^ l' }• /y IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR WRIT PETITION ( Cl NQ. \^5 QF 2010 PETITIONER Aps^ ^y/ \%€/ o^\^y ^•••'A?V\'^•'' ^w v~ ^y ft-y M/s.Phil Ispat Private Lim d, A Company registered under Companies Act, 1956 having it's plaee of business at Vill:Dighora, Medpar Chhota, PO:Muru P.S:Takhatpur, Chhatishgarh 495220 represented through its Director Shri Nimish Kumar Bhojani, S/o Late Chunnilal Thacker, aged about 47 Years who is a citizen of India. RESPQNDENTS :- 1. VERSUS Union of India, Secretary, Through the Ministry of Finance Department of Revenue North Block, New Delhi - 110 001 The Member (Central Excise) Central Board of Excise & Customs, Govt. of India, Ministry of Finance, Department of Revenue, New Delhi 110 001 /" 3- The ChiefCommissioiner, Customs & Central Excise(Bhopal Zone), 48, Administrative Area, Arera Hills, Hoshangabad,Road, Bhopal - 462 011, Madhya Pradesh. 4. The Commissioner, Central Excise & Customs, Central Excise Building, Dhamtari Road, Tikrapara, Raipur, Chhattisgarh. 1-- =.^,' WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA FORISSUANCE OF WRITfS),ORDERfSVAND DIRECTIONfS) ETC. 1 ] PARTIGULARS OF TH E PETITION ER: - >is^ (^ /^° ^Y HIGH COURT OF CHHATTISGARH AT BILASPUR Djyision Bench: Hon'bleShn Dhlrendra MIshra& Hoji'bieSJirLR^LChahdrakarLJJ. Writ_PetitLon_(C)JMa1J45 of2Q1Q PETITIONER: M/s Phil Ispat Private Limited Versus RESPONDENTS: Union of India and others ORDER FOR CONSIDERATION HON'BLE SHRI R.N. CHANDRAKAR, J Sd/- Dhirendra Mishra Judge <x.<i^-ueA— "(f " Sd/- R.N. Chandrakar — Judge .^ - -^ POST FOR ORDER ON 13 OCTOBER, 2010 Sd/- DbirendraMishr. Judge ^St.; HIGH COURT OF CHHATTISGARH AT BILASPUR Division Bench: Hon'ble Shri Dhirendra Mishra SB Hon'ble Shri R.N. Chandrakar. JJ. Writ Pedtion (0 No. 1245 of2010 PETITIONER: M/s Phil Ispat Private Limited, A company registered under Companies Act, 1956, having its place of business at Vill. Dighora, Medpar Chhota, PO Mum, PS Takhatpur, Chhattisgarh, 495220 represented through its Director Shri Nimish Kumar Bhojani, S/o Late Chunnilal Thacker, aged about 47 years, who is a citizen of India. Versus RESPONDENTS: Union of India, Secretary, Through the Ministiy of Finance Department of Revenue North Block, New Delhi 110 001 The Member (Central Excise) Central Board of Excise 85 Customs, Govt. of India, Ministry of Finance, Department ofRevenue, New Delhi 110 001. The Chief Commissioner, Customs 8s Central Excise (Bhopal Zone), 48, Administrative Area, Arera Hills, Hoshangabad, Road, Bhopal - 462 011, Madhya Pradesh. The Commissioner, Central Excise & Customs, Central Excise Building, Dhamtari Road, Tikrapara, Raipur, Chhattisgarh. Present: Shri Kartik Kurmy with Shri Dharmesh Shrivastava, counsel for the petitioner. Shri Bhishma Kinger, counsel for the responderits. Cc/ ff~). ^ ER (Passed on (3'''0ctober, 2010) The following order of the Court was passed by Dhirendra Mishra, J. 1. Briefly stated facts of the case are that the petitioner is engaged in the manufacture of Sponge Iron falling under Chapter-72 of the Central Excise Tariff. Assessee's preraises was searched on 31st July, 2009 by the officers of the Raipur Central Excise Commissionerate and incrimiAating docunients revealing clearance of finished goods clandestinely without payment of duty, were recovered. Evasion of duty of Rs. 13.6 lakh was estimated. The assessee deposited the entire amount voluntarily towards duty liability. The Chief Commissioner, considering that removal of goods without cover of an invoice and without payment of duty which constitute an offence under Clause (a) of Para-1 of the Notification No.32/2006 C.E. (NT) dated 30.12.2006 (hereinafter referred to as "the Notification"), sent a proposal to the Central Board of Excise and Customs (for brevity "the Board") recommending imposition of certain restrictions under the Notification and in pursuance thereof, the Board passed the impugned order ofAnnexure P/3. 