2023 (3) TMI 436 - HC - Central Excise

Court overturns Committee's Sabka Viswas Scheme rejection, stresses importance of considering all facts before decisions.

M/s. Khanna Paper Mills Ltd. Versus Union Of India And Anr.

The court set aside the Designated Committee's order rejecting the petitioner's application under the Sabka Viswas Scheme, 2019, due to failure to ... Application filed under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 dismissed - applicants have submitted that they have reversed the CENVAT credit involved in the inputs used in manufacture of WIP goods alleged to have been destroyed in the fire - HELD THAT:- This order was passed on 14.11.2018 and the petitioner has reversed the CENVAT credit as is evident from the letter dated 06.01.2018 (Annexure P-8). Even though in the order dated 14.11.2018 (Annexure P-9) it has been observed that they have not disputed that the CENVAT credit has been reversed by the petitioner and even while passing this order, they are not disputing this fact. Since this fact was in the knowledge of the respondent while rejecting his application for remission and while passing order 14.11.2018 (Annexure P-9), even then in this order, it has been observed that the applicant did not give any detail of credit taken reversed and inputs used in the material with respect to which they have sought remission. The letter (Annexure P-8) was in the knowledge of the Department and reversal was made in the November-December 2016. There has been miscommunication and lack of knowledge since this reversal order was made in the year 2016 and information was sent in the year 2018 vide letter dated 06.01.2018 (Annexure P-8) by way of an application under the Scheme, but the Designated Committee has not considered this aspect while rejecting the application of the petitioner under the Scheme by taking into account that the CENVAT credit has been reversed and information has been sent to the Authorities vide Annexure P-8. The petition is allowed and order of the Designated Committee dt.11.04.2017 is being set aside and matter is remanded back to the Designated Committee to pass afresh order after examining the information that CENVAT credit has been reversed by the petitioner as is evident from letter dated 06.01.2018(Annexure P-8) and in this letter it was clearly mentioned that CENVAT credit was reversed in the year 2016. Petition allowed by way of remand. Issues:Seeking quashing of order under Sabka Viswas Scheme, 2019; Rejection of remission application; Reversal of CENVAT credit; Disputed facts in the order; Miscommunication and lack of knowledge; Remand for fresh order.Analysis:The petitioner, a factory registered under the Companies Act, 1956, sought to quash an order dismissing their application under the Sabka Viswas Scheme, 2019. The factory, previously registered under the Central Excise Act, 1944, manufactured paper products under Chapter 48 of the Central Excise Tariff Act, 1985. A fire incident in 2012 destroyed a significant quantity of material, leading to a remission application under Rule 21 of the Central Excise Rules, rejected in 2018. The petitioner contended that they had reversed CENVAT credit before the rejection, a fact not disputed by the respondents in their written statement.The court noted that the rejection order did not consider the petitioner's reversal of CENVAT credit, despite the information being provided to the authorities in 2018. The lack of consideration for this crucial fact led to the setting aside of the Designated Committee's order and a remand for a fresh decision. The court emphasized that the petitioner must be given a hearing and an opportunity to present original documents proving the reversal of CENVAT credit for remission of duty. The fresh order was to be passed within six weeks, ensuring compliance with the law.In conclusion, the judgment highlighted the importance of considering all relevant facts, such as the reversal of CENVAT credit, before making decisions under schemes like Sabka Viswas. The court's decision to remand the matter for a fresh order aimed to rectify the oversight in the initial rejection and provide the petitioner with a fair opportunity to present their case based on the documented reversal of CENVAT credit.