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2019 (8) TMI 714

..... willful suppression of unaccounted manufacture and clearance/selling activity of articles of diamond studded gold jewellery - exemption N/N. 28/2016-CE dated 26.07.2016 - Rules 108 and 109A(1) of the CGST Rules, 2017, read with Section 107 of the CGST Act, 2017. HELD THAT:- By merely relying upon the circular, it cannot be said that the Joint Commissioner had no jurisdiction to issue the show-cause notice and adjudicate the same - reliance placed in the case of Supreme Court in the case of PAHWA CHEMICALS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI [2005 (2) TMI 136 - SUPREME COURT], wherein the very same issue had cropped up where it was held that the Superintendent had jurisdiction to issue showcause- notice and the Deputy Commissioner had jurisdiction to adjudicate. One another Circular No.31/05/2018-GST dated 9th February 2018 is relied upon where it was held that It has now been decided by the Board that Superintendents of Central Tax shall also be empowered to issue show cause notices and orders under section 74 of the CGST Act. Thus, in the present case, the writ-applicant has an alternative remedy of preferring a statutory appeal - writ-application is disposed of .....

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..... was issued by the Joint Commissioner (Incharge of Division-1), Central Goods and Services Tax and Central Excise, Surat, calling upon the writ-applicant to showcause as to why :- (i) the Central Excise duty amounting to ₹ 5,84,79,970/- applicable @ 1% ad-valorem (without Cenvat credit facility) evaded by way of willful suppression of unaccounted manufacture and clearance/selling activity of articles of diamond studded gold jewellery, falling under Chapter Heading 7113 of the Central Excise Tariff Act, 1985, during the period from March-2016 to June-2017, should not be demanded/recovered by invoking the provisions of extended period of Section 11A(4) of the Central Excise Act, 1944, made applicable vide Rule 14 of the Articles of Jewellery (Collection of Duty) Rules, 2016, read with Section 74(1) of the Central Goods and Services Tax Act, 2017, made applicable vide Section 142(8)(a) of the Central Goods and Services Tax Act, 2017; (ii) any exemption provided for vide Notification No.28/2016-CE dated 26.07.2016 should not be denied for evasion of above Central Excise duty; (iii) the interest at an appropriate rate should not be recovered from them under the provisions of Sectio .....

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..... ions of Section 74(1) of the Central Goods and Services Tax Act, 2017, made applicable vide Section 35(6) of the Central Goods and Services Tax Act, 2017, read with the provisions of Section 6 of Gujarat the SGST Act, 2017, to recover the State Tax (i.e. SGST); (iii) the seized goods totally valued at ₹ 15,58,59,711/- (₹ 4,10,68,644/- as per order of seizure dated 12.01.2018 and ₹ 11,47,91,067/- as per order of seizure dated 14/15.03.2018) should not be confiscated under the provisions of Section 130(i, ii & iv) of the CGST Act, 2017; (iv) the interest at an appropriate rate should not be recovered from them under the provisions of Section 50 of the CGST Act, 2017; (v) the penalty equal to the tax amount evaded should not be imposed upon them under Section 122(1)(i), (xv), (xvi), (xvii),(xviii), (xx) of the CGST Act, 2017; (vi) the penalty equal to the tax amount evaded should not be imposed upon them under Section 122(2)(b) of the CGST Act, 2017; (vii) the penal action should not be initiated against them for the offences committed under Section 132(a), (e), (h), (j) & (k) of the Central Goods and Services Tax Act, 2017. 4. The Joint Commissioner, GST and .....

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..... upply and shall be intimated to the Jurisdictional Assistant/Deputy Commissioner. (vi) order to recover interest for the amount mentioned at Sr.No. (ii) above, at an appropriate rate from them under the provisions of Section 11AA of Central Excise Act, 1944 made applicable vide rule 14 of Articles of Jewellery (Collection of Duty) Rules, 2016 read with Section 50 of the CGST Act, 2017 made applicable vide Section 142(8)(a) of the Central Goods and Services Tax Act, 2017 and I also order to recover interest on tax amount mentioned at Sr. No. (iii) and (iv) above under the provisions of Section 50 of the the CGST Act, 2017 and the Gujarat GST Act, 2017 read with the provisions of Section 6 of Gujarat GST Act, 2017, from M/s Palak Designer Diamond Jewellery, Surat. (vii) Impose penalty of ₹ 5,84,79,970/- (Rs. Five Crore Eighty Four Lakhs Seventy Nine Thousand Nine Hundred Seventy only) under Section 11AC(1)(c) of the Central Excise Act, 1944 read with rule 25 of the Central Excise Rules, 2002 made applicable vide Section 142(8)(a) of the Central Goods and Services Tax Act, 2017 on M/s Palak Designer Diamond Jewellery. (viii) impose penalty of ₹ 7,18,77,892/- (seven crore e .....

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..... y of the present writapplication. It was brought to the notice of Mr.Modh, the learned counsel appearing for the writ-applicant, that there is a statutory appeal provided against the impugned order before the Commissioner (Appeal) as per Rules 108 and 109A(1) of the CGST Rules, 2017, read with Section 107 of the CGST Act, 2017, on the payment of the admitted amount and pre-deposit of 10% of the disputed tax and cess within three months from the date of the communication of the impugned order. 6. In such circumstances referred to above, we called upon Mr.Modh to explain us as to why the writ-applicant should not be relegated to avail of the alternative remedy of preferring a statutory appeal. Mr.Modh submitted that the order passed by the Joint Commissioner could be termed as without jurisdiction. According to Mr.Modh, the Joint Commissioner was not empowered to issue the show-cause notice referred to above and adjudicate the same by passing the final impugned order. According to Mr.Modh, the Circular No.1049/37/2016-CX dated 29th September 2016 issued by the Government of India, Ministry of Finance (Department of Revenue), Central Board of Excise and Customs, New Delhi, makes it cl .....