2. The petitioner has impugned the constitutional validity of Section 37 of the Central Excise Act, 1944 (Annexure P/2) on the ground that it suffers frora the vice of excessive delegation. The petitioner Uas also impugned Rule 12CC of the Central Excise Rules, 2002, Rule 12AA of the Cenvat Credit Rules, 2004 as well as the Notification (Annexure P/2) on the ground that they are ultra vires to the Central Excise Act, 1944, and prayed for appropriate . direction to quash the order dated 4.1.2010 (Annexure P/3) by declaring the same as void and inoperative. ir' ^<-f ^ 3. Section 37 ofthe Central Excise Act, 1944 (in short "the Act, 1944") empowers the Central Government to niake rules to cany into effect the purposes of the Act. Without prejudice to the generality of the powers under sub-section (1), Section 37 deals with particular objects/conditions mentioned therein for which the rules may be made. /• 4. The Central Government in exercise of powers under Section 37 of the Act, 1944, made Central Excise Rules, 2002. Cenvat Credit Rules, 2004 have also been made in exercise of powers conferred under Section 37 of the Act, 1944 and Section 94 of the Finance Act, 1994 in supersession ofthe Cenvat Credit Rules, 2002 and the Service Tax Credit Rules, 2002. 5. Rule 12CC ofthe Rules, 2002 empowers the Central Govemment to issue notification in the official Gazette specifying the nature of restrictions, including suspension of registration in case of a dealer, type of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board, to prevent the evasion and default in payment of excise duty. Rule 12AA of the Rules, 2004 also empowers the Central Govemment to issue nodfication in the official Gazette specifying the nature of- restrictions, including restrictions on utilization of &- Cenvat credit and suspension of registration in case of a dealer and type of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board, in order to prevent misuse of the provisions of Cenvat credit as specified in these rules. w 6. The Central Governinent vide NotiEcation issued under Rule 12CC of the Rules, 2002 and Rule 12AA of the Rules, 2004, notified and declared that where the inanufacturer, first stage or second stage dealer or an exporter, including a merchant exporter, is prima facie found to be knowingly involved in any of the offences mentioned in Clause (1) of the Notification, the Board is empowered to withdraw the facilities and impose restrictions detailed in Clause (2). Clause (3) prescribes monetary limit of duty or Cenvat credit evasion of inore than Rs.IO lakh, for application of the Notification, and Clause (4) prescribes the procedure to be followed to proceed under the Notification. 7. At the outset, Shri Bhishma Kinger, learned counsel for the respondent, submitted that in W.P.(c) No.2696/10, M/s Rajat Ispat Pvt. Ltd. Vs. Union of India & others, the petitioner had challenged the constitutional validity of Section 37 of the Act, 1944; Rule 12CC of the Rules 2002; Rule 12AA of the Rules, 2004 and the Notification dated 30th December, 2006, and the same has been dismissed by this Court by a detailed order dated 9th September, 2010 and their constitutional validity has been upheld. 8. The above fact is not disputed by learned counsel appearing for the petitioner. 9. After hearing learned counsel for the petitioner and after carefully examining the grounds taken by the petitioner in the writ petition and going through the order p'assed by this Court in M/s Rajat Ispat Pvt. Ltd. (supra), we are of the opinion that this Court after considering the similar grounds raised in that petition, has dismissed the petidon and upheld the constitutional validity of the impugned provisions. No new ground has been urged by learned counsel for the petitioner herein for re-consideradon of the issue and therefore, agreeing with the order passed by this Court in M/s Rajat Ispat Pvt. Ltd., challenge to the constitutional validity of Section 37 of the Act, 1944; Rule 12CC of the Rules 2002; Rule 12AA of the Rules, 2004 and the Notification dated 30th December, 2006, is rejected. . lO.The petitioner has also challenged the order of Annexure P/3 whereby the facility of monthly payment of excise duty of the petitioner under Rule 8(1) of the Rules, 2002 has been withdrawn and the assessee is required to pay excise duty for each consignment at the time of removal of the goods