TMI Blog2011 (4) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... he receipt of the challans after 180 days he is entitled to take Cenvat Credit - There is no question of pre-determination of issue by the respondent and the respondent without affording opportunity passed the order, which has adverse effect of civil consequence on the petitioner there is violation of principals of natural justice and on that ground, the impugned order is liable to be set aside and it is set aside - Decided in favour of assessee. - 8123 of 2010, 8135 of 2010 - - - Dated:- 29-4-2011 - MR.JUSTICE R.S.RAMANATHAN, J. For Petitioner ... Mr.M.Venkataraman Senior Advocate for Mr.S.P.Maharajan For Respondents... Mr.B.Vijay Karthikeyan Senior Standing Counsel for Central Excise COMMON ORDER In the writ petition W.P.(MD)No.8123 of 2010, the petitioner challenges the notice, dated 08.06.2010 issued by the respondent directing the petitioner to reverse the Cenvat Credit availed by them to an extent of Rs.315,91,42,459/- and also to pay interest of Rs.8,78,51,937/- as per the work sheet attached to it. 2.The petitioner challenges the aforesaid notice on the ground that the respondent without following the principles of natural justice and without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice and to issue further orders. Therefore, in any event, the matter has to be agitated and decided only by the authorities provided under the Act and therefore, I am not deciding the issue whether Rule 4(5)(a) and 4(6) are mutually exclusive or not? 8.To appreciate the contention of both parties, the following facts are necessary. The petitioner's factory is at Tuticorin and it imports Copper Concentrate and after adding some raw-materials, the Copper Concentrate are converted into Copper Anodes and the Copper Anodes are despatched to the petitioner's other Unit situated at Chinchpada on job work basis for conversion into Copper Cathodes, rods, etc. For sending Copper Anodes to petitioner's own unit at Chinchpada and Silvassa, the petitioner obtained permission under Rule 4(6) of the Cenvat Credit Rules and one of the condition of the said permission was that the petitioner should get back the job work challans from the job workers within 180 days and copies of such challans should be produced before the jurisdictional Range Office on fortnightly basis. As the petitioner failed to comply with the said condition, the Range Officer reported the matter to the Central Exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e challans were seized on 09.04.2010 at the Madurai Railway Station and thereafter, a further statement was recorded from S.Varadharajan, Vice President (IDT) and he also admitted that the challans were not available in the factory and when it was admitted by Varadharajan, Vice President (IDT) that they have not received the challans within the period of 180 days and the challans were seized only after the period of 180 days, the petitioner is liable to reverse the entry and therefore, no prejudice is caused to the petitioner. 14.The main submission of the learned Senior Standing Counsel appearing for the respondent is that there is no necessity to issue the show cause notice, while passing an order directing the petitioner to reverse the entry for the non-receipt of the challans within the period of 180 days. 15.On the other hand, the learned Senior Counsel appearing for the petitioner, Mr.M.Venkataraman, submitted that even though Rule 4(5)(a) and 4(6) are silent about the issuance of show cause, before passing an order, the principles of natural justice, can be read into those provisions when the order has adverse civil consequences for the parties affected. 16.The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice or procedure required for decision has not been adopted. "19.Another Constitution Bench of this Court in State of M.P. v. Bhailal Bhai [(1964) 6 SCR 261 : AIR 1964 SC 1006] held that the remedy provided in a writ jurisdiction is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. The power to give relief under Article 226 of the Constitution is a discretionary power. Similar view has been reiterated in N.T. Veluswami Thevar v. G. Raja Nainar [1959 Supp (1) SCR 623 : AIR 1959 SC 422]; Municipal Council, Khurai v. Kamal Kumar [(1965) 2 SCR 653 : AIR 1965 SC 1321]; Siliguri Municipality v. Amalendu Das[(1984) 2 SCC 436 : 1984 SCC (Tax) 133 : AIR 1984 SC 653]; S.T. Muthusami v. K. Natarajan [(1988) 1 SCC 572 : AIR 1988 SC 616]; Rajasthan SRTC v. Krishna Kant [(1995) 5 SCC 75 : 1995 SCC (L S) 1207 : (1995) 31 ATC 110 : AIR 1995 SC 1715]; Kerala SEB v. Kurien E. Kalathil [(2000) 6 SCC 293 : AIR 2000 SC 2573]; A. Venkatasubbiah Naidu v. S. Chellappan [(2000) 7 SCC 695]; L.L. Sudhakar Reddy v. State of A.P. [(2001) 6 SCC 634]; Shri Sant Sadguru Janardan Swami (Moingiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why the statutory remedy available was not efficacious, it would not be proper for this Court to consider the question again. When the High Court had entertained a writ petition notwithstanding existence of an alternative remedy this Court while dealing with the matter in an appeal should not permit the question to be raised unless the High Court's reasoning for entertaining the writ petition is found to be palpably unsound and irrational. Similar view was expressed by this Court in First ITO v. Short Bros. (P) Ltd. [(1966) 3 SCR 84 : AIR 1967 SC 81] and State of U.P. v. Indian Hume Pipe Co. Ltd.