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2015 (9) TMI 351

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..... would apply mutatis mutandis for effecting such recoveries. Thus, before initiating recovery proceedings, it would be incumbent upon the authorities to issue notice to the petitioners under Section 11A of the Act for having either utilized the CENVAT credit wrongly for bringing such action within the scope of sub-rule (3A) or to construe such transaction as having cleared the goods without payment of duty or in other words, such belated utilization of CENVAT credit for payment of central excise duty to be construed as one in contravention of sub-rule (3A) of Rule 8 - Court is of the view that impugned notices cannot be sustained as it is contrary to Rule 14 of CENVAT Credit Rules, 2004, and in violation of natural justice. - Decided in fav .....

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..... s, 2002, petitioner has defaulted in payment of duty, namely paid duty beyond 30 days from the due date and as such, notwithstanding anything contained in sub-rule (1) or sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004, petitioner is required to pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date petitioner pays the outstanding amount including the interest thereon. As such, it was held that petitioner is deemed to have cleared the goods without payment of duty and thereby the impugned notices came to be issued. Re.W.P.13104/2015: 5. In the quarterly returns ER.1 for the period January 2013 to March 2013 the respondent authorities have stated that petitioner has failed to .....

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..... Section 11 of the Central Excise Act, 1944 to recover the same. Hence, calling in question said notices these two writ petitions have been filed. 6. It is the contention of learned counsel for the petitioners that when either CENVAT credit payment was utilized wrongly or has been erroneously refunded, respondent authorities would be entitled to recover the same after the issuance of notice under Rule 14 of CENVAT Credit Rules, 2004 and without adopting said course, recovery proceedings could not have been initiated and as such impugned notices are liable to be quashed. He would rely on the judgment of Gujarat High Court in the case of Indsur Global Ltd., -vs- Union of India 2 ( 2014-TIOL-2115-HC-AHM-CX ), whereunder Rule 8(3A) of CENV .....

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..... thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow. 9. A perusal of the above Rule would clearly indicate that in the event of assessee committing default in payment of duty beyond 30 days from the due date as prescribed under sub-rule (1), then notwithstanding anything contained in sub-rule (1) or sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004, such assessee would be required to pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assessee pays the amount including the interest thereon. As otherwise, such clearance would be deem .....

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..... of duty or in other words, such belated utilization of CENVAT credit for payment of central excise duty to be construed as one in contravention of sub-rule (3A) of Rule 8. The audialterempartem principle would be squarely applicable in case of such recoveries and particularly, when it is alleged that CENVAT credit has been utilized beyond the prescribed period. In that view of the matter, this Court is of the view that impugned notices cannot be sustained as it is contrary to Rule 14 of CENVAT Credit Rules, 2004, and in violation of natural justice. 11. For the reasons aforestated, I proceed to pass the following: ORDER I. Writ petitions are hereby allowed. II. Impugned recovery notices bearing OC.No.419/2013 dated 27.9.2013 and .....

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