2007 (11) TMI 187 - HC - Central Excise

If writ petition has been entertained & admitted for final hearing, it will not be proper at this stage to throw it out on the ground of alternative remedy petition can t be dismissed on this ground But petitioner failed to produce prescribed & relevant documents required as per law & wrongly availed the credit on the strength of invalid documents - sub-Rule (11) inserted in 57G & not. 7/99 aren t retrospective so wouldn t come to rescue of assessee petition dismissed credit disallowed

Summary

Issues:
Challenge to orders under Article 227 - Denial of MODVAT credit - Recovery and penalty imposition - Appeal to Tribunal - Rectification application rejection - Alternative remedy contention - Merits of the case regarding MODVAT credit denial.

Analysis:
The petitioner challenged Orders Annexure 'C', 'D', 'E', and 'F' under Article 227, claiming denial of MODVAT credit, recovery, and penalty imposition. The petitioner, engaged in manufacturing PCC Poles, availed MODVAT Credit for input (Cement) but was found to have wrongly availed credit of Rs.78,830 during April and May 1995. The Adjudicatory Authority disallowed the credit, ordered recovery, imposed a penalty, and levied interest. The Commissioner (Appeals) and Tribunal upheld the duty demand and penalty, partially allowing the appeal to set aside the interest levy. A rectification application was rejected, leading to the present writ petition challenging the denial of MODVAT credit.

The petitioner argued no breach occurred to deny the MODVAT credit or, if there was a breach, it was trivial. Relying on Notification 7/99-C.E.(N.T.), the petitioner contended that the denial of credit and recovery were unlawful due to the insertion of sub-Rule (11) in Rule 57G. The respondents, however, supported the impugned orders, asserting no interference was warranted and highlighting the petitioner's alternative remedy, suggesting dismissal on that ground.

Addressing the alternative remedy contention, the Court noted the self-imposed bar due to the discretionary nature of relief under Article 226/227. Despite the availability of an alternative remedy, the Court proceeded with the final hearing, rejecting the dismissal based on the alternative remedy at that stage. Moving to the merits, the Court explained the MODVAT scheme's purpose and burden of proof on the assessee to establish the defense's bona fides. In this case, the authorities found the petitioner failed to provide required documents, wrongly availed credit, and committed a significant breach, contrary to the petitioner's argument of a trivial breach.

The Court emphasized that subsequent changes in rules could not aid the petitioner retroactively, as procedural law changes are generally prospective unless a clear intention for retrospective effect exists. Analyzing the notification cited by the petitioner, the Court found no indication of retrospective operation, especially as the initial order predates the notification. Consequently, the Court dismissed the writ petition, finding no merit or substance, though without ordering costs.