2021 (2) TMI 302 - HC - Central Excise

Recovery of Central Excise Duty based on Audit Objections - CIRP Proceedings are pending - petitioner fairly submits that on account of the moratorium declared under Section 14 of the Insolvency Bankruptcy Code, 2016, the writ petition cannot be pursued any further at this stage - HELD THAT - Upon hearing learned counsel for the parties and taking note of the Insolvency Resolution Process underway against this company and the moratorium on continuation of any pending proceedings under Section 14 of the of the Insolvency Bankruptcy Code, 2016, the present writ petition cannot be entertained. Petition disposed off.

Summary

Issues:
1. Challenge to the imposition of excise duty based on audit objections.
2. Question regarding the imposition of excise duty on coal consumption in Captive Power Plant.
3. Validity of show cause notices issued by the Commissioner.
4. Setting aside the Order imposing duty, penalty, and interest.
5. Impact of insolvency proceedings on the writ petition.

Analysis:
1. The petitioner challenged the imposition of excise duty based on audit objections raised by the Central Excise & Revenue Audit (CERA) for the period 2009-2010 to 2013-2014. The petitioner sought a writ to show cause why duty was levied on the basis of audit objections. The court was asked to consider the legality of such imposition without a reasonable basis or legal justification. The petitioner requested the quashing of the show cause notices and the Order in Original imposing duty, penalty, and interest.

2. Another issue raised was the imposition of excise duty on coal consumption in the Captive Power Plant. The petitioner questioned whether such consumption should be subjected to excise duty. This issue was intertwined with the broader challenge to the imposition of duties based on audit objections and the legality of the show cause notices issued by the Commissioner.

3. The validity of the show cause notices issued by the Commissioner was also a key point of contention. The petitioner argued that the notices were raised on presumption without a reasonable basis, which was deemed impermissible under the law. The petitioner sought the quashing of these notices, emphasizing the lack of legal justification for the imposition of duties.

4. The Order dated 27th October 2017, imposing duty, penalty, and interest on the petitioner, was also contested. The petitioner requested the court to set aside this Order, highlighting the need for a just and proper resolution in the case. The challenge to this Order was part of the broader plea to address the legality and justification of the duties imposed on the petitioner.

5. The impact of insolvency proceedings on the writ petition was a crucial aspect considered by the court. The petitioner acknowledged the moratorium declared under Section 14 of the Insolvency & Bankruptcy Code, 2016, which prevented the continuation of pending proceedings. Given the ongoing insolvency resolution process against the company, the court noted that the writ petition could not be pursued further. The court disposed of the petition in light of the moratorium and the insolvency proceedings, emphasizing the need to await the outcome of the resolution process.