2021 (3) TMI 1070 - HC - Central Excise

Restoration of Notification dated 27.03.2008 - claim of special rate - certain add-ons to the goods manufactured by them - petition is instituted on the grievance that the Notification dated 27.03.2008 having been restored as per the judgment of the Supreme Court, two applications dated 02.02.2021 and 04.02.2021 under Clause 3(1) of the Notification No.20/2008-Central Excise dated 27.03.2008 was submitted by the petitioner claiming for a special rate, but the same has not been given its consideration and without giving a due consideration to the claim for special rate made by the petitioners - HELD THAT - As the Notification dated 27.03.2008 provides for a legal right to the assessee to claim for a special rate to be fixed in the event of there being any add-ons to the goods manufactured, we are of the view that without an appropriate decision being taken on such claim for special rate, it would be inappropriate for the department to proceed against the petitioners as per the rates provided in the Notification dated 27.03.2008. This petition stands disposed of by directing the Principal Commissioner of GST Guwahati to consider the aforesaid two applications of the petitioner dated 02.02.2021 and 04.02.2021 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured.

Summary

Issues:
Grant of exemption under Central Excise Act, 1944 and Northeast Industrial Policy, Notification No.20/2008-Central Excise dated 27.03.2008, Claim for special rate under Clause 3(1) of the Notification, Restored Notification post Supreme Court judgment, Consideration of special rate applications, Coercive measures by GST department pending decision.

Analysis:

The petitioner company, engaged in the manufacture of cement clinker and cement, sought exemptions under the Central Excise Act, 1944, and the Northeast Industrial Policy. Initially, 100% refund of excise duty was granted, but Notification No.20/2008-Central Excise dated 27.03.2008 introduced rates for refunds, allowing manufacturers to apply for a special rate under Clause 3(1) if actual value addition exceeded specified rates in the notification.

Following a series of writ petitions challenging the Notification, the High Court set it aside, restoring the 100% refund. However, the Supreme Court, in a subsequent judgment, reinstated the Notification, thereby reinstating the need for manufacturers to apply for special rates under Clause 3(1) for value addition exceeding prescribed rates.

The petitioner filed applications for special rates post the Supreme Court judgment, alleging that the GST department intended to attach their bank accounts without considering the special rate claims. The Court emphasized the legal right of the assessee to claim a special rate for add-ons to manufactured goods before any action under the Notification could be taken.

Consequently, the Court directed the Principal Commissioner of GST to consider the petitioner's special rate applications within six weeks, emphasizing that no coercive measures should be taken against the petitioner until a decision was made. The judgment allowed the writ petition to the extent of directing the consideration of special rate applications before any further action by the GST department.