TaxTMI 
TaxTMI 
2010 (8) TMI 304
X X X X Extracts X X X X
X X X X Extracts X X X X
....pondents to restore the facility under Rule 8(1) of the Central Excise Rules, 2002. 3. YOUR Lordship may please to direct the Respondents to allow the Petitioner to pay of excise duty by utilization of Cenvat Credit as provided under Rule 3(4) of the Cenvat Credit Rules, 2004." 2. The petitioner, a public limited company, is engaged in the activity of manufacturing Mild Steel Bars (MS Bars) for which the main raw material is Mild Steel Ingots (MS Ingots), Billets. The raw material is obtained from various suppliers by availing CENVAT Credit facility and the CENVAT Credit is, in turn, utilized towards payment of excise duty against the finished goods. The petitioner's unit from the very inception in January, 2007 has been regularly availing the facilities as provided under Rule 8(1) of the Central Excise Rules, 2002 (C.E. Rules) and utilizing the same towards payment of excise duty on a monthly basis under Rule 3(4) of the Cenvat Credit Rules, 2004 (C.C. Rules). On 3rd/4th April, 2009, officers of the Vapi Commissionerate visited the factory premises of the petitioner and drew up a panchnama recording shortage of raw materials and fini....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eply on 27th January, 2010 stating that the action was premature and that the provisions of Rules 12CC and 12AA had wrongly been invoked. Vide communication dated 30th June, 2010 of the Superintendent of Central Excise, which referred to Order No. 29/2010-M dated 28th June, 2010 issued by Member (Central Excise), Central Board of Excise and Customs, the petitioner was asked to strictly adhere to the said order and to take the four matters enumerated therein in its day-to-day working with effect from 1st July, 2010. A copy of the order was also annexed with the communication. Being aggrieved by the order dated 28th June, 2010 made by the Member (Central Excise), Central Board of Excise and Customs, the petitioner has moved the present petition challenging the same. 4.On 14th July, 2010, the Court had made an order in the following terms : - "(1) Heard learned Senior Advocate appearing on behalf of the Petitioners. (2) The main grievance ventilated is that the Chief Commissioner has only forwarded the proposal received from the first authority to the Board but has not forwarded his recommendations along with the proposal, as contemplated under the Rules because t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ra 1, to forward a proposal to the Chief Commissioner or Director General of Central Excise Intelligence, as the case may be, specifying the facilities to be withdrawn and restrictions to be imposed and the period of such withdrawal or restrictions, within 30 days of the detection of the case, as far as possible. It was strenuously argued that the search was conducted on 3rd December, 2009 whereas the proposal was forwarded on 7th January, 2010 which is beyond the period of 30 days prescribed under subject notification. The learned counsel invited the attention of the Court to Circular No. 224/40/2006-CX.6 dated 30th December, 2006, pertaining to "Measures to provide deterrence for tax evaders in the manufacturing sector". Referring to paragraph 2.7 thereof, it was submitted that under the said Circular the Chief Commissioner is required to forward comprehensive proposal to the Member (Central Excise) within 20 days of the receipt of the proposal, along with the copy of the record of personal hearing conducted by the Chief Commissioner whereas in the facts of the present case, though the proposal was received by the Chief Commissioner on 11th January, 2010, the Chief Commissioner h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....learned Senior Standing Counsel appearing on behalf of the respondents opposed the petition and reiterated the averments made in the affidavit-in-reply. It was submitted that rule 12CC of the C.E. Rules deals with evasion of central excise duty whereas rule 12AA of the C.C. Rules deals with the misuse of cenvat credit and that the petitioner has violated the provisions of both the rules. Inviting attention to the first paragraph of the subject notification, it was submitted that the same only stipulates that when any manufacturer is prima facie found to be knowingly involved in committing the offence in clauses (a) to (f) thereof, then the restrictions stipulated in Para 2 of the notification can be imposed. In this case the petitioner is found to be involved in the offence described under Para 1 (a) of the subject notification, viz., removal of goods without the cover of any invoice and without payment of duty and as such the restrictions have rightly been imposed on the petitioner. Dealing with the contention as regards delay at both stages, viz., in forwarding the proposal as well as the recommendations, it was submitted that in the light of the provisions of Para 4 of the notif....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d advocates for the parties, it is apparent that the principal contentions raised on behalf of the petitioner are: (i) the procedure as required under the subject notification has not been followed; (ii) there has been delay at both stages, firstly while forwarding of the proposal from the first authority to the Chief Commissioner and secondly while forwarding the recommendations from the Chief Commissioner to the Member; (iii) that the offence alleged against the petitioner is under paragraph 1(a) of the subject notification and that there is no allegation as regards mis-utilization of cenvat credit hence, in absence of any contravention of the cenvat credit rules, or mis-utilization of the facilities under the cenvat credit rules, it was not permissible for the Board to place restrictions against utilization of cenvat credit under rule 3(4) of the C.C. Rules; (iv) in the light of the of the contents of Para 3 of the Circular dated 30th December, 2006, the provisions of the subject notification would be applicable only if the evasion is of more than Rs. 10 lakhs. That, till the first two requirements are satisfied, namely that there is a case of evasion and mis-utilization and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ember, this prescription is found in the Circular dated 30th December, 2006 which is more in the nature of procedural guidelines/administrative instructions and in absence of any prescription in the parent notification, cannot be termed as mandatory. In the circumstances, it is not possible to state that the delay of one day in forwarding the comprehensive proposal would vitiate the entire proceedings. 12. As recorded in the above referred order dated 14th July, 2007 made by this Court at the time of issuance of notice in the matter, the main grievance ventilated was that the Chief Commissioner had only forwarded the proposal received from the first authority to the Board but had not forwarded his recommendations along with the proposal. In this regard, a perusal of the averments made in paragraph 4.1 of the affidavit-in-reply along with the annexures thereto indicates that the Chief Commissioner had vide letter No. F. No. IV/16-4/CCO/T/2010/544 dated 3-2-2010 forwarded the proposal to the respondent No. 1 Board, along with the proposal in the prescribed format, submissions of the assessee dated 27-1-2010, report dated 6-1-2010 of the Commissioner of Central Excise Vapi an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt at the time of removal of goods; (ii) payment of duty by utilisation of CENVAT credit may be restricted and the assessee shall be required to pay excise duty without utilising the CENVAT credit:" 14. Thus, Para 1 of the subject notification provides for withdrawal of the facilities or impositions of the restrictions as provided under Para 2 thereof by an officer authorised by the Board, in case a manufacturer, first stage or second stage dealer, or an exporter including merchant exporter is prima facie found to be knowingly involved in any of the circumstances stipulated thereunder. Para 1 does not specify that in case of involvement in a particular offence enumerated thereunder, the consequence would be under a particular clause of Para 2. In other words, Para 1 of the subject notification does not lay down that in respect of involvement in an offence under the C.E. Rules, the facilities withdrawn or restrictions imposed will be in terms of sub-para (i) of Para 2 and in case of involvement in an offence under the C.C. Rules, the facilities withdrawn and restrictions imposed will be in terms of sub-para (ii) of Para 2 of the subject notification. Thus, on a pla....