Excise & Customs : When there are no changes in circumstances, either factual or legal, it would not be open to department to upset apple-cart and come to a new conclusion; therefore, department cannot be permitted to take different stands, unless there are good and cogent reasons for a change in future
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[2014] 52 taxmann.com 343 (Madras)
HIGH COURT OF MADRAS
Kothari Petrochemicals Ltd.
v.
Union of India, Ministry of Finance (Department of Revenue)*
V. RAMASUBRAMANIAN, J.
WRIT PETITION NO. 34636 OF 2013
M.P. NOS. 1 & 2 OF 2013
SEPTEMBER 24, 2014
Rule 6, read with rule 2(d) and 2(e), of the Cenvat Credit Rules, 2004 and section 5A of the Central Excise Act, 1944 - CENVAT Credit - Exempted and dutiable goods or exempted and taxable services, obligation of assessee - Assessee purchased 'Poly Butylene Feed Stock (PBFS)' from CNPL for use in manufacture of Poly Iso Butylene and returned back remnants (83 per cent of input) to CNPL, claiming exemption under Notifications/Orders, dated 17-7-1989, 24-6-1994, 24-3-1995, 1-3-2006 and 17-3-2012 over more than 23 years - Department issued show-cause notice demanding payment under Cenvat rule 6 on ground that assessee was manufacturing dutiable as well as exempted goods and was not maintaining separate records and was therefore, liable to make reversal - HELD : Since exemption was operative for more than 23 years and there was no such objection and even Government of India was fully aware of nature of exemption, manufacturing process and assessee's entitlement, hence, department was bound by exemption notification - Since there was no change in facts and circumstances over so many years, department could not come to different conclusion - Impugned notice had effect of destroying exemption itself - Hence, impugned notice was without jurisdiction and was abuse of process of law and was set aside [Paras 21 to 40] [In favour of assessee]
Article 226 of the Constitution of India - Writ Petition - Alternative Remedy - Normally writ Court would not interfere at stage of show-cause notice i.e., abstinence from interference is a normal rule - However, there are two exceptions : (1) where show-cause notice is issued without jurisdiction; and (2) where it is an abuse of process of law; in said two exceptional cases, writ petition is maintainable against show-cause notice [Para 19] [In favour of assessee]
Section 11A, read with section 33A, of the Central Excise Act, 1944, section 73 of the Finance Act, 1994 and section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Scope of show-cause notice - Being an authority functioning under Government of India, department is bound by exemption Notification as well as decision taken by Government of India - Recourse to section 11A is not permissible unless assessee is found to be ineligible for exemption - When exemption continued over more than 24 years and government even granted retrospective exemption for period when exemption had been withdrawn, notice seeking payment on exempted goods is wholly without jurisdiction and is an abuse of process of law [Para 37] [In favour of assessee]
Section 5A of the Central Excise Act, 1944 - Exemptions - Central Excise - General - Exemptions are always to be construed strictly - Just as nobody can be brought within purview of an exemption Notification by way of interpretation, it is also not permissible to deny benefit of Notification to someone who, even according to Government of India, was entitled to benefit [Para 39] [In favour of assessee]
Section 11A, read with section 33A, of the Central Excise Act, 1944, section 73 of the Finance Act, 1994 and section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Scope of show-cause notice - When there are no changes in circumstances, either factual or legal, it would not be open to department to upset apple-cart and come to a new conclusion -Therefore, department cannot be permitted to take different stands, unless there are good and cogent reasons for a change in future [Para 38] [In favour of assessee]
■■■
[2014] 52 taxmann.com 343 (Madras)
HIGH COURT OF MADRAS
Kothari Petrochemicals Ltd.
v.
Union of India, Ministry of Finance (Department of Revenue)*
V. RAMASUBRAMANIAN, J.
WRIT PETITION NO. 34636 OF 2013
M.P. NOS. 1 & 2 OF 2013
SEPTEMBER 24, 2014
Rule 6, read with rule 2(d) and 2(e), of the Cenvat Credit Rules, 2004 and section 5A of the Central Excise Act, 1944 - CENVAT Credit - Exempted and dutiable goods or exempted and taxable services, obligation of assessee - Assessee purchased 'Poly Butylene Feed Stock (PBFS)' from CNPL for use in manufacture of Poly Iso Butylene and returned back remnants (83 per cent of input) to CNPL, claiming exemption under Notifications/Orders, dated 17-7-1989, 24-6-1994, 24-3-1995, 1-3-2006 and 17-3-2012 over more than 23 years - Department issued show-cause notice demanding payment under Cenvat rule 6 on ground that assessee was manufacturing dutiable as well as exempted goods and was not maintaining separate records and was therefore, liable to make reversal - HELD : Since exemption was operative for more than 23 years and there was no such objection and even Government of India was fully aware of nature of exemption, manufacturing process and assessee's entitlement, hence, department was bound by exemption notification - Since there was no change in facts and circumstances over so many years, department could not come to different conclusion - Impugned notice had effect of destroying exemption itself - Hence, impugned notice was without jurisdiction and was abuse of process of law and was set aside [Paras 21 to 40] [In favour of assessee]
Article 226 of the Constitution of India - Writ Petition - Alternative Remedy - Normally writ Court would not interfere at stage of show-cause notice i.e., abstinence from interference is a normal rule - However, there are two exceptions : (1) where show-cause notice is issued without jurisdiction; and (2) where it is an abuse of process of law; in said two exceptional cases, writ petition is maintainable against show-cause notice [Para 19] [In favour of assessee]
Section 11A, read with section 33A, of the Central Excise Act, 1944, section 73 of the Finance Act, 1994 and section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Scope of show-cause notice - Being an authority functioning under Government of India, department is bound by exemption Notification as well as decision taken by Government of India - Recourse to section 11A is not permissible unless assessee is found to be ineligible for exemption - When exemption continued over more than 24 years and government even granted retrospective exemption for period when exemption had been withdrawn, notice seeking payment on exempted goods is wholly without jurisdiction and is an abuse of process of law [Para 37] [In favour of assessee]
Section 5A of the Central Excise Act, 1944 - Exemptions - Central Excise - General - Exemptions are always to be construed strictly - Just as nobody can be brought within purview of an exemption Notification by way of interpretation, it is also not permissible to deny benefit of Notification to someone who, even according to Government of India, was entitled to benefit [Para 39] [In favour of assessee]
Section 11A, read with section 33A, of the Central Excise Act, 1944, section 73 of the Finance Act, 1994 and section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Scope of show-cause notice - When there are no changes in circumstances, either factual or legal, it would not be open to department to upset apple-cart and come to a new conclusion -Therefore, department cannot be permitted to take different stands, unless there are good and cogent reasons for a change in future [Para 38] [In favour of assessee]
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