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2019 (4) TMI 240

th new CENVAT Rules 2002 and whether the proceedings could continue under Section 38A of Central Excise Act, 1944 in view of Sections 131 and 132 of the Finance Act, 2001 which have introduced saving and validating provisions? - Held that:- Omission would be included in the meaning of repeal. Section 38A of the Act (inserted in 2001 with retrospective effect from 1944) will make the notice dated 17th January, 2000 valid even post 1st April, 2000. This is in view of Section 38A (c) of the Act which states that any amendment, repeal, supersession or rescinding shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any rule so amended, repealed, superseded or rescinded. This is further qualified by providing that any investigation, legal proceedings may be continued, as if the Rule had not been amended, rescinded, repealed or superseded. In fact, the above provision is an amalgamation of Section 6 & 6A of the General Clauses Act, 1897 which applies to Acts, while Section 38A of the Act is specifically in relation to Rules under the Act - the view of the CESTAT cannot be upheld. - Whether on the facts and in the circumstances of the case .....

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tial questions of law: (a) Whether the demand issued under erstwhile Rule 57(l)(ii) is legally valid after those Rules were substituted with new CENVAT Rules 2002 and whether the proceedings could continue under Section 38A of Central Excise Act, 1944 in view of Sections 131 and 132 of the Finance Act, 2001 which have introduced saving and validating provisions? (b) Whether on the facts and in the circumstances of the case the observation of the CESTAT that the principles of natural justice were violated on the grounds mentioned in para 5(e) (CESTAT order page 13) when it is on records that the Respondents herein themselves were responsible for not availing the opportunity offered from time to time of inspection of all documents and following decisions in the case of M/s. Sunrise Structurals & Engg. Ltd. as reported in A/771 to 722/WZB/04-CII when the said decision is also under challenge and Appeal against it is pending in Nagpur Bench of Bombay High Court? (c) Whether the CESTAT was right in law in setting aside recovery of irregular modvat credit amounting to ₹ 1,67,39,432/under Rule 571 having been fraudulently availed in respect of inputs during the period 31.03.1995 .....

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rom Respondent No.1 ₹ 1.66 Crores under Rule 57I of the said Rules being the credit irregularly availed on the inputs during the period 31st March, 1995 to 6th September, 1999. The basis of the above demand notice was that the Respondent No.1 had received during period 1995-96 to 1999-2000 inputs of high quality steel (of 8% nickel) bearing more duty and thus availed the higher MODVAT Credit but only consumed some part of it in the manufacture of its said goods. The shortfall of the higher quality steel was substituted by use of inferior quality steel. This resulted in the Respondents availing excess MODVAT Credit to the extent of ₹ 1.67 Crores. Besides, seeking to impose penalties upon the Respondent No.1 and also upon its Director (Respondent No.3) and the Chief Officer (Respondent No.2). (iv) The Respondents contested the show cause notice and sought cross examination of the various persons on whose statement department was placing reliance as well as inspection of various documents relied upon by the Revenue. The Respondents in particular submitted that the show cause notice is not sustainable in view of the MODVAT Rules being Rules 57A to 57U of the said Rules bein .....

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on of the Supreme Court in the case of Kolhapur Canesugar Mills Pvt. Ltd., v/s. Union of India 119 ELT 257 and M/s. Rayala Corporation (P) Ltd., v/s. Director of Enforcement [1969] 2 SCC 412. (ii) However, the Commissioner of Central Excise by order dated 10th May, 2004 negatived the aforesaid contention. It held that in view of Section 38A of the Act, which was introduced in 2001 with retrospective effect from 28th February, 1944 would save the notice issued under the MODVAT Rules. This was also so as held by the Larger Bench of the Tribunal in the case of Kisan Sahakari Chini Mills Ltd. v/s. Commissioner of Central Excise 131 ELT 370. Thus, confirming the notice of demand dated 17th January, 2000. (ii) On appeal, the CESTAT allowed Respondents' appeal on this issue by holding that the notice issued under the erstwhile MODVAT Rules will not be saved, as 'substitution' will not be covered by the words 'amended, repealed, superseded or rescinded' as provided under Section 38A of the Act. For this purpose, it placed reliance upon its earlier decision in the case of Sunrise Structural & Engineering Pvt. Ltd., v/s. Commissioner of Central Excise [2004] 177 ECR 3 .....

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bility acquired, accrued or incurred under any rule so amended, repealed, superseded or rescinded. This is further qualified by providing that any investigation, legal proceedings may be continued, as if the Rule had not been amended, rescinded, repealed or superseded. In fact, the above provision is an amalgamation of Section 6 & 6A of the General Clauses Act, 1897 which applies to Acts, while Section 38A of the Act is specifically in relation to Rules under the Act. Thus, the view of the CESTAT cannot be upheld. (v) In the above view, this substantial question of law is answered in the affirmative i.e. in favour of the Appellant-Revenue and against the Respondent-Assessee. 6. Re. Question (b): (i) We note that the impugned order of the CESTAT has reached a finding of fact that the order dated 10th May, 2004 of the Commissioner of Central Excise has been passed in breach of principle of natural justice. This in view of the fact that cross examination of persons whose statements were relied upon by the Revenue were not given to the Respondent. Further, non-supply of documents relied upon by the Revenue would vitiate the order passed by the Commissioner of Central Excise. Thus, .....

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cer (Respondent No.2) of the Respondent No.1. The penalty was imposed upon both of them for aiding and abetting the availment of incorrect MODVAT Credit taken by the Respondent No.1. (ii) Respondent Nos.2 and 3 support the impugned order on the basis of the decision of this Court in Commissioner of Central Excise v/s. M/s. Bansal Steel Corporation & Others (CEXA No.108 of 2007) decided on 12th September, 2017 and Commissioner of Central Excise v/s. M/s. Ramesh Kumar Rajendra Kumar & Co., (CEXA No.18 of 2006) rendered on 14th September, 2010. (iii) We are not examining this issue as the entire show cause notice has now been restored to the Commissioner of Central Excise for fresh disposal after following the principles of natural justice. Needless to state that at the time of adjudication, the Commissioner of Central Excise would consider the Respondents' contention that the aforesaid two decisions in M/s. Bansal Steel Corporation (supra) and M/s. Ramesh Kumar Rajendra Kumar & Co., (supra) apply to the present fact and if so, grant the necessary benefit. (iv) Thus, effectively this issue is also remanded for reconsideration. It is made clear that our restoring this i .....

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