TMI Blog2011 (7) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... der rule 8(1) of central Excise Rules, 2002, is order to be withdrawn and the assessees are required to pay excise duty for each consignment at the time of removal of goods with effect from 7/4/11 to 30/9/11. (ii) Payment of Central Excise duty by utilization of CENVAT credit as provided under rule 3(4) of the CENVAT credit Rules, 2004, of the above mentioned assesses is ordered to be stopped with effect from 7/4/11 to 30/9/11. During this period, the aforenamed assesses are required to pay excise duty without utilizing CENVAT credit. However, the assesses are permitted to take CENVAT credit on goods received during this period, which can be utilized for payment of duty on goods cleared from the factory after the aforesaid period is over. (iii) The Assessees will maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit has not been taken with effect from 7/4/11 to 30/6/11. (iv) The assesses will intimate the jurisdictional Superintendent of Central Excise without twenty four hours of the receipt of principal inputs in the factory on which CENVAT credit has or has not been taken and the same should be kept available for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st block VIII, wing no.VI, 2nd floor R.K. Puram, Sector1, New Delhi. 3. Please note that if no representation or submission is made by you or if you do not appear before the Director General, CEI New Delhi on the stipulated date, the matter will be decided exparte on the basis of facts available on record. 4. Ultimately, respondents after following the procedure passed the impugned order and imposed restrictions by way of impugned order, relevant portion of which is already reproduced hereinabove. Grievance of the petitioner to such orders are many. Primarily petitioner contends that proper procedure was not followed. Principles of natural justice were violated. Important documents on which department relied were not supplied. Statements retracted by representatives of the petitioner company were relied upon. 5. On the other hand, stand of department is that after following proper procedure, finding that petitioner was involved in clandestine removal of goods, restriction as permissible under Rule 12CC of the Central Excise Rules were imposed. 6. It is not necessary for us to go into details of rival contentions for the simple reason that counsel for the petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition that final order of punishment could not travel beyond the proposal contained in show cause notice. In view of admitted position that after issuance of initial show cause notice, proposing restriction for period of three months without any further communication, corrigendum or fresh proposal for restriction for an extended period, final order could not have been passed imposing such restriction beyond three months. 12. In this result on this short ground, impugned order to the extent same imposes restrictions for a period of six months from 7.4.2011 is set aside. It is clarified that order shall operate with all its rigors and restrictions for a period of three months from 7.4.2011 as envisaged in the impugned order itself. To that extent, order stands modified. Petitions are allowed to above extent. Petitions are disposed of accordingly. 13. Counsel for the Revenue stated that separate proceedings under the Central Excise Act have been initiated for recovery of duty, penalty, etc. by issuance of show cause notice. Nothing stated in this order shall come in way of either side in such proceedings. Direct service to respondents no. 2 and 3 is permitted. Date : 14/06/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of one Ankur Thakkar recorded on 3rd April 2010. The petitioner further elaborated that alongwith the show cause notice or otherwise, the proposal for imposition of restriction had not been supplied; the documents on which the proposal was based were also not supplied. The petitioner, therefore, contended that in absence of any such documents being made available, the petitioner was not aware as to on what grounds, the proposal was based. The petitioner requested that hearing fixed on 17th June 2010 may kindly be postponed and copies of proposal forwarded by the Additional Director General of Central Excise Intelligence and other relevant documents be provided to the petitioner in compliance of the principles of natural justice. Pursuant to the said representation dated 14th June 2010 of the petitioner, the respondents did not supply any documents. The date for personal hearing was, however, extended and hearing did not take place as previously proposed on 17th June 2010. The petitioner, therefore, on 18th August 2010 again sent a letter to the respondent no.3Director General of Central Excise Intelligence and reiterated that copy of the proposal for imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been cleared in contravention of the provision of the Rule 12CC of the Central Excise Rules, 2002 and necessary action as provided in the law in this regard would be taken. 17. It is further ordered as clarification that in the event the operation of this order get stayed by any authority, the total duration of the period for which said facilities will not be available or the period for which the restrictions shall be operative will remain the same as specified in foregoing para 15 above with only change in corresponding dates, if the aforesaid stay order is vacated subsequently. 18. This order is issued without prejudice to any action which can betaken against the assesses under this law or any law in for the time being in force. In the reply affidavit filed by the respondents, it is primarily contending that the petitioners have not availed of the opportunity of personal hearing, nor any reply on merits was filed. It is also contended that looking to the nature of the proceedings, the action taken by the respondents was just and proper. On the basis of above factual background, counsel for the petitioners submitted that the respondent no.4 passed the impugned order in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v] Our attention was drawn to two orders passed by the Division Bench of this Court [i] in SCA No. 25507 of 2007 dated 1st November 2007; and [ii] in SCA No. 9823 of 2007 dated 8th May 2007, wherein, the Bench finding that the panchnamas were not supplied to the manufacturers, the orders imposing restrictions under Rule 12AA/12CC came to be setaside; of course leaving it open to the Department to proceed ahead after supplying such documents. On the other hand, learned counsel Mr. Ravani appearing for the Department opposed the petitions vehemently contending that looking to the nature of the proceedings involved, full fledged hearing is not envisaged. The petitioner was granted opportunity to make representation. Such opportunity was not availed of. The petitioner did not even participate in the personal hearings. Counsel submitted that the petitioner has not demonstrated any prejudice on account of nonsupply of the documents. He further submitted that in cases where the