2010 (10) TMI 310

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....rawing facility of paying excise duty on monthly basis and also stopping utilization of Cenvat Credit under the Cenvat Credit Rules, 2004 apart from taking other actions. 2. Case of the petitioner is that a search was conducted on the premises of the petitioner by the Directorate General of Central Excise (DGCEI) on 3-12-2009. It was alleged by a Show Cause Notice dated 8-4-2010 that the petitioner was found engaged in evasion of Central Excise Duty by way of clandestine manufacture of goods, as goods worth Rs. 59 lacs were found unaccounted for in the records. The goods seized were released against a bond of the value of goods and bank guarantee for 25% of the value of the goods. Further Show Cause Notice dated 1-6-2010 was issued ....

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....ted in penal action; (vi)   Under any fair procedure, penal action should succeed and not precede adjudication of fault; (vii)  There is also mechanism for post-decisional hearing and restoring the loss suffered in case a person is found to be innocent. 4. In the reply filed, the impugned Rule as well as the impugned action have been defended by submitting that provision for preventive action was necessary to adjudicate evasion and to act as a deterrent for evaders. The action is permitted only when there was massive evasion of more than Rs. 10 lacs. The power was conferred on the members of the Board of Central Excise and Customs. As regards the impugned order, it has been stated that as a result of search, fol....

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....h it may not be necessary to go into other questions, since the question of validity and scope of Rule 12CC of the 2002 Rules are being repeatedly raised, we consider it appropriate to deal with certain aspects. The impugned provision was upheld by Gujarat High Court in Dhariyal Chemicals v. Union of India - 2009 (234) E.L.T. 208 (Guj.) on the ground that summary power under the Rules will act as a deterrent against tax evaders by withdrawal of facilities. The power provided thereunder had nexus with the object, in view of monetary limit, restricting action only against a specified class where evasion is of higher magnitude or more than Rs. 10 lacs. It was further observed that exercise of power was permissible by complying with principles ....