2019 (8) TMI 963 - HC - Central Excise

Recovery of duty - imposition of penalty - finalization of assessments - Jurisdiction of assessments - HELD THAT - It is an admitted position between the parties that for the Financial Years 2013-2014 and 2014-2015 the petitioner's request for provisional assessment was allowed by the respondent-Deputy Commissioner of Central Excise-Respondent No.5. This was on the petitioner furnishing bond and bank guaranties to the satisfaction of the Revenue. The assessments of both the financial years 2013-2014 and 2014-2015 continued to remain provisional till the passing of the impugned orders dated 25th September 2018. Therefore, neither the impugned show cause notices nor the impugned order had occasion to invoke Section 11A of the Act while finalising of the assessment. In fact a plain reading of the section 11A of the Act clearly provides that the time to recover the duty under the above provision would commence from the relevant date. The relevant date as defined in Section 11A, in case of duty of excise which is provisionally assessed, would be the date of final assessment. So also, penalty under Section 11A of the Act consequent to the above demand would not arise at the stage as the provisional assessment continues. Impugned order set aside - petition allowed.

Summary

Issues:
Challenge to show cause notices dated 07th March 2018 for Financial Years 2013-2014 and 2014-2015 under Central Excise Act, 1944. Jurisdiction of demand duty under Section 11A and penalty under Section 11AC. Alternate remedy of appeal under the Act. Provisional assessment for Financial Years 2013-2014 and 2014-2015. Interpretation of Section 11A of the Act in case of provisional assessment. Quashing of impugned orders dated 25th September 2018 and show cause notices dated 07th March 2018.

Analysis:

The petitioner sought leave to amend the petition to challenge two show cause notices dated 07th March 2018 related to Financial Years 2013-2014 and 2014-2015. The respondent had no objection, and the amendment was allowed without re-verification. The petition was taken up for final disposal at the admission stage.

The petition under Article 226 challenged two orders dated 25th September 2018 passed by the Assistant Commissioner of Central Excise, finalizing assessment for the years 2013-2014 and 2014-2015. The orders confirmed a duty demand under Section 11A and imposed penalties under Section 11AC. The petitioner challenged the show cause notices dated 07th March 2018 for demanding duty and imposing penalties, arguing it was without jurisdiction based on the Act and relevant legal precedents.

The Revenue argued for an alternate remedy of appeal under the Act, while the petitioner contended that the impugned orders and show cause notices were without jurisdiction. The petitioner approached the Court under extraordinary jurisdiction without filing an appeal under the Act against the impugned orders and notices.

The Court decided to entertain the petition and examine the petitioner's grievance. It was established that provisional assessment was allowed for the Financial Years 2013-2014 and 2014-2015, remaining provisional until the impugned orders were passed. The invocation of Section 11A of the Act was deemed premature as the duty recovery time starts from the final assessment date, not during provisional assessment.

Relying on the Supreme Court decision in ITC Ltd. v. UOI, it was concluded that invoking Section 11A before finalizing provisional assessment is without jurisdiction. Therefore, the impugned orders dated 25th September 2018 were quashed, and the show cause notices dated 07th March 2018 were set aside to the extent they demanded duty and imposed penalties under Sections 11A and 11AC. The assessments for the relevant years were to be finalized after hearing the petitioner, in line with the legal provisions and the court's decision.

In conclusion, the petition was disposed of in accordance with the above terms, providing relief to the petitioner based on the interpretation of the Act and relevant legal precedents.