2014 (4) TMI 950 - HC - Central Excise

Fraudulent availment of CENVAT Credit - Violation of principle of natural justice - Held that - Impugned order passed is in violation of the Principles of Natural Justice. The notice was issued on 30.07.2007. 7 days time has been allowed to file the reply. Certain documents had been relied upon in the show cause notice. it is stated that the said show cause notice has been received by the petitioner on 3rd September, 2007, therefore, the petitioner has 7 days time to file the reply. According to the petitioner, the reply was filed on 6.09.2007. In paragraph 20 of the writ petition, it is stated that the reply of the show cause notice was filed, which has been replied by the paragraph 18 that the reply was not filed within time. It is further stated that it has been replied on 6th September, 2007 when the order was passed. Thus, in the counter affidavit, it is admitted that the reply has been received on 6th September, 2007. It is unfortunate that even though, the reply was received on 6th September, 2007 but in the impugned order, it is alleged that no reply has been filed and no request has been made for the personal hearing. - impugned order has been passed in gross violation of Principles of Natural Justice and therefore, is not sustainable and is liable to be set aside - Decided in favour of assessee.

Summary

Issues:
Challenge to orders passed by Assistant Commissioner, Customs & Central Excise regarding rebate claims based on alleged fraudulent CENVAT Credit utilization without receiving raw materials.

Analysis:
The petitioner contested orders dated 6.9.2007 issued by the Assistant Commissioner, Customs & Central Excise, alleging fraudulent CENVAT Credit utilization for rebate claims without receiving raw materials. The show cause notice accused the party of availing CENVAT Credit based on fake documents and using it to pay Central Excise Duty on exports. The petitioner received the notice on 3rd September, 2007, filed a reply on 6th September, 2007, and challenged the lack of details in the intelligence report supporting the allegations. The petitioner also claimed mala fide intentions due to the officer's absence on the day of the order. The respondent argued that as raw materials were not received, the rebate claims were rightly rejected.

Upon review, the court found the impugned order violated Principles of Natural Justice. The petitioner received the notice on 3rd September, 2007, and filed a reply on 6th September, 2007. Despite this, the order alleged no reply was filed, indicating a procedural error. The court deemed the order passed in violation of Principles of Natural Justice and unsustainable, setting it aside. The matter was remanded to the Adjudicating Authority for a fresh order after providing a proper opportunity of hearing in accordance with the law. The Adjudicating Authority was directed to issue the order within six months from the date of the court's decision.

In conclusion, the writ petition challenging the orders related to rebate claims based on alleged fraudulent CENVAT Credit utilization without receiving raw materials was allowed. The court emphasized the importance of adhering to Principles of Natural Justice in administrative proceedings, ensuring fair treatment and procedural regularity.