2022 (8) TMI 60 - HC - Central Excise

Recovery of excise duty penalty etc. from the petitioner - area based exemption - fixation of special rate of excise duty before initiating any process for recovery of excise duty penalty etc. - benefit of notification dated 25-4-2007 - HELD THAT - In the case of M/S JYOTHY LABS LTD. (ERSTWHILE JYOTHY LABORATORIES LTD.) VERSUS UNION OF INDIA AND 2 ORS. PRINCIPAL COMMISSIONER CGST COMMISSIONERATE ASSTT. COMMISSIONER OF GST AND CENTRAL EXCISE 2021 (8) TMI 726 - GAUHATI HIGH COURT this Court had categorically held that the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India in UNION OF INDIA ANOTHER ETC. ETC. VERSUS M/S V.V.F LIMITED ANOTHER ETC. ETC. 2020 (4) TMI 669 - SUPREME COURT . It is seen that by virtue of orders passed by the Supreme Court of India in IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2021 (5) TMI 564 - SC ORDER arising out of the said case the period of limitation whether condonable or not stood extended from 15-3-2020 till 2-10-2021 and it was further provided that In cases where the limitation would have expired during the period between 15-3-2020 till 2-10-2021 notwithstanding the actual balance period of limitation remaining all persons shall have a limitation period of 90 days from 3-10-2021. In the event actual balance period of limitation remaining with effect from 3-10-2021 is greater than 90 days that longer period shall apply. The petitioner has been able to show a prima facie case for hearing because if the requirement of requesting for fixation of a special rate in respect of value addition to the manufactured goods had arisen only after the final judgment of the Supreme Court of India on 22-4-2020 the period of limitation would stand extended for a period of 90 days from 3-10-2021 and therefore the application which was submitted on 20-10-2021 by the petitioner was well within the period of limitation. Therefore the balance of convenience tilts in favour of interim protection to the petitioner. The Court is of the considered opinion that the petitioner is entitled to interim protection till disposal of the application dated 20-10-2021 by the competent authority of the respondent Nos. 2 and 3 - the respondent Nos. 2 and 3 authority are restrained from coercive action against the petitioner for enforcing refund in terms of demand cum-show cause notice till disposal of the application dated 20-10-2021 - Application disposed off.

Summary

Issues Involved:
1. Challenge to the impugned order-in-original dated 5-11-2021 and demand-cum-show cause notice dated 20-11-2020.
2. Request for directing the respondent authorities to decide the application for fixation of a special rate of excise duty before initiating any recovery process.
3. Consideration of the interim relief for the petitioner.

Detailed Analysis:

1. Challenge to the Impugned Order-in-Original and Demand-Cum-Show Cause Notice:
The petitioner, a manufacturing concern, challenged the impugned order-in-original dated 5-11-2021 and the demand-cum-show cause notice dated 20-11-2020. The petitioner argued that they were entitled to a refund of central excise duty paid on value addition as per the amended notification dated 27-3-2008, which was initially 100% but later reduced to 39%. The petitioner referenced a previous judgment by this Court dated 24-6-2009, which set aside the amendments and upheld the 100% exemption. However, the Supreme Court stayed this judgment on 7-12-2015, directing a conditional refund of 50% of the amount due, pending final judgment. The Supreme Court's final decision on 22-4-2020 allowed the Revenue's appeal, leading to the demand for a refund of the excess amount paid to the petitioner.

2. Request for Fixation of Special Rate of Excise Duty:
The petitioner filed an application for fixation of a special rate of excise duty on 20-10-2021, claiming that the timeline for such an application was extended due to the COVID-19 pandemic based on orders from the Supreme Court. The petitioner argued that the necessity for this application arose only after the Supreme Court's final judgment on 22-4-2020. The petitioner cited previous orders and judgments, including those from the Supreme Court and this Court, which extended the limitation period due to the pandemic. The petitioner contended that their application was within the extended limitation period and should be considered before any recovery process is initiated.

3. Consideration of Interim Relief:
The Court acknowledged the petitioner's prima facie case, noting that the requirement for requesting a special rate arose only after the final Supreme Court judgment on 22-4-2020. The Court referenced the Supreme Court's orders extending the limitation period due to the pandemic, which applied to the petitioner's application filed on 20-10-2021. The Court found that the balance of convenience favored interim protection for the petitioner, restraining the respondent authorities from taking coercive action to enforce the refund until the petitioner's application for fixation of a special rate is decided. The interim protection was subject to the petitioner extending the validity of the solvency surety bond submitted as per the Supreme Court's interim order.

Conclusion:
The Court granted interim protection to the petitioner, restraining the respondent authorities from enforcing the refund demand until the application for fixation of a special rate is decided. The petitioner was required to extend the solvency surety bond's validity if it had lapsed. The Court emphasized that these observations were not final opinions and would not prejudice the parties when the matter is finally heard on merit. The case was listed for further hearing on 10-1-2022.