2015 (11) TMI 149 - HC - Central Excise

Settlement Commission order upheld, Commissionerate's petition dismissed. Diligence and timely action crucial.

The court dismissed the writ petition filed by the Commissionerate of Central Excise and the Director of Revenue Intelligence challenging the Settlement ... Denial of recovery of CENVAT credit - misdeclaration of goods - petitioners case is that the raw material whether imported or procured locally for manufacture of PVC compound was sold by respondent no. 1 in the local market. The containers meant for export, when physically examined were found to contain Fly Ash and not PVC compound - Held that:- Petitioners did not examine the order of the Settlement Commission and whether or not the respondent no. 1 had taken CENVAT benefit or passed on the CENVAT benfit to the extent of ₹ 35,19,040/-. In the first place, the figure of ₹ 61,32,963/- should not have been mentioned in the prayer clause as the Settlement Commission itself had directed refund of ₹ 26,13,923/- with interest and the said amount stands deposited. It shows non-application of mind on the part of the petitioners when they filed the present writ petition. - there is no prayer in the writ petition for enhancement of rate of interest or penalty etc.. The petitioners had opportunity and could have even moved an amendment application, but no steps have been taken. - Decided against Revenue. Issues involved:1. Challenge to the order of the Settlement Commission regarding denial of recovery of CENVAT credit.2. Dispute over the utilization of CENVAT credit by the respondent.3. Question of excise duty liability based on the manufacturing of PVC compound.4. Petitioners' failure to clarify the CENVAT credit utilization and subsequent rejection by Central Excise authorities.5. Imposition of interest and penalty on the respondent.6. Consideration of penalty enhancement and dismissal of the writ petition.Issue 1: The Commissionerate of Central Excise and the Director of Revenue Intelligence challenged the Settlement Commission's order denying the recovery of CENVAT credit amounting to Rs. 61,32,963. The petition sought to set aside the order and direct the respondent to pay the disputed amount along with interest. The core contention revolved around the misuse of CENVAT credit by the respondent.Issue 2: The petitioners contended that the respondent did not manufacture PVC compound as claimed, leading to a dispute over the utilization of CENVAT credit. Despite the respondent's acceptance of fault, discrepancies arose regarding the actual use of the credit and the subsequent payment directed by the Settlement Commission.Issue 3: The court examined whether excise duty liability existed based on the manufacturing activities of the respondent concerning PVC compound. The petitioners argued that since no PVC compound was manufactured, excise duty should not be applicable, thereby impacting the utilization of CENVAT credit.Issue 4: The petitioners failed to provide a clear clarification on the CENVAT credit utilization, leading to rejection by Central Excise authorities. The court highlighted the importance of thoroughly examining the Settlement Commission's order before filing the writ petition to avoid such discrepancies.Issue 5: The respondent was directed to pay a substantial amount along with interest and a penalty, raising concerns over the adequacy of the penalty imposed. However, the court declined to enhance the penalty, emphasizing the need for timely and appropriate legal actions by the petitioners.Issue 6: After a prolonged period of litigation, the court dismissed the writ petition, citing the petitioners' failure to address the errors in the prayer clause and take necessary steps promptly. The judgment emphasized the importance of diligence and legal strategy in pursuing legal remedies effectively.