2005 (5) TMI 85 - HC - Central Excise

Summary

Issues:
1. Recovery of alleged dues of Central Excise
2. Legality of forceful collection of cheques
3. Return of unencashed cheques

Issue 1: Recovery of alleged dues of Central Excise
The petitioner, a Private Limited Company engaged in the textile business, challenged the arbitrary action of respondent No. 3 in initiating the recovery of alleged Central Excise duty. The petitioner contended that they were not liable to pay the duty being enforced on them without due process of law. The respondent authorities collected various cheques forcibly from the petitioner, claiming a substantial sum. The Court noted that no statutory provision supported the recovery made by the authorities. The judgment emphasized that any tax or duty collection must be in accordance with the law and supported by appropriate provisions. The Court highlighted that the authorities must act within the powers granted by the statute and cannot retain funds without legal sanction. The recovery of funds through cheques without statutory backing was deemed impermissible, leading to the direction for immediate refund of the amount collected.

Issue 2: Legality of forceful collection of cheques
The petitioner sought a declaration that the recovery through forceful collection of cheques was illegal and unlawful. The Court observed that the respondent authorities failed to demonstrate any lawful basis for their actions. It was emphasized that the revenue authorities must act within the bounds of statutory provisions and could not retain funds without legal authorization. The judgment quashed the actions of the authorities in collecting various cheques and adjusting amounts against Modvat credit, directing the immediate refund of the sum collected through encashment of cheques. The Court highlighted that the petitioner's entitlement to a refund did not absolve them from potential liabilities arising from the inquiry and adjudication process.

Issue 3: Return of unencashed cheques
The Court directed the respondent authorities to return the unencashed cheques to the petitioner promptly. The judgment specified the cheques to be returned and set a deadline for the refund process. The Court ordered the authorities to refund the total sum recovered through cheque encashment and permit the reversal of the entry regarding outstanding Modvat credit within a stipulated timeframe. The judgment concluded by allowing the petition, making the rule absolute, and specifying that there would be no order as to costs.