Court quashes show cause notice, directs LTU inclusion for all petitioner's units, emphasizing scheme's facilitative nature

The court quashed the show cause notice and directed the LTU to include all of the petitioner's units under the LTU scheme since inception, emphasizing the scheme's facilitative nature and the need for discretion in such matters. The court asserted jurisdiction to entertain the Writ Petition, highlighting the proactive role required of the Chief Commissioner in resolving issues and ensuring all units are governed by the LTU scheme from the beginning.

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Issues Involved:
1. Validity of letters and show cause notice issued by the Dy. Commissioner of Central Excise and Service Tax regarding the inclusion of certain units under the LTU scheme.
2. Eligibility of the petitioner's additional units for inclusion under the LTU scheme.
3. Jurisdiction of the Court to entertain the Writ Petition.

Issue-wise Detailed Analysis:

1. Validity of Letters and Show Cause Notice:
The petitioner company sought to quash and set aside letters dated 14/10/2009 and 13/8/2010, as well as a show cause notice dated 4/2/2010, issued by the Dy. Commissioner of Central Excise and Service Tax. These communications held that three manufacturing units and one trading unit of the petitioner were not covered under the LTU scheme. The court noted that the petitioner had filed its consent for LTU registration on 17/3/2006, and the Chief Commissioner of Central Excise, LTU, had accepted this consent on 11/6/2008 without further verification. The petitioner subsequently set up additional units, which it believed were covered under the LTU scheme. However, the respondents issued show cause notices disallowing Cenvat credit for these units, arguing that they were not part of the original consent.

2. Eligibility of Additional Units for LTU Scheme:
The petitioner argued that the additional units should be deemed part of the LTU from the original date of acceptance, citing continuous communication and transactions with LTU authorities. The court observed that the petitioner had informed the LTU about the new units and had engaged in transactions under the LTU scheme, including transferring credit and clearing exports. The court held that the refusal to include the new units in the LTU scheme was a hyper-technical approach and that the procedural flaw was curable. The court emphasized that the LTU scheme was intended to facilitate trade and boost industrial development, and the Chief Commissioner should have used discretion in favor of the petitioner.

3. Jurisdiction of the Court:
The respondents contended that the court had no jurisdiction to entertain the Writ Petition. The court rejected this argument, noting that the unit in question was situated in Nashik, Maharashtra, within its jurisdiction. The court held that the LTU, Delhi's actions, including the issuance of the show cause notice to the Nashik unit, fell within its jurisdiction. The court also noted that the LTU policy required the Chief Commissioner to play a proactive role in solving initial stage problems, and thus, all units must be considered governed by the LTU scheme since inception.

Conclusion:
The court quashed the show cause notice dated 4/2/2010 and directed the LTU, Delhi, to allow the benefit of the LTU scheme to all the petitioner's units since inception. The court made the rule absolute with no order as to costs.

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