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2017 (11) TMI 652 - HC - Central ExciseAbatement of duty payable u/s 3A due to Closure of factory - delay in intimation - Whether demand for Central Excise duty for non manufacturing period i.e. closure of factory is justified u/s 3A of the Act when it is contrary and ultra vires to Article 265 read with entry 84 of the Union List to the Constitution of India? - Held that - no basis was laid even before first authority or the Tribunal and when the act and provisions are made it is not to be presumed ultra vires unless it has been quashed and set aside by the High Court or any High Court or the Supreme Court, in writ jurisdiction - regarding Section 35G it will not be appropriate to held any provision to be unconstitutional because power under section 35G is only to be exercised in substantial question of law arising out of the Central Excise Act and not on any constitutional point - decided against assessee-appellant. Section 10 of the General Clauses Act - Whether Tribunal is justified in denying substantial right of assessee over and above procedural lapse of delayed intimation of closure of factory when it was due to unforeseen circumstances beyond control and under immunity of Section 10 of the General Clauses Act of 1897? - Held that - when considering the rule there are five conditions which are required to be fulfiled since the assessee is claiming exemption. If one is to claim exemption and non-payment of tax, interpretation of such exemption should be construed and it is in aid to rule. Once the interpretation is found to be proved one has to go by the rule - the rule even if it is construed liberally cannot travel beyond the next working day of the closure either it is Saturday, Sunday and public holiday or any other circumstances where the movement of a person is not possible to reach the office of the Central Government or the respondent namely in a case of curfew or any other exigency, the time can be extended and all documents on record do not show that on the date of intimation of there was curfew in the area which is to be proved by the assessee and not by the department - assessee will be entitled only for the benefit of the next working day not beyond that - decided partly in favor of appellant. Appeal allowed in part.
Issues Involved:
1. Justification of demand for Central Excise duty during the non-manufacturing period. 2. Denial of substantial rights over procedural lapses and applicability of Section 10 of the General Clauses Act, 1897. Issue 1: Justification of Demand for Central Excise Duty During Non-Manufacturing Period The appellant contested the Tribunal's decision, arguing that the demand for Central Excise duty during the factory's non-manufacturing period was unjustified under Section 3A of the Central Excise Act, 1944, and contrary to Article 265 read with Entry 84 of the Union List of the Constitution of India. The appellant's counsel cited Rule 96ZO(2), which outlines the conditions for claiming abatement of duty during factory closure, including written intimation to the Assistant Commissioner of Central Excise and other procedural requirements. The appellant's counsel referenced several judgments, including the Supreme Court's decision in Mangalore Chemicals & Fertilizers Ltd. vs. Deputy Commissioner, which distinguished between substantive and procedural conditions, emphasizing that procedural lapses should not negate substantive rights. The Supreme Court held that non-observance of procedural conditions could be excused if it did not facilitate fraud or administrative inconvenience. Similarly, in Indian Aluminium Company Ltd. vs. Thane Municipal Corporation, the Supreme Court underscored that procedural requirements must be met to avail concessions, but failure to do so could be excused if it did not hinder verification by authorities. The Allahabad High Court in Commissioner of Central Excise, Kanpur vs. Ram Shree Steels Pvt. Ltd. also supported the view that substantial benefits should not be denied due to procedural delays if sufficient explanation is provided. Issue 2: Denial of Substantial Rights Over Procedural Lapses and Applicability of Section 10 of the General Clauses Act, 1897 The appellant argued that the Tribunal erred in denying substantial rights due to procedural lapses, emphasizing that the delay in intimation was due to unforeseen circumstances beyond their control. The appellant relied on Section 10 of the General Clauses Act, 1897, which provides immunity for procedural delays under certain conditions. The appellant's counsel cited various Tribunal decisions, including D.C. Steel (P) Ltd. vs. Commissioner of C.Ex. Chandigarh, J.R. Alloys Castings Pvt. Ltd. vs. Commissioner of C.Ex. Jaipur, and Mahavir Ispat vs. Commissioner of Central Excise, Hyderabad, where procedural delays in intimation were excused due to holidays or other unavoidable circumstances. These decisions highlighted that procedural requirements should be interpreted liberally to avoid denying substantive rights. The department's counsel countered that the Tribunal's decision was justified, emphasizing the importance of adhering to procedural requirements. The counsel relied on the decision in Maharshi Commerce Ltd. vs. Commr. Of Cus. & C. Ex., which upheld the denial of abatement claims due to non-compliance with procedural conditions. Court's Analysis and Conclusion The court examined the provisions of Section 35G of the Central Excise Act, which allows appeals to the High Court on substantial questions of law. The court noted that constitutional issues could not be addressed under Section 35G, and the demand for duty during the non-manufacturing period could not be presumed ultra vires unless quashed by a higher court. Regarding the procedural lapses, the court emphasized that the conditions for claiming abatement must be strictly followed. However, the court acknowledged that procedural delays due to holidays or other unavoidable circumstances could be excused if sufficient explanation was provided. The court concluded that the appellant was entitled to the benefit of the next working day for intimation but not beyond that. Judgment The appeal was disposed of, with the court holding that the appellant was entitled to the benefit of the next working day for procedural intimation. The first issue was answered against the assessee, and the second issue was addressed by allowing limited leniency for procedural delays.
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