[(1977) 2 SCC 724 : 1977 SCC (Tax) 335]. That being the position, we do not consider the High Court's judgment to be vulnerable on the ground that alternative remedy was not availed. There are two well-recognised exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of principles of natural justice. 24.The main contention of the respondent for issuing the impugned notice was that on 08.04.2010, the officials of the respondent visited the factory of the petitioner at Tuticorin to verify whether the job work challans were received within 180 days and it was found that job of challans pertaining to the despatches made during the period of from 01.03.2009 to 30.09.2009 were not available and though it was accepted by the petitioner that they have not received the challans within 180 days and the challans might have been misplaced in their factory, the same challans were seized only on 09.04.2010 at the Madurai Railway Station and therefore, it was proved that the challans were not received within the period of 180 days and hence, the petitioner is liable to reverse the entry in respect of Cenvat Credit availed earlier. 25.The specific contention of the petitioner was that they were granted permission under Rule 4(6) of the Cenvat Credit Rules and as per the permission granted under Rule 4(6), the petitioner was permitted to remove the finished goods from their Unit at Chinchpada and the petitioner were permitted to pay the duty to the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re seized on 09.04.2010 at the Madurai Railway Station, according to the respondent, having regard to the fact that by passing the order, directing the petitioner to reverse the entry and pay a sum of Rs.315,91,42,459/- as stated above would definitely involve civil consequences and therefore, as per the judgment of the Hon'ble Supreme Court referred to above, the respondent ought to have given an opportunity to show cause why the Cenvat Credit shall not be reversed. 27.Further, a reading of Rule 4(5)(a) and 4(6) would also make it clear that the non-receipt of challans within 180 days will not dis-entitle the petitioner to avail the Cenvat Credit and it has been made clear that even after the challans were received after 180 days, the manufacturer can take the Cenvat Credit again when inputs and capital goods are received back in their factory or in the premises of the provider of output service and they have to pay interest for the period. Therefore, there is no need to pass such an order on the assumption that the challans were not received within 180 days and if the petitioner is able to prove that he has received the challans within 180 days, he is entitled to avail the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and the contention of the petitioner that they were permitted to maintain the challans in the computer as per the permission granted to them, this Court cannot go into those details and they are in the realm of the authorities, and in my opinion, the authorities have not pre-determined the issue and they have only come to the conclusion on the basis that the challans were not received within 180 days and passed the impugned order. 32.Hence, there is no question of pre-determination of issue by the respondent and the respondent without affording opportunity passed the order, which has adverse effect of civil consequence on the petitioner there is violation of principals of natural justice and on that ground, the impugned order is liable to be set aside and it is set aside. 33.The respondent is directed to issue show cause notice to the petitioner and the petitioner is also entitled to prove his case and the respondent can decide whether Rule 4(5)(a) and 4(6) are mutually exclusive or not, while deciding the issue after giving sufficient opportunity to the parties concerned. 34.In the writ petition, W.P(MD)No.8135 of 2010, the petitioner challenged the communication sent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .06.2010 on the ground of violation of principles of natural justice, the communication, dated 09.06.2010 sent by the 1st respondent is liable to be stayed, till the disposal of the enquiry to be conducted by the 1st respondent in respect of the proceedings, dated 08.06.2010 as stated above, though the writ petition in W.P.(MD)No.8135 of 2010 is not strictly maintainable in law. 40.Hence, having regard to the orders passed in W.P.(MD)No.8123 of 2010, there shall be an order of stay of the communication, dated 09.06.2010, which is impugned in W.P.(MD)No.8135 of 2010 in so far as it relates to non-compliance of Rule 4(5)(a) or 4(b) of Cenvt Credit Rules till the disposal of the enquiry directed in the order passed in W.P.(MD)No.8123 of 2010. 41.Accordingly, W.P.(MD)No.8135 of 2010 is disposed of with the manner as stated above and W.P.(MD)No.8123 of 2010 is allowed and the impugned order, dated 08.06.2010 is set aside and the matter is remitted back to the respondent, for deciding the issue as stated above after giving opportunity to the petitioner to prove his case. 42.Further, having regard to the apprehension of the learned Senior Counsel for the petitioner that if the sam ..... 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