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Berger Paints India Ltd. Versus Commissioner of Central Excise And Others

2016 (9) TMI 984 - CALCUTTA HIGH COURT

Validity of order directing special audit - Section 14AA of the Central Excise Act, 1944 - breach of principles of natural justice - petitioner was not afforded any opportunity of hearing - non-specification of any ground that the petitioner has availed of duty credit or utilised cenvat credit beyond the normal limits - Held that:- Section 14AA of the said Act empowers the Principal Commissioner or the Commissioner of Central Excise to have the accounts of a manufacturer audited by a cost accoun .....

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manufactured and cleared by the petitioner. The Commissioner has not discussed of the quantum of the duty credit or utilised cenvat credit by the manufacturer. The foundational basis for the assumption of jurisdiction by the Commissioner under Section 14AA of the said Act has not been stated in the impugned order. Therefore, the impugned order is unreasoned. - Section 14AA of the said Act does not contemplate that the assessee is entitled to a right of hearing before a decision is taken the .....

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nder such section. In the present case, it does not appear from the materials made available on record that the authorities have afforded the petitioner an opportunity of hearing prior to the issuance of the impugned order. Therefore, the impugned order is set aside. - Appeal disposed of - WP No. 433 of 2012 - Dated:- 15-9-2016 - Debangsu Basak, J. Mr. J. P. Khaitan, Sr. Adv. With Ms. Nilanjana Banerjee, Adv Mr. R. N. Das, Sr. Adv. With Ms. Aishwarya Rajyashree, Adv ORDER The petitioner has assa .....

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ion 14AA of the said Act entails civil consequences, the authorities are obliged to grant an opportunity of hearing to the petitioner. In the present case, the petitioner was not afforded any opportunity of hearing. Moreover, the impugned order is unreasoned. The impugned order does not specify any ground as to the formation of the opinion of the Commissioner that the petitioner has availed of duty credit or utilised cenvat credit beyond the normal limits. Learned Senior Advocate on behalf of th .....

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of duty availed of or utilised under the rules made under this Act by a manufacturer of any excisable goods - (a) is not within the normal limits having regard to the nature of the excisable goods produced or manufactured, the type of inputs used and other relevant factors, as he may deem appropriate; (b) has been availed of or utilised by reason of fraud, collusion or any wilful mis-statement or suppression of facts, he may direct such manufacturer to get the accounts of his factory, office, d .....

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ovisions of sub-section (1) shall have effect notwithstanding that the accounts of the said manufacturer aforesaid have been audited under any other law for the time being in force or otherwise. [***] (5) The manufacturer shall be given an opportunity of being heard in respect of any material gathered on the basis of the audit under sub-section (1) and proposed to be utilised in any proceeding under this Act or rules made thereunder. 5 [Explanation 1]. - For the purpose of this section, cost acc .....

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turer audited by a cost accountant or a chartered accountant nominated by them in the event he finds any of the grounds enumerated therein to be satisfied. As the impugned order stands, the Commissioner has not specified the materials on the basis of which he has formed the opinion that the petitioner has availed of duty credit or utilised cenvat credit beyond the normal limits having regards to the nature and quantity of finished goods manufactured and cleared. The Commissioner has not discusse .....

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