2025 (1) TMI 535 - HC - Central Excise

Jurisdiction of invocation of Section 11D of the Central Excise Act, 1944 - Section 35 of the Central Excise Act, 1944 along with pre-deposit under Section 35F of the Central Excise, 1944 - HELD THAT - Section 11D(1) contemplates collection of duty and corresponding failure to pay the duty to the credit of the Central Government. Therefore, it cannot be said that the petitioner has not collected the tax as the petitioner has admitted to the tax liability by filing Form SVLDRS - 1 on 31.12.2019. Therefore, invocation of machinery under Section 11D(1) or 11D(1A), as the case cannot be questioned. The Show Cause Notice has rightly invoked Section 11D(2) which has now culminated in the impugned order. The challenge to the impugned order on the ground that the Show Cause Notice was without jurisdiction is liable to be rejected. The petitioner has to pay the duty that has been self assessed by the petitioner. The petitioner has paid a part of duty liability in cash to an extent of Rs. 24,73,472/- leaving the balance of Rs. 11,67,469/-. The amount has been paid an appropriation cannot be questioned. The petitioner would be entitled to reduce the tax liability by way of set off in the Form of Rule 3(1) of the CENVAT Credit Rules, 2004 provided petitioner has document to establish that petitioner had indeed purchase inputs/services on payment of tax duty. This would require a determination by the respondent. The benefit of input tax credit in the Form of CENVAT Credit under Rule 3(1) of the CENVAT Credit Rules, 2004 cannot be denied. As far as imposition of penalty is concerned, same can be re-visited by the respondent as to whether the petitioner is to be imposed with penalty for the failure to pay the tax in time. Conclusion - Section 11D(1) makes it clear that every person who is liable to pay tax under the Act or rules made thereunder and has collected the amount in excess of the duty assessed or determined and paid on any excisable goods under the Act or the rules made thereunder from the buyer of such goods shall forthwith pay the amount so collected to the credit of the Central Government. Applicability of Section 11D for recovery of excess duty collected afirmed. The benefit of input tax credit in the Form of CENVAT Credit under Rule 3(1) of the CENVAT Credit Rules, 2004 cannot be denied. Petition disposed off.

1984 (3) TMI 390 - AT

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following legal issues:

Whether the invocation of Section 11D of the Central Excise Act, 1944, by the Department was within jurisdiction.
Whether the petitioner was correctly assessed for the excise duty liability and the appropriateness of the penalty imposed.
Whether the petitioner could utilize CENVAT credit to settle the outstanding tax liability.
Whether the petitioner's challenge to the impugned order was procedurally appropriate under Article 226 of the Constitution of India.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Jurisdiction under Section 11D of the Central Excise Act, 1944

Relevant legal framework and precedents: Section 11D(1) of the Central Excise Act mandates that any person liable to pay duty who collects an amount in excess of the duty assessed must pay it to the Central Government. Section 11D(2) provides the machinery for recovery of such amounts.
Court's interpretation and reasoning: The court interpreted Section 11D as applicable because the petitioner admitted to the tax liability by filing Form SVLDRS-1, thus acknowledging the collection of duty.
Key evidence and findings: The petitioner filed a declaration under the Sabka Vishwas (Legacy and Dispute Resolution) Scheme, 2019, admitting a tax liability of Rs. 36,40,941/-.
Application of law to facts: The court found that the conditions under Section 11D(1) were satisfied, justifying the invocation of Section 11D(2).
Treatment of competing arguments: The petitioner argued that the invocation of Section 11D was without jurisdiction, suggesting alternative provisions under Section 11A. The court rejected this, emphasizing the petitioner's admission of liability.
Conclusions: The jurisdictional challenge was rejected, affirming the applicability of Section 11D.

Issue 2: Assessment of Excise Duty and Imposition of Penalty

Relevant legal framework and precedents: The Central Excise Act and corresponding rules govern the assessment and collection of excise duty, including penalties for non-compliance.
Court's interpretation and reasoning: The court noted the petitioner's partial payment and the balance due, highlighting the need for reassessment of penalties.
Key evidence and findings: The petitioner paid Rs. 24,73,472/- but had a remaining liability of Rs. 11,67,469/-.
Application of law to facts: The court directed a fresh assessment regarding penalties, considering the petitioner's partial compliance.
Treatment of competing arguments: The petitioner contended against the penalty, while the respondent upheld its imposition. The court found merit in revisiting the penalty.
Conclusions: The court allowed for reconsideration of the penalty imposed.

Issue 3: Utilization of CENVAT Credit

Relevant legal framework and precedents: Rule 3 of the CENVAT Credit Rules, 2004, allows for the utilization of credit for duty payments.
Court's interpretation and reasoning: The court acknowledged the possibility of using CENVAT credit, provided the petitioner could substantiate the claim with appropriate documentation.
Key evidence and findings: The petitioner attempted to settle the liability using CENVAT credit, which was not initially accepted.
Application of law to facts: The court directed the respondent to assess the validity of the CENVAT credit claim.
Treatment of competing arguments: The petitioner argued for credit utilization, while the respondent required evidence of eligible inputs/services.
Conclusions: The court allowed for potential reduction of liability through CENVAT credit upon verification.

Issue 4: Procedural Appropriateness of the Writ Petition

Relevant legal framework and precedents: Article 226 of the Constitution of India permits writ petitions for jurisdictional challenges.
Court's interpretation and reasoning: The court acknowledged the petitioner's choice to file a writ petition but noted the availability of appellate remedies under the Central Excise Act.
Key evidence and findings: The petitioner bypassed the appellate mechanism, opting for direct judicial intervention.
Application of law to facts: The court recognized the writ petition's validity for jurisdictional issues but emphasized the usual appellate process.
Treatment of competing arguments: The petitioner justified the writ petition on jurisdictional grounds, while the respondent highlighted procedural norms.
Conclusions: The court disposed of the writ petition, directing a fresh order from the respondent.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "Section 11D(1) makes it clear that every person who is liable to pay tax under the Act or rules made thereunder and has collected the amount in excess of the duty assessed or determined and paid on any excisable goods under the Act or the rules made thereunder from the buyer of such goods shall forthwith pay the amount so collected to the credit of the Central Government."
Core principles established: The court reaffirmed the applicability of Section 11D for recovery of excess duty collected and the procedural propriety of using writ jurisdiction for jurisdictional challenges.
Final determinations on each issue: The court upheld the jurisdiction under Section 11D, allowed for reassessment of penalties, recognized potential CENVAT credit utilization, and directed a fresh order within three months.

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