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2021 (3) TMI 178 - HC - Central ExciseDoctrine of forum conveniens - Removal of Capital Goods without reversal of Credit / Payment of duty - Levy of interest and penalty on the petitioner as a condition for granting immunity from prosecution - jurisdiction of this Court to entertain the present writ petitions on the ground of forum non conveniens - HELD THAT - This doctrine of forum conveniens is a well-known doctrine in international law. The courts have held the question of forum conveniens / forum conveniens involves balancing the considerations of the interests of the parties involved (especially factors of costs and convenience), as well as wider concerns of convenience and justice to third parties involved in the litigation, wastage of resources, the risk of inconsistent judgments from different courts and justice in the broadest sense, as well as considerations of international comity, i.e., the respect for the jurisdiction of the courts of other countries - The doctrine pre-supposes that two or more courts have jurisdiction over the subject matter of the dispute but one among them is more appropriate and therefore the court would decline to pass any order in a court if it finds the other court to be more appropriate to decide the dispute as that court was a forum convenient to decide the lis between the parties. Since there are no disputed questions of fact involved in the present cases and issue arises solely on account of interpretation of the provision, I am of the view that the challenge to the impugned common order of the first respondent Settlement Commission located within the jurisdiction of this Court is maintainable before this Court under Article 226 of the Constitution of India. Levy of interest and imposition penalty under the provisions of the Central enactment namely the Central Excise Act, 1944 and the Rules made therein, namely CENVAT Credit Rules, 2004 and Central Excise Rules, 2002 - HELD THAT - The present writ petitions can be decided on merits based on the available case laws instead of driving the petitioner to work out its remedy in the Andhra Pradesh High Court or Telangana High Court at this distant point of time. As per the Rule 3(5A) of the CENVAT Credit Rules, 2004, removal of the used capital goods was to accompany a payment of amount equal to the Cenvat credit taken on the said capital goods reduced by percentage point calculated by straight line method - The removals by the petitioner of the capital goods were between 22.11.2011 and 14.03.2012 and therefore strictly there was no liability to pay the amounts under Rule 3(5A) of the CENVAT Credit Rules, 2004 as it did not exist in the Rules. The first amendment to Rule 3 of the CENVAT Credit Rules, 2004 for the purpose of recovery of amount came into force only on 01.03.2013 vide Notification No.3/2013-CE (NT) dated 01.03.2013 after the petitioner had started paying an amount of ₹ 1,23,56,697/- in installments on various dates between 29.05.2012 and 07.10.2013 to the credit of the second respondent for removals made between 22.11.2011 and 14.03.2012. The above amendment was later substituted vide Notification No.1/2014-CE (NT) dated 08.01.2014. Therefore, question of imposing interest under Rule 14 of the Act cannot be sustained as the Rules did not exist at the time of removals - Thus, the amount payable under Rules 3(5), (5A), (5B) and (5C) of the CENVAT Credit Rules, 2004 which were made recoverable in the same manner provided under Rule 14 of the aforesaid Rules if no amount was paid at the time of removal came into force only w.e.f. 01.03.2013 for the first time. Since the petitioner paid the aforesaid amount of ₹ 1,23,56,697/- on various dates between 29.05.2012 and 07.10.2013 and a further sum of ₹ 8 lakhs on 26.11.2013, the invocation of Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 on the date of Show Cause Notice dated 14.11.2012 was without jurisdiction - Since the removals were contrary to spirit of the provisions of the CENVAT Credit Rules, 2004, there are no merits in the submission of the learned counsel for the petitioners as far as the challenge to imposition of penalty or redemption fine under the impugned common order as a condition for granting immunity from prosecution under the provisions of the Central Excise Act, 1944 to the petitioners. Invocation of Rule 8(3A) of the Central Excise Rules, 2002 in the impugned order of the first respondent was wholly misplaced. Rule 8(3A) of the Central Excise Rules, 2002 applies only to a situation where an assessee defaults in payment of duty beyond 30 days due date as prescribed in the said Rules. Then, notwithstanding anything contained in CENVAT Credit Rules, 2004, such an assessee was required to pay excise duty on each consignment at the time of removal, without utilising the Cenvat Credit till the outstanding amount including interest thereon was paid in cash; and in the event of failure, it shall be deemed that goods have been cleared without payment of duty and the consequence of penalties as provided in these Rules were attracted. This is not applicable to the facts of the cases. Therefore, while upholding the impugned common order imposing penalty and redemption fine on the respective petitioners, I set aside the impugned common order insofar as it seeks to direct the petitioners to pay the balance amount of ₹ 22,44,953/- towards interest under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 11AA of the Central Excise Act, 1944 - petitioners therefore are directed to remit the balance amount of penalty and redemption fine imposed in the impugned common order as a condition for settling the case and for granting immunity from prosecution within a period of 30 days from date of receipt of a copy of this order if the aforesaid amount has already not been paid by the petitioners. Petition allowed in part.
