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TMI Blog2010 (9) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... od, sustainable - 15917 of 2010 - - - Dated:- 2-9-2010 - N. Paul Vasanthakumar, J. REPRESENTED BY : Shri V. Balasubramanian, Counsel, for the Petitioner. Shri K. Ravi Anantha Padmanabhan, Counsel, for the Respondent. [Order]. - In this writ petition, petitioner seeks to quash the order dated 19-7-2010 passed by the first respondent suspending CENVAT credit facility for a period from 22-7-2010 to 15-10-2010 to the petitioner company. 2.The brief facts necessary for disposal of the writ petition are as follows : (a) The petitioner company is engaged in the manufacture and sale of ATM machines and their parts, which is falling under Chapter 84 of Central Excise Tariff and it is having Central Excise Registration. According to the petitioner Company it is discharging its Excise Duty liability by paying about a sum of Rs. 36 crores per annum. (b) It is claimed by the petitioner that during the period from October, 2008 to December, 2008, due to the change in staff attending Central Excise CENVAT credit work, there was duplication in the entry of credit to the tune of Rs. 176.27 lakhs, which is also reflected in the monthly ER-1 returns. On 4-12-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Superintendent of Central Excise within 24 hours from the receipt of the principal inputs and await verification from him in the next 48 hours. (g) The said order is chellenged in this writ petition by contending that there was no mens rea on the part of the petitioner company and presence of mens rea is a sine qua non as per Notification No. 32/2006. It is also contended in the affidavit that the said notification was issued for imposing deterrent punishment action only in case of manufacture, if prima facie found to be knowingly involved in committing the offence, and the petitioner having committed the mistake by inadvertence the impugned order ought not to have been passed. According to the petitioner the impugned order is premature, particularly when adjudication is pending pursuant to the show cause notice issued on 30-12-2009 before the third respondent and in any event there is no revenue loss to the Government since the petitioner has not utilised the credit accounted in the books. The proceedings issued under Notification No. 32/2006 is to be set aside as it is in violation of the principles of natural justice. 3.The respondents have filed counter affidavit conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conciled and there is no evidence to establish that the entries were made inadvertently. The wrong availment of cenvat credit twice on the same input invoices was admitted by the petitioner. The average rate of credit availed for the months of October, 2008 to December, 2008 also verified and the rate of credit availed in each month ranged between Rs. 2.00 to Rs. 3.50 crores only. But for the months of November and December, 2008 alone an alarming rate of Rs. 7.00 crores and Rs. 6.50 crores were taken as cenvat credit respectively, which is double the average level availed in any given month over the period of three years. The entire excise credit resulted in double credit transaction enumerated from their sister concern, which is also situated in the same premises. Therefore the petitioner's contention that double entry was made by oversight cannot be sustained and the credit availed was with intention and therefore the impugned order is sustainable in terms of Notification No. 32/2006. 4. A reply affidavit is filed by the petitioner company denying the averments made by the department in the counter affidavit. 5.Heard the learned counsel for the petitioner company and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime or subsequently, every removal of goods from his factory may be ordered to be under an invoice which shall be countersigned by the inspector of Central Excise or the Superintendent of Central Excise before the said goods are removed from the factory or warehouse. Explanation I It is clarified that a person against whom the order under sub-para (3) of para 4 has been passed may continue to take CENVAT credit; however, he would not be able to utilize the credit for payment of duty during the period specified in the said order." Procedures to be followed while deciding the matter under the circular reads as follows : "4. Procedure. (1) The commissioner of Central Excise or Additional Director General of Central Excise intelligence, as the case may be, after examination of records and other evidence, and after satisfying himself that the person has knowingly committed the offence as specified in para 1, may forward a proposal to the Chief Commissioner or Director General of Central Excise Intelligence, as the case may be, specifying the facilities to be withdrawn and restriction to be imposed and the period of such withdrawal or restrictions, within 30 days of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in future, to prevent duty evasion. Recording of reasons by the first respondent is based on facts after following the procedures mentioned in the notification. 11.In the unreported judgment of this Court in W.P. No. 4764 of 2010 dated 16-4-2010 (cited supra), in paragraphs 7 and 8 it is held as follows : "7. I agree with the submissions of the learned Standing Counsel appearing for the respondents. Notification No. 32/06 imposes restrictions on the facilities as regards payment of duty when the violations as regards removal of goods without payment of duty is done consciously. The Notification imposes restrictions on the payment of duty as well as on the availing of Cenvat credit on the stated circumstances of violation, such restrictions are imposed keeping in mind the need to protect the interest of the Revenue as well as to have a check on the breach of law consciously committed by an assessee, leading to evasion of duty; that restrictions imposed as to the payment of duty and availing of Cenvat credit would bring an erring assessee to comply with the provisions in accordance with law. The restrictions imposed are only for a restricted period of time. Given the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea of the petitioner, thereby dismissing the writ petition." 12. The decision cited by the learned counsel for the petitioner reported in 2009 (234) E.L.T. 578 (Bom.) (Hiren Aluminium Ltd. v. Union of India) is only against an interim order and the same cannot be treated as laying down the law. 13. The Supreme Court in the decision reported in 2009 (13) SCC 448 = 2009 (238) E.L.T. 3 (S.C.) (Union of India v. Rajasthan Spinning and Weaving Mills) considered the issue as to whether payment made by the assessee before show cause notice alter the liability to pay penalty. The said case arose with reference to Section 11A (Recovery of duties); Section 11AA (interest for the period from three months after determination of duty payable till the date of payment of duty); Section 11AB (interest for the period from the first day of the month succeeding the month in which duty was payable till the payment of duty); and Section 11AC (penalty for short levy or non-levy of duty) of the Central Excise Act, 1944. The Supreme court held that penalty as punishment for an act of deliberate deception by the assessee, with an intent to evade duty, will inevitably lead to imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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