with effect from 11.1.2010 to 31.3.2010. Similariy, payment of excise duty by utilization of Cenvat credit as provided under Rule 3(4) of the Rules, 2004 has been ordered to be stopped w.e.f. 11.1.2010 to 31.3.2010 and the assessee is required to pay excise duty without utilizing Cenvat credit. However, he has been permitted to take Cenvat credit on goods received at the respective factories during this period, which can be utilized for payment of duty on goods cleared from the respective factories after the aforesaid period is over. The assessee has been further directed to maintain the record of receipt, disposal, consumption and inventory of the principal inputs on which Cenvat credit has not been taken w.e.f. 11.1.2010 to 28.2.2010. It has been specifically mentioned in the order that the assessee will intimate the jurisdictional Superintendent of Central Excise within twenty four hours of the receipt of principal inputs in the factory on which Cenvat credit has or has not been taken and the same should be kept available for verification for fhe next 48 !! »?r hours. This restriction will be applicable for the period from 11.1.2010 to 28.2.2010. The assessee has also been informed that if they clear the goods in violation of the above mentioned restrictions, the said goods shall be treated as having been cleared in contravention of the provisions of Rule 12CC of the Central Excise Rules, 2002 and necessary action as provided in the law in this regard would be taken. ll.Learned counsel for the pedtioner has challenged the order of Annexure P/3 on the ground that restriction of payment of duty consignment-wise and restriction of utilization of Cenvat credit has been imposed by the impugned order contrary to the provisions of Para-2 of the iinpugned Notification. Under the Notification, both the benefits/facilities can be resta-icted only in case of second or subsequent offence, which is not the case here, hence both the restrictions for the first time offender are contrary to the proviso to Para-2 of the impugned Notification and as such, without authority of law. 12. From perusal of the impugned order of Annexure P/3, it is clear and not disputed that a show-cause notice dated 12th August, 2009 was issued to the assessee by the Chief Commissioner in terms of Para-4 of the impugned Notification, cleariy stating that the petitioner has indulged in clandestine removal of excisable goods under the cover of parallel set of invoices/without cover of Central excise invoices and without payment of Central Excise duty amounting to Rs.13,58,026/- and thereby evaded fhe above duty, which is inore than Rs.IO lakh. The notice also mentions the proposed restrictions on the facilities that are to be imposed. The assessee was called upon to make representation against the [y proposed action within seven days and he was further afforded an opportunity of personal hearing, and the matter was fbced on 28th August, 2009. However, the petitioner did not appear for personal hearing before the Chief Commissioner and the Chief Commissioner was intimated through Pax that the amount of duty of Rs. 13.58 lakh has been deposited by them and they requested for soft view in the matter. 13. We find no merit in the contention of the petitioner that under proviso to Clause (3) of the Notification only one of the restrictions mentioned under Clause (2) could be imposed on the petifioner. The restrictions have been imposed for a specified period i.e. from 11.1.2010 to 31.3.2010 under Para 6(i) and (ii) of the impugned order, and for a period commencing from 11.1.2010 to 28.2.2010 under 6(iii) & (iv) of the above order. The said period has already corae to an end. Thus, considering the entire facts and circumstances of the case, including the fact that there is no dispute about duty evasion and that the petitioner did not specifically object before the Chief Commissioner against the proposed restrictions and also did not participate in personal hearing, we are of the opinion that no interference is called for in the impugned order of Annexure P/3. Accordingly, the petition is dismissed. Sd/- Dhirendra Mishra Judge Sd/- R.N. Chandrakar Judge Khan