TMI Blog2009 (11) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... Kiran, for the Petitioner. Shri A. Rajasekhar Reddy, A.S.G., for the Respondent. [Judgment per: C.V. Nagarjuna Reddy, J]. - The petitioner, a company registered under the Companies Act, 1956, filed this writ petition for a Mandamus to declare that sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 (for short, "the Rules") is not retrospective and for a consequential declaration that the demand of duty of Rs. 1,63,24,762/- with interest by respondent No. 1, as illegal and arbitrary. 2. The facts, which are not in dispute, are as under: The petitioner manufactures polyester yarn (textured and non-textured). The polyester yarn is liable for excise duty under the Central Excise Tariff Act, 1944 (for short, "the Act"). The petitioner purported to pay excise duty for the months of January, 2005 and February, 2005 through certain outstation cheques. Those cheques were dishonoured. The amount, which fell due by 5th February, 2005, was eventually paid by the petitioner through account current. Nearly three years thereafter, respondent No. 1 issued notice dated 1-5-2009 to the petitioner, wherein the latter was called upon to pay a sum of Rs. 1,63,24,762/- and interest t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months of January, 2005 and February, 2005, it has been specifically averred in the counter affidavit that the petitioner is not eligible to utilize the Cenvat credit, as it continued to be a defaulter beyond 30 days and that as sub-rule (3A) of Rule 8 of the Rules came into force from 1-6-2006 by which date the default beyond 30 days period continued, the petitioner was not entitled to avail the Cenvat credit from 1-6-2006 and till payment of the due amount was made. The respondents further pleaded that as the due amount was cleared only on 15-6-2006, the availment of Cenvat credit between 1-6-2006 and 14-6-2006 was illegal, even though the petitioner may have adequate credit in its Cenvat account. The respondents further pleaded that the petitioner, who was responsible for dishonour of the cheques, is not entitled to invoke the discretionary jurisdiction of this Court under Article 226 of the Constitution and that on the facts of the case, sub-rule (3A) of Rule 8 of the Rules, as amended with effect from 1-6-2006, is applicable. In reply to the petitioner's averment that under Section 11(A)of the Act, the normal period of limitation for recovery of duty, which is not paid or not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) of Rule 8 is initiated, it is only the provisions of Section 11 of the Act that are attracted and not the provisions of Section 11(A) and therefore neither the period of limitation of one year prescribed under Section 11(A) is attracted nor was there any duty cast on the respondents to issue show cause notice. In support of his contention, the learned Counsel placed reliance on the judgment of the Supreme Court in Collector of Central Excise, Jaipur v. Raghuvar (India) Limited [2000 (118) E.L.T. 311 (S.C.) = (2000) 5 SCC 299] and a Division Bench of this Court in Fenoplast Limited v. Assistant Commissioner of Central Excise, Hyderabad [2008 (225) E.L.T. 41 (A.P.)]. 8. We shall first deal with the contention of the learned Senior Counsel that a show cause notice is mandatory before taking any action for recovery of the duty in dispute. In order to resolve this controversy, the provisions of Sections 11 and 11(A) and sub-rule (3A) of Rule 8 need to be considered. For better appreciation, they are reproduced hereunder: "Section 11. Recovery of sums due to Government. - In respect of duty and any other sums of any kind payable to the Central Government under any of the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other provisions of this Act or the rules made thereunder], a Central Excise Officer may, within [one year] from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, (as if, [***]) for the words (one year), the words "five years" were substituted." Sub-rule (3A) of Rule 8 - If the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2004, the assessee shall, pay excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me provided for a notice before recovering the disputed duty, the provisions of Section 11(A) cannot be pressed into service. 11. While strongly banking on the above ruling of the Supreme Court, the learned Assistant Solicitor General placed reliance on sub-rule (4) of Rule 8 in asserting that for recovery of the duty, the respondents are entitled to invoke Section 11 and not Section 11(A). 12. On a careful reading of the said judgment of the Supreme Court, we are satisfied that the ratio laid down therein applies in favour of the petitioner instead of supporting the case of the respondents. The reason for this conclusion of ours is that as in the case of Modvat scheme considered by the Apex Court in the aforementioned judgment, the Cenvat scheme, which is applicable to the present case, is covered by a separate set of statutory provisions called Cenvat Credit Rules, 2004 (for short, "the 2004 Rules"). Rule 14 of the said Rules reads as under: "Recovery of Cenvat credit wrongly taken or erroneously refunded. - Where the Cenvat credit has been taken or utilized wrongly or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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