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2019 DIGILAW 944 (RAJ)

Star Delta Exim (P) Ltd. v. Union of India

2019-03-29

GOVERDHAN BARDHAR, MOHAMMAD RAFIQ

body2019
JUDGMENT : Mohammad Rafiq, J. 1. This writ petition has been filed by M/s. Star Delta Exim (P) Ltd. and its four Directors challenging Order-in-Original dated 25.05.2018 passed by the Commissioner, Central Goods and Service Tax Commissionerate, Alwar. 2. Learned counsel for the parties have confined their submissions as to the attractability of Clause 11.2 of Master Circular No. 1053/2/2017-CX., dated 10.03.2017 (for short 'the Master Circular') issued by the Central Board of Excise and Customs, New Delhi. This Circular has been issued in super session of different 92 Circulars and Instructions on Show Cause Notices and Adjudication issued by the Board from time to time and therefore rescinded all of them, list of which has been appended thereto. The aforesaid Master Circular addresses references from trade and field formations and provides clarity and uniformity on the issues so raised. The aforesaid Circular covers 31 different subjects. Part I of the Master Circular deals with Demand; Show Cause Notice; Structure of Show Cause Notice; Authority to adjudicate; Limitation to demand duty; Extended period; Applicability of limitation in demanding interest; Demand due to Department Audit or CERA; Pre Show Cause Notice consultation; Authority to issue Show Cause Notice; Unjust enrichment in Show Cause Notice; Changing Practice of Assessment; Waiver of Show Cause Notice and; Call Book Cases. Part II of the Master Circular deals with Adjudication, Monetary limits and other issues; Jurisdiction of Executive Commissionerate; Adjudication by officers of Audit Commissionerate; Cases investigated by DGCEI; Service of Show Cause Notice and Relied Upon Documents; Stages of adjudication; Corrigendum to an adjudication order; Transfer of adjudicating authority; Signing of the order and; Adjudication of SOFs/LAR raised by CERA. In part III, subjects of confirmed demands and recovery have been dealt with. Part IV of the Master Circular deals with Service of decisions, orders, summons, etc.; De novo adjudication; no Show Cause Notice on voluntary payment and; refund of pre-deposit. Opening of the Master Circular reads as under: "Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Master Circular on Show Cause Notice, Adjudication and Recovery-Regarding. Kind attention is invited to Ninety two Circulars and Instructions on Show Cause Notices and Adjudication issued by the Board from time to time, placed at the Annexures to this Master Circular. Kind attention is invited to Ninety two Circulars and Instructions on Show Cause Notices and Adjudication issued by the Board from time to time, placed at the Annexures to this Master Circular. These circulars address references from trade and field formations and provide clarity and uniformity on the issues raised. Board undertakes exercise of consolidating these circulars from time to time so as to ensure clarity and ease of reference. This master circular on the subject of show cause notices, adjudication proceedings and recovery is an effort to compile relevant legal and statutory provisions, circulars of the past and to rescind circulars which have lost relevance. Annexure-I to the circular provides list of the eighty nine circulars which stand rescinded. Three circulars listed in Annexure-II have not been rescinded as they contain comprehensive instructions on the subject they address. 2. The matter circular is divided into four parts. Part I deals with Show Cause Notice related issues, Part II deals with issues related to Adjudication proceedings, Part III deals with closure of proceedings and recovery of duty and Part IV deals with miscellaneous issues. 3. The provisions of the Master Circular shall have overriding effect on the CBEC's Excise Manual of Supplementary instructions to the extent they are in conflict. 4. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow." 3. We are in the present case concerned with Clause 11.2 of the Master Circular contained in Part II, captioned as "Other important points", which reads as under: "11.2 Other important points: Cases involving taxability, classification, valuation and extended period of limitation shall be kept out of the purview of adjudication by Superintendents. Such cases, upto rupees 10 Lakhs, shall also be adjudicated by the Deputy Commissioner/Assistant Commissioner in addition to the cases exceeding rupees 10 Lakhs but not exceeding rupees 50 lakh. i. Refund matters (including rebate), shall be adjudicated by the Deputy Commissioner/Assistant Commissioner without any monetary limit. ii. In case different show cause notices have been issued on the same issue answerable to different adjudicating authorities, Show Cause Notices involving the same issue shall be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty." 4. The facts of the case, necessary for deciding present controversy lie in a narrow compass. ii. In case different show cause notices have been issued on the same issue answerable to different adjudicating authorities, Show Cause Notices involving the same issue shall be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty." 4. The facts of the case, necessary for deciding present controversy lie in a narrow compass. A show cause notice C. No. DZU/INV/CE/G/49/2013/1550 dated 01.03.2016 was issued by