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TMI Blog2018 (11) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... nable. It is arbitrary exercise of power. It is not correct to argue that the dispute got settled in favour of the petitioner by virtue of an order of this Court and as a consequence a demand notice gets slapped on them. Such a preposition borders on absurdity. The recourse to Section 5-B of the Central Excise Act, 1944 by the respondents is not correct. At the material time, while the petitioner had contested the assessment by registering protest, the respondents endorsed the assessment that included the availment of modvat credit. Also the dispute in the pending court cases pertained to the dutiability of the final products and the availing of modvat credit was never in dispute during the pendencies. Therefore the plea on the principle of equity made by the respondents on the bar of limitation is misplaced. The modvat credit was availed during the period May, 1994 to March, 1995 - Even the Writ Petition was decided against the Department on 12.04.1999. The Show Cause Notice was issued on 11.10.2010. Therefore, the Show Cause Notice is hit by limitation also. The issue of Show Cause Notice No 34/2010 dated 11.10.2010 is arbitrary exercise of authority and hit by the bar of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal documents relating to the payment of duty were not produced and that the petitioner had already availed a credit of ₹ 14,34,493/- on the inputs used in the manufacture of final products for which refund claim is filed 6.In the intervening time, the impugned show cause notice dated 11.10.2010 came to be issued proposing to demand the modvat credit of ₹ 14,34,493/- on the ground that the final products cleared by the petitioner is not leviable to duty as held by this Court taking recourse to Rule 57 C of the Central Excise Rules, 1944. The non issue of notification contemplated under Section 5-B of the Central Excise Act, 1944 for non reversal of Modvat credit was also cited as a ground for the demand. The proviso to Section 5-B regarding the non applicability of notification for refund cases even when a notification is issued, was also quoted in the notice. 7.The petitioner contends that the impugned show cause notice is without jurisdiction, opposed to Central Excise Act and Rules and is totally barred by limitation and is arbitrary and therefore liable to be quashed as there is no efficacious alternate remedy on the following grounds. (i)The respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere not entitled to take modvat credit on any inputs used in the manufacture of non excisable goods and therefore the issue of show cause notice is in accordance with Rule 57-C read with Rule 57-I of the erstwhile Central Excise Rules, 1944. It was also submitted that by virtue of Section 5-B of the Central Excise Act, 1944, when the petitioner had not voluntarily reversed the credit in the contemplated circumstances, the same can be recovered under the provisions of Section 11-A and Section 11-AB of the Central Excise Act, 1944. 10.The respondents submit that the question of limitation raised by the petitioner is not maintainable by the principle of equity since the petitioner had also filed refund after a period of 14 years as they were also party to the litigation until the issue of final order dated 27.04.2010 by the Hon'ble High Court in the Writ Appeal. The respondents specifically denied that the proposal to adjust the modvat credit demanded in the impugned show cause notice against the refund claim filed by the petitioner. Certain averments regarding the eligibility of the refund claim and its admissibility were also made by the respondents. 11.Heard the counsels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availed and allowed the same from time to time. That is the slated position of the Department atleast until the order in Writ Appeal was passed by this Hon'ble Court. The Department had objection to the availing of modvat credit only after filing the refund claim by the petitioner on 29.12.2009 resubmitted again on 29.03.2010. Therefore, the credit is not wrongfully availed. In other words, the modvat credit was rightfully availed during the material time but became ineligible, as the final products were held to be non excisable at a distant date by this Hon'ble Court. 15.In the peculiar circumstances of the case, the question of demanding modvat credit availed is not tenable. It is arbitrary exercise of power. It is not correct to argue that the dispute got settled in favour of the petitioner by virtue of an order of this Court and as a consequence a demand notice gets slapped on them. Such a preposition borders on absurdity. The recourse to Section 5-B of the Central Excise Act, 1944 by the respondents is not correct. As rightly pointed out by the petitioner, Section 5-B of the Central Excise Act, 1944 is an enabling provision empowering the Government to issue notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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