2005 (3) TMI 152 - HC - Central Excise

Summary

Issues:
Challenge to order of Central Excise authorities under Article 226 of the Constitution of India, validity of Rule 57G(5) of the Central Excise Rules, 1944, Modvat credit entitlement, imposition of penalty, time limit for availing credit, condonation of delay, legislative intent behind Rule 57G.

Detailed Analysis:

1. Challenge under Article 226:
The petitioner challenged the orders passed by the Assistant Commissioner of Central Excise, Commissioner (Appeals), and the Customs Excise and Service Tax Appellate Tribunal. The petitioner sought various reliefs, including a writ declaring Rule 57G(5) of the Central Excise Rules, 1944 as ultra vires the Constitution of India.

2. Modvat Credit Entitlement:
The petitioner, a limited company engaged in manufacturing excisable goods, claimed entitlement to Modvat credit under the Central Excise Rules. The petitioner exported Ethyl Alcohol (not-denatured) and sought to avail credit on inputs used in the manufacturing process.

3. Imposition of Penalty:
A show cause notice was issued to the petitioner regarding the disallowance of Modvat credit, leading to an order-in-original by the Assistant Commissioner, imposing a penalty under Rule 173Q(1) of the Rules. The petitioner's appeals before the Commissioner (Appeals) and the Tribunal were dismissed.

4. Validity of Rule 57G(5):
The main contention raised by the petitioner was the challenge to the validity of sub-rule (5) of Rule 57G. The petitioner argued that the time limit of six months for availing credit was arbitrary and should be struck down or read down to allow for condonation of delay in certain circumstances.

5. Legislative Intent and Condonation of Delay:
The Court analyzed the provisions of Rule 57G, emphasizing the requirement for manufacturers to determine duty paid inputs and file declarations within specified timelines. The Court noted that the rule-making authority had consciously excluded the power to condone delays, indicating a legislative intent to restrict the time limit for availing credit.

6. Decision and Conclusion:
The Court rejected the petitioner's challenge to the validity of Rule 57G(5), stating that the time limit was not arbitrary and served the legislative purpose of verifying duty paid inputs within a specified period. The Court found no grounds to declare the rule ultra vires the Act or the Constitution, ultimately dismissing the petition with no order as to costs.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the petitioner's challenge, the regulatory framework under Rule 57G, and the Court's reasoning in upholding the validity of the rule.