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TMI Blog2013 (1) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner availed for the period December, 2007 to March 2011, benefit of Cenvat Credit on the excise duty paid on goods such as cement, MS Angles, MS Channels, TMT/CTD bars, MS rounds, MS Squares, Joists, Beams etc., used in the course of manufacture of steel products which have been utilized in the manufacture of excisable products under Rule 3 of the CENVAT Credit Rules,2004 . 4. Basing on intelligence gathered that the petitioner company availed huge amounts of Cenvat credit on certain ineligible goods under the category of capital goods, contravening provisions of the said Rules and thereby availed/availing Cenvat Credit and making use of the Cenvat Credit so availed for discharging their duty liability on the finished products, Officers of the Headquarters, Preventive Unit, Guntur belonging to the Central Excise department (for short "the Department" ) visited the unit of the petitioner on 6.8.2010. 5. The Department officials enquired from Officials of the petitioner Company how the materials on which Cenvat Credit was claimed were utilized by the petitioner company. The Vice -President (Finance) of the petitioner company furnished some information to the Department. Not sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent contended that several opportunities were given to the petitioner to put forth its submissions in support of its claim and that the petitioner failed to submit valid reasons in support of its claim. It also contended that the reversal of Cenvat Credit was done by the petitioner voluntarily on 28.8.2010 for Rs. 3,77,14,353/- but the subsequent reversal of Rs. 1,00,00,000/- in September 2010 was done under protest. It contended that writ jurisdiction cannot be invoked at the show cause notice stage and that the writ petition is premature. It also contended that the petitioner has not availed the alternative remedies available to it. 11. Heard Sri K. Vivek Reddy, Counsel for the petitioner and Sri Gopalakrishna Gokhale, Counsel for the Respondent. 12. The Counsel for the petitioner contends that the impugned show cause notice is violative of principles of natural justice as the respondent had already prejudged the issue and has come to the conclusion that the petitioner is not entitled to the Cenvat Credit availed by it. He also contended that the show cause notice suffers from bias as it confronts the petitioner with definitive conclusions. He contended that although the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; ** "Further, the 'impugned goods' were stated to have been used in 'Raw Material Handling Systems, Conveyor Systems, material Charging System, Material Handling System, Crushing systems, De-busting System, Utilities, Electrical Distribution System, Rehearing Furnace etc. in the factory. It is apparent that the above systems/machines as a whole, are actually systems or a network of machines and they come into being upon assembly of their components. In such a situation, there is no manufacture of 'goods' as it is only a case of assembly of manufactured goods into systems and hence, such systems as a whole cannot be considered to be goods as clarified by the Board vide its Circular No.58/1/2002-C.Ex., dated 15-01-2002. In view of the above, the above said goods cannot be considered as capital goods for extending the benefit of credit on the impugned goods. Further, the various plants erected/assembled in the premises of the assessee involving supply of large number of components, machinery, equipments, pipes and tubes etc. for their assembly/installation/ erection/integration/ inter-connectivity on foundation/civil structures etc. are not to be considered as excisab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee under 'inputs' cannot be available." 18.4.3 From the above, it is clear that the assessee claimed that the items like Raw material handling Systems, Conveyor Systems and processing systems etc., and structure of Steel, Cement, Sheets etc., used in the fabrication of the Machinery are 'capital goods'. But, these are basically systems comprising of various components and such systems as a whole cannot be considered to be excisable gods as clarified by the Board vide its Circular No.58/1/2002-C, Ex., dated 15-01-2002. Therefore, it is clear that the assessee manufactured/fabricated certain structural items only but not capital goods and the reasons stated supra, the listed goods under this category stands debarred from the cenvat credit." 18.4.4.............The absence of such details in the ERIs, invariably support/proves that the manufactured/fabricated items out of the usage of impugned goods are structural items only and hence, the assessee do not disclosed the details to the department in regard to the items/goods (structural items) manufactured out of the impugned goods." 18.4.6. From the above narrations, it is clear that the items manufactured by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bled in the premises of the assessee are to be considered as exempted goods. In such a situation credit cannot be allowed on the goods used in the erection/assembly of such plants in terms of Rule 6(1) of CCR 2004. However, the assessee availed credit on the goods used for manufacture of the above systems, without knowing their admissibility of credit and thereby, contravened the provisions of Rule 9(5) of CCR 2004. ** ** ** 20.4. Further, the assessees with a clear intention to avail the entire credit of duty paid on the impugned goods has first claimed the goods under capital goods category and later retracted and claimed the impugned goods used as inputs used for manufacture of capital goods and which shows their intention that to avail credit on the all the quantity of the impugned goods procured by them. This intention can be clearly seen in their letters submitted to the department from time to time." (Emphasis supplied) 16. The above passages in the impugned notice indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in adjudging the guilt or otherwise of the person proceeded against and specially when he has the power to take a punitive step against the person after giving him a show-cause notice. 33. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi-judicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it." 19. In Siemens Ltd.'s case (supra), the Supreme Court held: "9. Although ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by this Court in some decisions including State of U.P. v. Brahm Datt Sharma 1987 (2) SCC 179), Special Director v. Mohd. Ghulam Ghouse 2004 (3) SCC 440) and Union of India v. Kunisetty Satyanarayana 2006 (12) SCC 28), but the question herein has to be considered from a different angle viz. when a notice is issued with premeditation, a writ petition would be maintainable. In such an event, even if the court directs the statutory authority to hear the matter afresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice. 21. In Shakti Me-Dor Ltd.'s case (supra), Bajaj Tempo Ltd.'s case (supra), Punjab Bone Mills case (Supra) and in Charminar Nonwovens Ltd's cases (supra), cited by the respondent's counsel, it has been held that at the stage of show cause notice, a writ petition should not be entertained where such show cause notice is not without jurisdiction. It was held that the contentions in the show cause notice should be accepted as true and after the petitioner submits its reply thereto, the adjudicating authority would decide the matter. It was also held that the High Court or the Supreme Court should be approached only after exhausting the remedies provided under the statute. Similar view has also been expressed in Dunlop India Ltd.'s case (supra). However, these cases did not deal with a situation like the present one where the show cause notice issued by the respondent is challenged on the ground that it is issued with premeditation. In Siemens Ltd.'s case (supra), the Supreme Court has clearly clarified that although ordinarily a writ Court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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