TMI Blog2013 (1) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice clearly indicating the issues on which prima facie the petitioner appears to have availed of the Cenvat Credit allegedly without justification . While issuing such show cause notice, the respondent should ensure that it does not indicate any premeditation or prejudgment by the respondent. In case any such fresh show cause notice is issued by the respondent, the respondent shall also furnish the material on the basis of which the show cause notice is issued and give reasonable opportunity to the petitioner to file its objections with supporting material apart from personal hearing (if sought by the petitioner) and then pass a reasoned order in accordance with law. - W.P. No. 14380 OF 2012 - - - Dated:- 15-10-2012 - Goda Raghuram and M.S. RAMACHANDRA RAO, JJ. K. Vivek Reddy for the Petitioner. Gopalakrishna Gokhale for the Respondent. ORDER M.S. Ramachandra Rao, J. - This writ petition is filed by the petitioner challenging the show cause notice dt.14.12.2011 bearing No.C.No.V/72/15/181/2011-Adjn. O.R.55/2011-CEx issued by the respondent on the ground that the contents thereof indicate that the respondent had predetermined the liability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner apart from interest and penalty. 8. The petitioner contends (a) the notice was issued because the petitioner company was insisting that it was eligible for claiming the Cenvat Credit and the Department should allow it to take back the credit reversed under protest. (b) the notice determines the amount of Cenvat Credit to be reversed and proposes interest and penalty at the applicable rates thereon at the preliminary stage itself without affording an opportunity of hearing to the petitioner, in violation of S.11A(10) of the Act which requires an opportunity of being heard given to the assessee. (c) the notice indicates that the respondent had already made up it's mind that the petitioner is not entitled to the Cenvat Credit claimed by it. The respondent's prejudice against the petitioner is apparent from perusal of the contents of the notice wherein the respondent had given a finding that the Cenvat Credit claimed by the petitioner is irregular. 9. On 8.6.2012, this Court ordered notice before admission and granted an interim order restraining the respondent from taking any further action pursuant to the impugned show cause notice dated 14.12.2011. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted the contentions of the counsel for the petitioner and contended that a challenge to a show cause notice like the one in the present case should not be entertained under Article 226 of the Constitution of India as the petitioner can respond to the show cause notice and prove that it's claim of Cenvat Credit is valid. He also contended that the petitioner has been given reasonable opportunity to defend itself and that there is no violation of principles of natural justice. He relied upon the decisions in Shakti Me-Dor Ltd. v. CC, CE ST 2011 (268) ELT 51 (AP), Asstt. Collector of Central Excise v. Dunlop India Ltd. 1985 (19) ELT 22 (SC), Union of India v. Bajaj Tempo Ltd. 1997 (94) ELT 285 (SC) Punjab Bone Mills v. Collector of Central Excise 2001 (135) ELT 1377 (Tri-Delhi), CC CE v. Charminar Nonwovens Ltd 2004 (167) ELT 372 (SC) and Charminar Nonwovens Ltd v. CC CE 1985 (19) ELT 22 (SC). 14. We have considered the pleadings of both the parties and the submissions made by the respective counsel. 15. A perusal of the impugned notice shows that at several places, the language used by the respondent suggests that he has already come to a conclusion that the petitioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfounded allegation of use of force by the department to that of laying claim for restoration of the entire amount of cenvat credit reversed (on 28-08-2010 and on 22-09-2010) in their favour, the assessee has been making so many claims bereft of any legal support." "18.3. It is observed, that during the period from December 2007 to March 2011, the assessees availed CENVAT credit to the tune of Rs. 1,43,20,870/- on these goods viz., MS Beams, Rounds, Squares and Joists under 'Capital goods' (earlier). In as much as the said goods were used in the construction activities, and also admitted by the assessee to have been used in the construction/structural/civil works accordingly the goods mentioned in the Table below cannot be treated as 'inputs' and the eligibility of Cenvat credit on these items no longer available to the assessee." 18.4.1 As verification of usage of the disputed items in the manufacture of capital goods at the factory premises, revealed that the impugned items were found to have been used for construction of platforms, buildings including factory sheds or laying of foundation or making of structures for support of capital goods and structural work of various pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 2010. However, these items are found to be not falling under the purview of the definition of capital goods defined under Rule 2(a) of CENVAT Rules, 2004. thereby, the assessee has contravened the provisions of Rule 2(a) of CCR 2004 by mis-declaring the impugned goods under 'capital goods' in terms of Rule 9(5) of CCR 2004 which cast the burden of proof regarding the admissibility of the CENVAT credit on inputs or capital goods on the manufacturer. Further, vide statement dated 27.7.2011, the assessee admitted that they are aware of the fact that in terms of Rule 9(5) of CCR 2004, the burden of proof regarding the admissibility of the CENVAT credit on capital goods/inputs (including classification of goods under capital goods or inputs) was cast on them. But they choose to misclassify the impugned goods under capital goods and thereby, willfully, contravened the provisions of Rules 2(a) and 9(5) of CCR 2004 in order to avail entire credit of duty paid on the entire quantity of impugned goods procured. 20.1 Further, the 'impugned goods were stated to have been used in 'various systems in the factory.' It is apparent that the above systems/machines as a whole, are actually ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in the present case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony. 18. In Oryx Fisheries' (P.) Ltd.'s case (supra), the Supreme Court held: "31. It is of course true that the show-cause notice cannot be read hypertechnically and it is well settled that it is to be read reasonably. But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show-cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show-cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show-cause notice does not commence a fair procedure especially when it is issued in a quasi-judicial proceeding under a statutory regulation which promises to give the person proceeded against a reasonable oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit filed by the respondents, we are satisfied that the statutory authority has already applied its mind and has formed an opinion as regards the liability or otherwise of the appellant. If in passing the order the respondent has already determined the liability of the appellant and the only question which remains for its consideration is quantification thereof, the same does not remain in the realm of a show-cause notice. The writ petition, in our opinion, was maintainable." 20. In Rajam Industries (P) Ltd.'s case (supra), the Chennai High Court followed the above decisions and held that where a show cause notice quantified the amount of Central Excise duty not paid by the petitioner therein under various heads and also stated that the petitioner therein was liable to pay penalty and interest, the said show cause notice has to be set aside insofar as it relates to the quantification of the amount liable to be paid by the petitioner therein towards the difference of the excise duty and the observations made therein that the petitioner had clandestinely removed the goods. It held that when the respondents had arrived at the quantum of excise duty stated to have been evaded by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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