the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi (for short 'the DGCEI') to M/s. Chandra Protech Ltd. Silvassa for denial and recovery of CENVAT Credit of Rs. 22,45,79,860/- along with interest besides invocation of penal provisions. This show cause notice was made answerable to the Additional Director General (Adjudication), DGCEI, Delhi Zonal Unit, Delhi. Another show cause notice, pursuant to which impugned Order-in-Original was passed, was issued to the petitioners herein vide C. No. V(H)Adj/CE-76 & 74/155/Alw/2017/7924 dated 23.10.2017 by the Commissioner, Central Excise and Service Tax Commissionerate, Alwar for denial and recovery of CENVAT Credit of Rs. 4,49,63,006/- along with interest besides invocation of penal provisions. Perusal of aforesaid two show cause notices would indicate that show cause notice dated 23.10.2017 has been issued on the basis of investigation conducted and referred to in earlier show cause notice dated 01.03.2016 issued to M/s. Chandra Protech Ltd. Silvassa. 5. We have been taken through both the show cause notices and we find that averments of both the show cause notices are having striking similarities at different pages and their contents are verbatim at several places. Similarities in two show cause notices dated 01.03.2016 and 23.10.2017 are listed as under: S. No. Description Para & Page no. of show cause notice dt. 01.03.2016 (P-3), page 79 to 144 Para & Page no. of show cause notice dt. 23.10.2017 (P-4), page 145 to 177 1. Para 2, page 145, show cause notice dt. 02.03.2016 (actual date 01.03.2016 – P- 3) refers 2. Panchnama dt. 09.04.2013 drawn at premises of M/s Star Delta Para 2.4.1, page 97 & 98, “... the factory premises consists of.... no movement of vehicles” Para 20, page 152 & 153 “... the factory premises consists of...... no movement of vehicles” 3. Statement dt. 09.04.2013 of Sh. Satender Sharma – Auth. Signatory of M/s Star Delta Para 2.4.1.1, page 98, 99. At page 99 “.... that for these firms/companies....... the factory premises consists of.... no movement of vehicles” Para 20, page 152 & 153 “... the factory premises consists of...... no movement of vehicles” 3. Statement dt. 09.04.2013 of Sh. Satender Sharma – Auth. Signatory of M/s Star Delta Para 2.4.1.1, page 98, 99. At page 99 “.... that for these firms/companies....... in the custody of by sh. Yogesh Singh....” Para 20.2, page 153, 154. At page 154. “..... that for these firms/companies.......in the custody of by Sh. Yogesh Singh....” 4. Statement dt. 21.05.2013 of Sh. Yogesh Singh, Auth. Signatory of M/s Star Delta Para 2.4.3.1, page 104, 105. At page 105 “..... They started another company in the...... not surrendered its central excise registration...” page 106 Para 20.4, page 155, 156 “..... They started another company in the.... not surrendered its central excise registration...” 5. Do Para 2.4.3.1, At page 106 & 107 “..... on getting instruction from Sh. Pawan Gupta..... based on the instructions of Sh. Pawan Gupta...” Para 20.5, 20.6 page 156 & 157 “.... on getting instruction from Sh. Pawan Gupta... based on the instructions of Sh. Pawan Gupta....” 6. Statements of transporters 6.1 Statement dt. 09.04.2013 of Sh. Kamlesh Kumar Sharma prop. M/s Shivam Transport Para 2.5.3, page 109, 110 “........ He was the owner..... the office copy may be lying with M/s Star Delta Exim Pvt. Ltd. Only Para 23.1, page 159, 160, 161, 162. At page 159 “..... He was the owner....... the office copy may be lying with M/s Star Delta Exim Pvt. Ltd. Only (internal page 15 & 16 of SCN refers) 7. Statement dt. 08.11.2013 of Sh. Kamlesh Kumar Sharma prop. M/s Shivam Transport Para 2.5.4, page 110, 111 “..... He did not have his....... of goods other than the places mentioned, above...... Para 23.2, page 161, 160 At page 161 “...... He did not have his......... of goods other than the places mentioned, above...... (internal page 16 & 17 of SCN refers) 7.1 Do At Page 111, “.... He had not issued any bilty to...... did not keep the GR with them Page 160 & 162 “..... He had not issued any bilty to..... did not keep the GR with them (internal page 17 & 18 of SCN refers) 8. Statement dt. 08.11.2013 of Sh. Banwari Lal Sharma M/s Happy Transport Para 2.5.5, Page 111, 112, 113. At page 112 & 113 “...... did not keep the GR with them Page 160 & 162 “..... He had not issued any bilty to..... did not keep the GR with them (internal page 17 & 18 of SCN refers) 8. Statement dt. 08.11.2013 of Sh. Banwari Lal Sharma M/s Happy Transport Para 2.5.5, Page 111, 112, 113. At page 112 & 113 “...... He was proprietor of M/s Happy....... not doing any business of transportation of goods....” Para 23.3, Page 162, 163 “....... He was proprietor of M/s Happy........... not doing any business of transportation of goods...” (internal page 18 & 19 of SCN refers) 6. Learned counsel for the petitioner-assessee argued that as per Clause 11.2 of the Master Circular, in the case of different show cause notices issued on the same issue answerable to different adjudicating authorities, show cause notice involving the same issue shall be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty, which according to him, would be the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi where the adjudication proceedings are still pending. 