TMI Blog2001 (3) TMI 541X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 to pay the dues by utilising CENVAT credit standing in its credit as on the date fixed for payment of duty for clearance of final product. 2. Before adverting to the facts, we deem it proper to notice the relevant rules (as amended from time to time. Prior to 1-4-2000, Rule 49 of the Rules provided that central excise duty shall be paid by the manufacturer on clearance of excisable goods on consignment basis either by debit to the account current i.e. by cash deposit in PLA or by debiting it to register RG-23 Part-III i.e. by utilising Modvat credit. Rules 57AB to 57-Q contained the provisions for credit duty payable on the excisable goods used as inputs. Under these provisions, the manufacturers were entitled to take credit of the duty paid on inputs and utilised the same for paying the excise duty on final product. This was known as Modvat credit. Vide Notifications dated 31-3-2000 and 30-6-2000, Rule 49(1) was amended so as to provide for payment of duty on fortnightly-basis of removal of goods from the factory premises or from an approved place of removal. Simultaneously, Rule 57AB of the Rules was inserted so as to introduce the concept of CENVAT credit. Likewise, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the excisable goods intended to be removed, for each consignment and shall enter the particulars of such consignments [in daily stock account maintained under rule 53]; (ii) the manufacturer shall indicate on each gate pass or invoice, issued under rule 52 or 52A, as the case may be, the amount of duty payable; (iii) at the end of each fortnight, the manufacturer shall determine the total amount of excise duty payable on the excisable goods removed during the fortnight, and he shall discharge the total duty liability so payable by making debit entry in the account current or by utilising CENVAT credit. (c) The duty of excise shall be deemed to have been paid on excisable goods for the purpose of these rules, and the credit of such duty, as may be prescribed under any rule, will be permissible. (d) If the manufacturer fails to pay the amount of duty payable by the due date, he shall be liable to pay the outstanding amount along with interest at the rate of twenty-four per cent per annum on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount. (e) If the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff Act, 1975 (51 of 1975) on goods falling under chapter heading No. 98.81 of the First Schedule to the said Customs Tariff Act. (b) The CENVAT credit may be utilised for payment of any duty of excise on any final products manufactured by the manufacturer for payment of duty on inputs or capital goods themselves if such inputs are removed as such or after being partially processed, or such capital goods are removed as such : Provided that while paying duty in the matter specified under sub-rule (1) of Rule 49 or sub-rule (1) of Rule 173G as the case may be, the CENVAT credit shall be utilised only to the extent such credit is available on the fifteenth day of the month for payment of duty relating to the first fortnight of the month and the last day of the month for payment of duty relating to the second fortnight of the month or in case of a manufacturer availing exemption by notification based on value of clearance in a financial year, for payment of duty relating to the entire month. Rule 173G of the Rules RULE 173G. Procedure to be followed by the assessee. - (1)(a) Every manufacturer, other than manufacturer who is availing of the exemption under a notification ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount current or by utilising CENVAT credit, as the case may be. (c) the duty of excise shall be deemed to have been [paid for the purposes of these rules, on excisable goods removed in the manner prescribed in this sub-rule, and the credit] of such duty, as may be prescribed, under any rule, will be permissible. (d) If the manufacturer fails to pay the amount of duty payable by the due date, he shall be liable to pay the outstanding amount along with interest at the rate of twenty four per cent per annum on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount. (e) If the manufacturer defaults on account of any of the following reasons, namely :- (i) full payment of any one instalment is discharged beyond a period of thirty days from the date on which the instalment was due in a financial year, or (ii) the due date on which full payment of instalments are to be made is vioated for the third time in a financial year whether in succession or otherwise. then the manufacturer shall forfeit the facility to pay the dues in instalments under this sub-rule for a period of two months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner No. 1. For the period from 1-4-2000 to 30-6-2000, the petitioners regularly paid the duty, but in the months of July, August and September, 2000, they committed the following defaults :- S. No. Fortnight Ending Amount of duty Payable Due date of payment of duty Date of actual payment of full duty 1. 15-7-2000 Rs. 3,34,074.00 20-7-2000 21-7-2000 2. 31-7-2000 Rs. 2,90,033.00 5-8-2000 10-8-2000 3. 5-8-2000 Rs. 6,16,350.00 20-8-2000 31-8-2000 4. 31-8-2000 Rs. 8,44,862.00 5-9-2000 6-10-2000 5. 