2021 (8) TMI 819 - HC - Central Excise

Refund of Excise duty - invocation of provisions of Clause 3(1) of the Notification No.20/2008-Central Excise 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, 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 01.04.2021 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:
Claim for special rate under Notification No.20/2008-Central Excise dated 27.03.2008 not considered by the respondents leading to potential recovery actions against the petitioners.

Analysis:
The petitioners, engaged in manufacturing UPVC Pipes, fittings, etc., are subject to Central Excise Act, 1944, and claimed benefits under the Northeast Industrial Policy entailing exemptions in excise duties. Initially, 100% refund of excise duty paid was granted, but Notification No.20/2008 altered this by introducing specified rates for refunds based on categories of goods (para 2-3).

Under Clause 3(1) of Notification No.20/2008, manufacturers could opt for a special rate by demonstrating actual value addition exceeding the rates specified in the notification. The petitioners invoked this clause, but a subsequent judgment set aside the notification, reverting to 100% refund. However, a Supreme Court judgment reinstated the notification, allowing for special rates (para 4-6).

The petitioners, post the Supreme Court judgment, applied for a special rate under Clause 3(1) of the notification, but the respondents failed to consider the application. Despite the restoration of the notification, the respondents intended to recover excise duty without addressing the special rate claim. The court emphasized the right of the assessee to claim a special rate for add-ons to manufactured goods before any recovery actions (para 7).

Consequently, the court directed the Principal Commissioner of GST to evaluate the petitioner's application for a special rate within six weeks. Pending this decision, no coercive measures for recovery were to be taken against the petitioner. The court allowed the writ petition to the extent of the directions provided (para 8-10).