2021 (3) TMI 243 - HC - Central Excise

Refund of Excise duty paid - Area Based Exemption - benefits under the Northeast Industrial Policy - allegation is that without giving a due consideration to the claim for special rate made by the petitioners, the respondents now intend to attach the bank accounts of the petitioner on the premises that the refund of excise duty would be as per the rates provided in the Notification dated 27.03.2008 - HELD THAT - As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, we are of the view that without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid application of the petitioner dated 28.09.2020 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured. After arriving at the special rate, if any as per the order to be passed by the Principal Commissioner, GST further process against the petitioner as per law may be initiated - Petition allowed.

Summary

Issues:
1. Claim for special rate under Notification No.20/2008-Central Excise.
2. Non-consideration of special rate application by the GST department.
3. Coercive measures against the petitioner.
4. Imposition of interest by the GST department.

Claim for Special Rate under Notification No.20/2008-Central Excise:
The petitioner, engaged in the manufacture of instant tea, sought benefits under the Northeast Industrial Policy, entailing exemptions from excise duties. Initially, 100% refund of excise duty was granted. However, Notification No.20/2008-Central Excise altered this, allowing manufacturers to apply for a special rate if the value addition exceeded the rates specified. The petitioner applied for a special rate under Clause 3(1) of the Notification, which was pending when the Notification was challenged in various High Courts and set aside by this Court. Subsequently, the Supreme Court reinstated the Notification, leading to the petitioner's grievance that their special rate application was not considered.

Non-Consideration of Special Rate Application by the GST Department:
Following the Supreme Court's judgment reinstating the Notification, the petitioner submitted applications for a special rate under Clause 3(1) on 28.09.2020. The petitioner alleged that despite the Notification being restored, the GST department did not evaluate their special rate claim. Consequently, the department intended to attach the petitioner's bank accounts based on the rates in the Notification. The Court emphasized that without a decision on the special rate claim, it was inappropriate for the department to proceed with coercive measures based on the Notification's rates.

Coercive Measures Against the Petitioner:
Acknowledging the need for a fair assessment of the petitioner's special rate claim, the Court directed the Principal Commissioner of GST Guwahati to consider the application within six weeks. Until a decision was reached, the Court prohibited any coercive actions against the petitioner, including attachment of bank accounts. Notably, if any coercive measures had been initiated, they were to be reverted to the original status.

Imposition of Interest by the GST Department:
The petitioner contested the imposition of interest by the GST department on the amount due. As the Court had not addressed this issue in the current judgment, it granted the petitioner liberty to approach the Court again regarding the imposition of interest, if necessary. The writ petition was allowed to the extent of directing the consideration of the special rate application and halting coercive actions until a decision was made.

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