2013 (6) TMI 32 - HC - Central Excise

Cenvat Credit - jurisdiction - validity of Notices under Rule 14 of the 2004 Rules to show cause why action be not taken for wrongly taking Cenvat credit for the aforesaid items. Hence, the present two writ petitions. - held that - The power to specify jurisdiction of different officers could be entrusted to the Board under Section 3 of the Constituting Act read with Section 37(1) of the Act - Sections 37(2)(ib) and 37(2)(xx) do not prohibit framing of such rules - Rule 3(2) of the 2002 Rules is not illegal. The Commissioner, Raipur was given jurisdiction over State of Chhattisgarh by the 2001 Notification and not by the GOs office orders . The 2001 Notification was published in official gazette. There is no illegality in the same. Shri Pradeep Kumar and Shri Pramod Kumar were merely promoted by the GOs office orders . There was no necessity to publish the GOs in the official gazette. They had jurisdiction to issue notice - Decided against the assessee.

Summary

Issues:
1. Legality of sub-rule (2) of Rule 3 of the Central Excise Rules, 2002 and validity of notices issued to the Petitioner under Rule 14 of the Cenvat Credit Rules, 2004.

Detailed Analysis:

1st Issue: Legality of Rule 3 of the 2002 Rules
The main contention was whether Rule 3 of the 2002 Rules, specifically Rule 3(2), which empowers the Central Board of Excise and Customs to specify jurisdiction, is legal. The Petitioner argued that the power to define jurisdiction cannot be delegated to the Board. However, the Court held that the power to specify jurisdiction can be entrusted to the Board under the Constituting Act and Section 37(1) of the Act. The Court emphasized that Sections 37(2)(ib) and 37(2)(xx) do not prohibit such rules, and thus, Rule 3(2) of the 2002 Rules was deemed legal.

2nd Issue: Validity of Notices
The second issue revolved around the validity of the notices issued by the Officers. The Petitioner contended that the Officers did not have jurisdiction as their promotions were not published in the official gazette. However, the Court clarified that Rule 3(2) mandates the specification of jurisdiction through notification, not promotion orders. The Court distinguished a previous case where jurisdiction was conferred through notification, which was not the case with the Officers in this scenario. Therefore, the Court held that the notices issued by the Officers were valid.

3rd Issue: Necessity of Special Audit
The third issue raised was regarding the necessity of a special audit under Section 14AA of the Act before issuing the notices. While the Petitioner argued that a special audit was a prerequisite, the Respondent contended that it was discretionary. The Court did not delve into this issue as the writ petitions were against the show cause notices, leaving it open for the Petitioner to raise the objection in their reply.

Conclusions:
1. Rule 3(2) of the 2002 Rules was deemed valid.
2. The jurisdiction of the Commissioner was established through the 2001 Notification, and the promotions of the Officers did not require publication in the official gazette.
3. The Officers had jurisdiction to issue the notices.
4. The necessity of a special audit was not addressed as it was not crucial to the decision on the show cause notices. The writ petitions were dismissed based on the observations made by the Court.