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..... ers). It is hereby directed that henceforth powers of adjudication both in Central Excise and Service Tax shall be exercised, based on the monetary limit of the duty/tax/ credit involved in a case, as under :- Sl. No. Central Excise Officer Monetary Limits of duty/tax/credit demand for Central Excise and Service Tax 1. Superintendent Not exceeding rupees ten lakh 2. Deputy/Assistant Commissioner Above ten lakh but not exceeding rupees fifty lakh 3. Additional/Joint Commissioner Above fifty lakh but not exceeding rupees two crore 4. Commissioner Without limit i.e. cases exceeding rupees two crore 8. Mr. Nirzar Desai, the learned standing counsel appearing for the Union of India, invited our attention to a decision of the Supreme Court in the case of Pahwa Chemicals Pvt. Ltd. v. Commissioner of Central Excise, Delhi, reported in 2005(181) E.L.T. 339 (S.C.), wherein the very same issue had cropped up. In the case before the Supreme Court, the appellants preferred an appeal before the Commissioner of Central Excise (Appeals). It was contended that as suppression had been alleged, the Superintendent who had issued the show-cause notices was not competent to issue the show-cause notices .....

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..... ads as follows: SECTION 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded.(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words "Central Excise Officer", the words "Collector of Central Excise" and for the words "six months" the words "five years" were substituted .....

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..... deleted and the words "Central Excise Officer" were incorporated. Thus, the Legislature purposely and knowingly made a change whereby it was no longer required that where allegations of fraud, collusion, willful misstatement or suppression of facts are made, a Collector should issue a show-cause notice or adjudicate the same. Now a Central Excise Officer also has the jurisdiction. 10. Section 2(b) of the Act defines a "Central Excise Officer" as follows: 2(b). "Central Excise Officer" means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central Excise (Appeals), Additional Commissioner of Central Excise, Deputy Commissioner of Central Excise, Assistant Commissioner of Central Excise or any other officer of the Central Excise Department, or any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act. Thus, even an Additional Commissioner or an Assistant Collector or a Deputy Commissioner or any other Officer of the Central Exc .....

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..... And upto ₹ 10 lakhs Assistant Commissioner - Upto ₹ 2 lakhs Notwithstanding the powers of Assistant Commissioners to adjudicate the cases involving duty amount upto ₹ 2 lakhs only as above, all cases of determination of valuation and/or classification other than those covered under Category (A) above, will be adjudicated by the Assistant Commissioners without any limit as hitherto, as also Modvat disputes, other than those at category (A) above. (C) Cases related to issues mentioned under first proviso to Section 35B(1) of Central Excise Act, 1944 would be adjudicated by the Addl. Commissioners/ Dy. Commissioners without any monetary limit, as was the position under Board's Circular No. 13/93- CX., dated 15th October, 1993. 4. The value of goods/conveyance, plants, machinery and building etc., liable to confiscation will not alter above powers of adjudication which will solely depend upon the amount of duty/Modvat credit involved on the offending goods. 5.1 In respect of cases covered under Category (A) of Para 3 above, the show cause notices will be issued by the same rank of officers who will adjudicate them. Wherever the posts of Commissioner-I and Commiss .....

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..... n 11A and replaced it with the words "Central Excise Officer". It is the Act which confers jurisdiction on the concerned Officer/s. The Act permits any Central Excise Officer to issue the show-cause notices even in cases where there are allegations of fraud, collusion, willful misstatement and suppression of facts. The question therefore is: Can the Board override the provisions of the Act by issuing directions in the manner in which it is done and if the Board cannot do so then what is the effect of such Circulars? 13. In order to consider the powers of the Board one needs to see certain provisions of the Act. Section 2(b) defines the "Central Excise Officer" and it is mentioned therein that any Officer of the Central Excise Department or any person who has been invested by the Board with any of the powers of the Central Excise Officer would be a Central Excise Officer. Thus, the Board has power to invest any Central Excise Officer or any other Officer with powers of Central Excise Officer. By virtue of Section 37B the Board can issue orders, instructions or directions to the Central Excise Officers and such Officers must follow such orders, instructions or dir .....

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..... ecting the Commissioner (Appeals) to dispose of the Appeal. 12. In view of the aforesaid, we are of the view that by merely relying upon the circular, it cannot be said that the Joint Commissioner had no jurisdiction to issue the show-cause notice and adjudicate the same. 13. At this stage, Mr.Nirzar Desai brought to our notice one another Circular No.31/05/2018-GST dated 9th February 2018. The subject of the said Circular reads as follows : Proper officer under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017 and under the Integrated Goods and Services Tax Act, 2017 - reg. 14. The Circular reads as under : The Board, vide Circular No. 1/1/2017-GST dated 26th June, 2017, assigned proper officers for provisions relating to registration and composition levy under the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act ) and the rules made thereunder. Further, vide Circular No. 3/3/2017 - GST dated 5th July, 2017, the proper officers for provisions other than registration and composition under the CGST Act were assigned. In the latter Circular, the Deputy or Assistant Commissioner of Central Tax was assigned as the proper officer under s .....

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..... e below, the functions as the proper officers in relation to issue of show cause notices and orders under sections 73 and 74 of the CGST Act and section 20 of the IGST Act (read with sections 73 and 74 of the CGST Act), up to the monetary limits as mentioned in columns (3), (4) and (5) respectively of the Table below:- Sl No Officer of Central Tax Monetary limit of the amount of central tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing o .....

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