TaxTMI 
TaxTMI 
2009 (1) TMI 51
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....g 76 of the Central Excise Tariff Act, 1985. 3. On 17/18th July, 2008 the factory premises of the petitioner was visited by the Officers of the Central Excise department wherein various records were withdrawn under a panchanama and statements of several employees of the petitioner were recorded. 4. On the basis of the said documents and the statements recorded, the excise officers were of the prima facie opinion that the petitioner had grossly undervalued the assessable value of the aluminium conductors manufactured and sold by them by showing lesser sale price and highly inflated freight charges. It was noticed that the declared sale price of the final product was less than the cost of production and the freight charges recovered by the petitioner was far in excess of the actual freight paid. Since the freight charges are not includible in the assessable value, the excise officers were of the prima facie opinion that the petitioner had attempted to evade duty by recovering part of the sale price as freight charges. 5. The excise officers were also of the prima facie opinion that the petitioner had wrongfully availed Cenvat credit of Rs.1.59 crores by claiming that they ha....
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....Central Excise Act, 1944 because the said Rules are framed far in excess of the power conferred upon the Central Government under the Central Excise Act, 1944. He submitted that in the guise of regulating the provisions relating to the Cenvat credit, the Central Government cannot deny utilisation of the credit that too before completion of the investigation. In this connection, he relied upon the Judgment of the Apex Court in the case of Kunj Beharilal v. State of Himachal Pradesh reported in 2000 (3) S.C.C. 40. 11. As regards the allegation of undervaluation, Mr. Shreedharan submitted that the sale price received as well as the freight charges recovered have been properly recorded in the books of accounts maintained by the petitioner and, therefore, it cannot be inferred that the freight charges recovered by the petitioner includes sale price so as to constitute violation of the condition set out in Notification No.32 of 2006 dated 30-12-2006. As regards the allegation of wrongfully availing the Cenvat credit, Mr. Shreedharan submitted that it is not in dispute that JSK Industries has in fact paid excise duty of Rs.1.59 crores on aluminium stranding wires manufactured by them and....
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.... investigation and the issuance of the show cause notice is totally premature and ought not to be entertained. He submitted that there is enough evidence on record to form a prima facie opinion that the petitioner had attempted to evade duty to the tune of Rs.2 crores and had wrongfully availed Cenvat credit of Rs.1.59 crores on inputs without actually receiving the inputs. In these circumstances pending investigation the member, CBEC is justified in passing the impugned order in exercise of the powers conferred under the impugned rules. After six months period is over the petitioner is entitled to utilise the accumulated credit and, therefore, no fault can be found with the impugned order. 15. Mr.Sethna submitted that the validity of the impugned Rules have already been upheld by the Gujarat High Court in its Judgment delivered on 11-7-2008 in the case of Dhariyal Chemicals v. Union of India in Spl. C.A. No.5769 of 2008 (unreported)[Since reported in 2009 (234) E.L.T. 208(Guj.)]. Hence there is no merit in the challenge to the validity of the impugned Rules. 16. Mr. Sethna submitted that the petitioner had attempted to evade duty is evidenced from the fact that the assessa....
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....n of investigation and even before issuance of a show cause notice can be said to be a rule framed for implementing the provisions of the Central Excise Act? Whether denying the right of a manufacturer to utilise the credit of duty paid on inputs under the impugned rules amounts to imposing penalty even before adjudication? Can penalty be imposed on a manufacturer even before he is found to be guilty in the adjudication proceedings? Can it be said that the manufacturers who are prima facie found to have attempted to evade duty form a separate class so that they can be penalised even before adjudication? 20. Restraining a manufacturer from utilising the Cenvat credit has serious civil consequences, because where a manufacturer purchases duty paid inputs and utilises the same in the manufacture of final product, then the said manufacturer under the Central Excise law is entitled to take credit of duty paid on the inputs and utilise the same in payment of excise duty payable on the final product. To illustrate, if Rs.100/- is the duty paid on the inputs, then the manufacturer of the final product, who purchases such duty paid inputs is entitled to take credit of Rs.100/-. If the exci....