2022 (4) TMI 132 - HC - Central Excise

Rejection of Petitioner s Declaration in Form SVLDRS - manufacture of partially oriented polyester yarn/POY, texturized yarn, grey fabrics and knitted fabrics from the POY, falling under the Chapters 54 and 60 respectively of the Central Excise Tariff Act - HELD THAT - The picture that emerges as on date is that on one hand, the writ applicants want to question the legality and validity of the decision taken by the Designated Committee to reject the declaration under the scheme and on the other hand, there is an appeal filed by the writ applicants against the order in original passed by the Commissioner, Surat. The Tribunal should be allowed to proceed with the hearing of the appeal and decide the same on its own merits - Rule returnable on 22nd June, 2022.

Summary

Issues:
1. Challenge to rejection of declaration under SVLDRS
2. Appeal against order passed by Commissioner, Surat

Analysis:

Issue 1: Challenge to rejection of declaration under SVLDRS
The writ applicants, engaged in manufacturing activities falling under Central Excise Tariff Act, faced a show cause notice demanding a substantial amount. During the ongoing adjudication proceedings, the Ministry of Finance introduced the SVLDRS to resolve pending tax disputes. The writ applicants applied under the SVLDRS, declaring a specific amount as payable, which was 50% of the total duty demand mentioned in the show cause notice. They argued that a significant portion of the demand had already been paid from their accounts and should be considered as deposited. However, the Designated Committee rejected their declaration under the SVLDRS, primarily due to the contention that the amount shown as deposited against the demand in the show cause notice was not valid. This rejection prompted the writ applicants to challenge the decision, seeking relief through a writ application under Article 226 of the Constitution of India.

Issue 2: Appeal against order passed by Commissioner, Surat
Simultaneously, the Commissioner, Central Excise & CGST, Surat, issued a final order confirming the demand for Central Excise Duty, interest, and penalties against the writ applicants. The order imposed substantial financial obligations on the applicants, including duty payment, interest, and penalties on both the company and its director. The order also provided for a reduction in the penalty amount if the duty, interest, and the reduced penalty were paid within a specified timeframe. The writ applicants, dissatisfied with this order, filed an appeal before the Tribunal challenging its legality and validity.

In light of these circumstances, the High Court recognized the dual legal challenges faced by the writ applicants. While allowing the Tribunal to proceed with the appeal against the order passed by the Commissioner, Surat, the Court decided to reserve the examination of the rejection of the declaration under the SVLDRS for the final hearing of the writ application. The Court emphasized the importance of expeditiously resolving the pending matters and set a future date for further proceedings. The respondents waived the service of notice for the rule returnable, indicating their acknowledgment of the legal proceedings.