7. Learned counsel for the revenue however objected to the maintainability of the writ petition on the ground that the petitioners have alternative efficacious remedy by way of appeal under Section 35B of the Central Excise Act, 1944 before the Central Excise and Service Tax Appellate Tribunal, New Delhi. However, responding to the argument raised by learned counsel for the petitioners, his submission is that CBEC Circular No. 1000/7/2015-CX : dated 03.03.2015 and Circular No. 1053/2/2017-CX : dated 10.03.2017 are applicable only in respect of the cases booked by DGCEI as is evident from the subject of Circular No. 1000/7/2015-CX : dated 03.03.2015 which reads as 'Instructions regarding adjudication of Central Excise and Service Tax Cases booked by DGCEI-reg.'. Further submission of learned counsel for the revenue is that present case was not booked by DGCEI, which could be considered for transferring to another adjudicating authority. Moreover, such a request was made by Petitioner No. 1 after more than two months of issuance of impugned show cause notice. Further submission of learned counsel for the revenue is that present case was not booked by DGCEI, which could be considered for transferring to another adjudicating authority. Moreover, such a request was made by Petitioner No. 1 after more than two months of issuance of impugned show cause notice. Furthermore, the request of the petitioners for transferring the case to the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi did not fall within the power of the adjudicating authority of the present case i.e. the Commissioner, Central Excise and Service Tax Commissionerate, Alwar and therefore the same could not be considered. 8. We are not inclined to enter into the merits of the case but at the same time we are also not inclined to countenance the preliminary objection raised by the respondents with regard to maintainability of writ petition on the ground of availability of alternative efficacious remedy of appeal as the objection of the assessee, if upheld, would touch upon the very jurisdiction of the Assessing Authority. In our view, objection of the respondents with reference to subject of Circular No. 1000/7/2015-CX : dated 03.03.2015 that it deals with 'Instructions regarding adjudication of Central Excise and Service Tax Cases booked by DGCEI-reg.' is wholly untenable because this circular is no longer in existence as the same has been rescinded by the Master Circular. This would be evident from list of circulars appended thereto wherein Circular dated 03.03.2015 finds place at Serial No. 86. The respondents therefore would not be justified in relying on Circular dated 03.03.2015. 9. We have gone through two show cause notices and find substantial similarities between the two and we are prima facie inclined to sustain the argument of learned counsel for the petitioner that subsequent show cause notice dated 23.10.2017 has been issued on the basis of material discovered in the course of investigation conducted and referred to in earlier show cause notice dated 01.03.2016 issued to M/s. Chandra Protech Ltd. Silvassa. We therefore find that both the show cause notices are based on common evidence relied before two adjudicating authorities by the department, thus, giving rise to possibility of divergent views by two different adjudicating authorities. We therefore find that both the show cause notices are based on common evidence relied before two adjudicating authorities by the department, thus, giving rise to possibility of divergent views by two different adjudicating authorities. It is in order to avoid such a situation that the Central Board of Central Excise and Customs, New Delhi, in its wisdom, has rightly provided that in the case of different show cause notices issued on the same issue answerable to different adjudicating authorities, show cause notice involving the same issue shall be adjudicated by the adjudicating authority competent to decide the case involving the highest amount of duty. Admittedly, first show cause notice C No. DZU/INV/CE/G/49/2013/1550 dated 01.03.2016 containing denial and recovery of CENVAT Credit of Rs. 22,45,79,860/- along with interest, besides invocation of penal provisions, had the highest amount of duty as compared to denial and recovery of CENVAT Credit of Rs. 4,49,63,006/- along with interest besides invocation of penal provisions contained in another show cause notice C No. V(H)Adj/CE-76 & 74/155/Alw/2017/7924 dated 23.10.2017, which culminated in the impugned Order-in-Original. 10. Argument of the respondents that request of Petitioner No. 1 for transferring the case to the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi did not fall within the power of the adjudicating authority of the present case i.e. the Commissioner, Central Excise and Service Tax Commissionerate, Alwar, is wholly without any substance as it was always open for him to make a request to the competent authority seeking appropriate order of transfer of the case to the Adjudicating Authority at New Delhi. 11. In view of above discussion, present writ petition deserves to succeed and is accordingly allowed. Impugned Order-in-Original is set aside. Proceedings pursuant to show cause notice C No. V(H)Adj/CE-76 & 74/155/Alw/2017/7924 dated 23.10.2017 are revived to be transferred to the Additional Director General, Directorate General of Central Excise Intelligence, Delhi Zonal Unit, New Delhi for decision with the proceedings initiated pursuant to first show cause notice C No. DZU/INV/CE/G/49/2013/1550 dated 01.03.2016 in accordance with law. 12. Stay Application No. 13093/2018 stands disposed of.