investigation is still going on and is at a sensitive stage, it is not feasible to supply the documents. In the present case, counsel submitted that, the petitioner demanded documents without showing any r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trative action. Reliance was also placed on the decision in the case of State of U.P vs. Shatrughan Lal Anr., reported in [(1998) 6 SCC 651] wherein the Apex Court had an occasion to examine the nature of penalties ie., confiscation and personal penalties imposable under the Customs Act. Having thus heard learned counsel for the parties and having perused the material on record, before adverting to the rival contentions, it would be useful to take note of the statutory provisions. Rule 12AA of the CENVAT Credit Rules, 2004 gives power to impose restrictions in certain types of cases. The said Rule 12AA of the Rules reads as under :RULE 12AA : Power to impose restrictions in certain types of cases - Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout the cover of an invoice and without payment of duty; (b) removal of goods without declaring the correct value for payment of duty, where a portion of sale price, in excess of invoice price, is received by him or on his behalf but not accounted for in the books of account; (c) taking of CENVAT credit without the receipt of goods specified in the document based on which the said credit has been taken; (d) taking of CENVAT credit on invoices or other documents which a person has reasons to believe as not genuine; (e) issue of excise duty invoice without delivery of goods specified in the said invoice; (f) claiming of refund or rebate based on the excise duty paid invoice or other documents which a person has reason to believe as not genuine; (g) removal of inputs as such on which CENVAT credit has been taken, without paying an amount equal to credit availed on such inputs in terms of subrule( 5) of rule 3 of the CENVAT Credit Rules, 2004., an officer authorized by the Board may for withdrawal of facilities or impose certain restrictions as specified in para2 of this Notification. 2. Facilities to be withdrawn and imposition of restrictions - (1) Where a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Notification lists facilities to be withdrawn and imposition of restrictions, which are as follows :( i) the facility of monthly payment of duties may be withdrawn and the assessee shall be required to pay excise duty for each consignment at the time of removal of goods; (ii) payment of duty by utilization of CENVAT credit may be restricted and the assessee shall be required to pay excise duty without utilizing the CENVAT credit; (iii) the assessee may be required to maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit has not been taken; (iv) the assessee may be required to intimate the Superintendent of Central Excise regarding the receipt of principal inputs in the factory on which CENVAT credit has or has not been taken, within a period specified in the order and the said inputs shall be made available for verification upto the period specified in the order. Paragraph2 of the Notification also envisages imposition of stricter and stringent restrictions in case where manufacturer/dealer is found to be knowingly involved in repeated defaults. Paragraph 3 of the Notification lays down that the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Central Excise or Director General of Central Excise Intelligence, before forwarding his recommendations, shall give an opportunity of being heard to a person against whom the proceedings have been initiated and also shall take into account any representation made by such person before forwarding such recommendations to the Board. The law is well settled. In any action of the State involving adverse civil consequences to a citizen, unless the Statute specifically or by necessary implications excludes requirement of hearing, the principles of natural justice would automatically apply, and hearing would be necessary before any such adverse orders could be passed or action could be taken. In the present case, quite to the contrary, procedure itself envisages giving an opportunity of being heard to a person likely to be affected prejudicially by the order that may be ultimately passed. It also requires the authorities to take into account representation, if so made made by such a person. In case of Smt. Maneka Gandhi v. Union of India Anr., reported in AIR 1978 SC 597, it was observed that 32. It is well established that even where there is no specific provision in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice, supply of documents, opportunity of hearing to the concerned person and also permitting him to lead evidence; if so desired. These proceedings go through several stages - of appeal and revision. These proceedings necessarily consume long time before a final order could be passed and ultimately implemented. The procedure envisaged under Rule 12AA and 12CC of the respective rules should not therefore be confused with the full fledged departmental proceedings for recovery of unpaid excise duty or for imposition of penalties including personal penalties. These proceedings, therefore, are necessarily in the nature of summary proceedings. The very fact that such restrictions are allowed to be imposed on prima facie satisfaction of the authorities that the person concerned has engaged or involved himself in any of the illegal acts mentioned in clause (a) to (g) of para1 of the Notification would show that it would not be necessary to establish the allegations and charges beyond reasonable doubt, and only prima facie satisfaction would be sufficient. This coupled with the fact that the restrictions envisaged are for a limited period and are in the nature of suspension of certain facil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and may prejudicially affect the Revenue in its ultimate proceedings, which may be commenced at a later stage. Such are some of the cases where the Department may be, in our opinion, justified in contending that the material relied upon in making the proposal for imposing restrictions should be withheld. These cases, however, must be few and far between, in the nature of exception and not a matter of rule. Having said so, reverting back to the facts of the present case, we find that none of the documents, heavily relied upon by the Department - right from the stage of sending the proposal by the Additional Commissioner and issuance of show cause notice, though time and again demand, such documents were not supplied. Such documents were placed before the Director General. The Director General, in turn, sent his opinion to the Board after having examined the proposal of the Addl. Director General and having perused the material accompanying such a proposal. Ultimately, the impugned order came to be passed, without ever supplying documents to the petitioners. Such documents were numerous. These documents, from the impugned order, clearly emerges were not merely the statements of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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