2009 (8) TMI 327 - HC - Central Excise

Court Upholds Withdrawal of Facilities for Excise Duty Evasion

The court upheld the withdrawal of facilities for evasion of excise duty under Rule 12CC and Rule 12AA, dismissing the petition and emphasizing the ... Cenvat Credit- Clandestine removal of goods- Notification No. 32/2006-CE(NT)- in this case it was revealed on investigation that the vehicle was being used for clandestine removal of the goods without an invoice and without payment of duty. Stock taking of finished goods and raw material revealed shortage of goods, on which cenvat credit has been taken. Thus, under Notification No. 32/2006-CE(NT), dated 30.12.2006 order was issued for withdrawal of facility to the assessee of monthly payment of excise duty by utilization of cenvat credit for six months. Petitioner filed writ petition. Held that- on the basis of the statement made by driver of vehicle, the manager, authorized signatory of assessee, clearly admitted that the shortage detected in the stock had accrued due to the clearance of goods/material without issuing invoices and without payment of central excise duty. Thus this petition fails and is hereby dismissed. Issues:Withdrawal of facilities for evasion of excise duty based on Central Excise Rules and CENVAT Credit Rules.Analysis:The judgment deals with the withdrawal of facilities for evasion of excise duty by a petitioner under Rule 12CC of the Central Excise Rules, 2002, and Rule 12AA of the CENVAT Credit Rules, 2004. The Central Government issued Notification No. 32/2006-CE(NT) to specify measures against tax evaders, allowing withdrawal of facilities or imposing restrictions. The petitioner faced withdrawal of the facility of monthly payment of excise duty and CENVAT credit utilization for six months due to unauthorized removal of goods without payment of duty. The order was based on findings of the Anti Evasion Branch, revealing evasion and shortages. The petitioner challenged the withdrawal through a writ petition.The court noted that the incident of goods removal without payment of duty was supported by statements of involved individuals. The petitioner's manager and director admitted to the unauthorized removal of goods without duty payment. The court found the case fell under Rule 12CC and Rule 12AA, justifying the withdrawal of facilities as a deterrence measure against duty evasion. The court upheld the impugned order as the authorized officer had the power to withdraw facilities under the relevant notification. The petitioner did not challenge the rules or notification during the hearing, and no other points were raised for consideration.In conclusion, the court dismissed the petition without costs, upholding the withdrawal of facilities for evasion of excise duty as per the provisions of Rule 12CC and Rule 12AA. The judgment emphasizes the authority of the Central Government to take preventive measures against tax evasion and misuse of CENVAT credit, ensuring compliance with excise duty regulations and deterring unauthorized activities in the industry.