15-9-2000 Rs. 8,61,237.00 2-9-2000 26-12-2000 5. As a consequence of first three defaults, respondent No. 4 passed order dated 11-10-2000 under Rule 173G(1)(e) forfeiting the facility to pay duty on fortnightly-basis for 2 months and in view of that order petitioner No. 1 had to pay the duty on consignment basis through current account (PLA). In lieu of the 4th default, respondent No. 4 passed order dated 8-12-2000 vide which he forfeited the facility of payment of the duty on fortnightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication based on the value of clearances in the financial year for the payment of duty relating to the entire month. The need to restrict the assessee to utilize the CENVAT credit only to the extent such credit is available to the last day of the month for payment of duty was that the assessees were utilizing the advance credit which was available to them since they were to make the payment of central excise duty by 20th of the month in case of the first fortnight and 5th day of the succeeding month. 8. They have also averred that the scheme of Rules 49, 57AB and 173G of the Rules does not envisage giving of notice and opportunity of hearing to the defaulter and, therefore, the impugned orders cannot be invalidated on the ground of violating of the rules of natural justice. 9. Shri O.P. Goyal, Senior Counsel appearing for the petitioners argued that the impugned orders should be declared void on the ground of violation of the rules of natural justice because no notice or opportunity of hearing was given by respondent No. 4 before passing the order of forfeiture. Learned Counsel submitted that even though Rules 49(1)(e) and 173G(1)(e) of the Rules do not expressly provide for g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips of the upheld the applicability of the rule of natural justice in a purely administrative matter by making the following observations :- It is true that the order is administrative in character, but even an administrative order which involves civil consequences, as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the State, the evidence in support thereof and after giving an opportunity to the first respondent of being heard and meeting or explaining the evidence. 13. In Sayeedur Rehman v. The State of Bihar and Others, AIR 1973 S.C. 239, a three-Judges Bench of the Supreme Court highlighted importance of the rule of hearing in the following words :- This unwritten right of hearing is fundamental to a just decision by any authority which decides a controversial issue affecting the rights of the rival contestants. This right has its roots in the notion of fair procedure. It draws the attention of the party concerned to the imperative necessity of not overlooking the other side of the case before coming to its decision, for nothing is more likely to conduce to just and right decision than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef Election Commissioner, New Delhi, AIR 1978 S.C. 851, the Supreme Court rejected the theory of implied exclusion of the rules of natural justice by making the following observations: - We have been told that wherever the Parliament has intended a hearing, it has said so in the Act and the rules and inferentially where it has not specified it is otiose. There is no such sequitur. The silence of a statute has no exclusionary effect except where it flows from necessary implication. Art. 324 vests a wide power and where some direct consequence on candidates emanates from its exercise we must read this functional obligation. 16. In S.L. Kapoor v. Jagmohan, AIR 1981 S.C. 136, a three-Judges Bench of the Supreme Court interpreted the provisions of Section 238(1) of the Punjab Municipal Act, 1911 and rejected the argument that requirement of hearing cannot be read as implicit in the said section. The observations made by the Supreme Court on this issue are reproduced below :- One of the submissions of the learned Attorney General was that when the question was one of disqualification of an individual member, Sec. 16 of the Punjab Municipal Act expressly provided for an opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months. In addition, the defaulter will have to pay interest at the rate of 24% per annum on the delayed payment of the duty. 19. The defence which the affected person may put forward in reply to the show cause notice cannot be visualised, but the possibility of giving a plausible explanation cannot, altogether, be ruled out. In a given case, the noticee may show that no default has been committed in making payment of duty within the stipulated period. In another case, it may prove that the notice has not been issued by the competent authority. In yet another case, it may convince the authority concerned that the amount standing in its credit could be used for payment of duty. The defence offered by the noticee may or may not be accepted by the concerned authority, but there does not appear to be any reason or justification to exclude the applicability of the rules of natural justice from the scheme of amended Rules 49 and 173G of the Rules by assuming that the noticee will have no defence explanation to offer. 20. On the basis of the above discussion, we hold that the order Annexure P.1, dated 8-2-2001 passed by respondent No. 4 is vitiated due to violation of the rules of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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