Issues Involved:
1. Levy of interest and imposition of penalties by the Settlement Commission. 2. Jurisdiction of the Court to entertain the writ petitions on the ground of "forum non conveniens". 3. Applicability of Rule 3(5) and Rule 3(5A) of the CENVAT Credit Rules, 2004. 4. Validity of amendments to the CENVAT Credit Rules, 2004 and their retrospective application. 5. Imposition of penalty and redemption fine as a condition for granting immunity from prosecution. Issue-wise Detailed Analysis: 1. Levy of Interest and Imposition of Penalties by the Settlement Commission: The petitioners challenged the Settlement Commission's order dated 15.04.2014, which directed them to pay interest on a balance amount of ?22,44,953/- and imposed penalties under the CENVAT Credit Rules, 2004. The Settlement Commission had settled the additional amount of Central Excise Duty at ?1,23,56,697/- and interest at ?30,51,968/-. The petitioners had already paid ?8,07,015/- towards interest, and the balance interest amount was to be paid within 30 days. Additionally, penalties of ?1,25,000/- on the petitioner and ?25,000/- on the Managing Director were imposed under the relevant provisions. 2. Jurisdiction of the Court to Entertain the Writ Petitions on the Ground of "Forum Non Conveniens": The second respondent argued that the writ petitions should be dismissed on the ground of "forum non conveniens," as both the petitioner company and the second respondent are from Andhra Pradesh. The Court noted that the doctrine of "forum conveniens" should be invoked at the threshold and not at the final hearing stage. Since the objection was raised after six years and no counter was filed earlier, the Court decided to entertain the writ petitions. 3. Applicability of Rule 3(5) and Rule 3(5A) of the CENVAT Credit Rules, 2004: The Court examined Rule 3(5) and Rule 3(5A) of the CENVAT Credit Rules, 2004. Rule 3(5) required payment of an amount equal to the credit availed if capital goods were removed "as such." However, Rule 3(5A), which was introduced on 01.04.2012, required payment of an amount equal to the CENVAT credit taken on capital goods when removed after use. The removals by the petitioner occurred between 22.11.2011 and 14.03.2012, before the introduction of Rule 3(5A). 4. Validity of Amendments to the CENVAT Credit Rules, 2004 and Their Retrospective Application: The Court noted that the amendments to Rule 3(5A) and the introduction of the Explanation for recovery under Rule 14 were effective from 01.03.2013 and 08.01.2014, respectively. Since the removals occurred before these amendments, the Court held that the invocation of Rule 14 for interest recovery was without jurisdiction. 5. Imposition of Penalty and Redemption Fine as a Condition for Granting Immunity from Prosecution: The Court upheld the imposition of penalties and redemption fine on the petitioners as a condition for granting immunity from prosecution under the Central Excise Act, 1944. The amount of ?8,07,015/- already paid by the petitioner towards interest was treated as an additional amount for settling the case. The Court directed the petitioners to remit the balance amount of penalty and redemption fine within 30 days if not already paid. Conclusion: The Court partly allowed the writ petitions, setting aside the order directing the petitioners to pay the balance interest amount of ?22,44,953/-. The penalties and redemption fine imposed by the Settlement Commission were upheld, and the petitioners were directed to pay the remaining amounts within 30 days.
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