Milton Plastics Ltd vs The Union Of India Through The ...
2016 Latest Caselaw 7134 Bom

     suresh                                       14-WP-10788.2015.doc

              IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                      
                      CIVIL APPELLATE JURISDICTION 
                         WRIT PETITION NO.10788 OF 2015




                                              
     Milton Plastics Ltd.,
     a company incorporated under the




                                             
     Companies Act, 1956 having its
     Registered Office at 4th Floor, 
     Asian Building, 17, R. Kamani Marg,
     Ballard Estate, Mumbai-400 001




                                    
     and having factory at Plot No.28/29,
     Pune Nagar Road, Shikrapur,
                             
     Pune - 412 208.                                   ....  Petitioners
                            
              - Versus -

     1. The Union of India
         through the Secretary, Ministry
      

         of Finance, Department of Revenue,
         North Block, New Delhi-110 001.
   



     2. The Commissioner of Central Excise,
         Pune-III, having his office at
         ICE House, 41/A, Sassoon Road,





         3rd Floor, "F" Wing, Pune-411 001.

     3. The Joint Commissioner of Central
         Excise, Pune-III Commissionerate,
         1st Floor, D-Wing, ICE House,





         41-A, Sassoon Road, Opp: Wadia
         College, Pune-411 001.

     4. The Customs, Excise & Service Tax
         Appellate Tribunal, West Zonal Bench,
         Jai Centre, P.D'Mello Road, 
         Poona Street, Masjid (E),
         Mumbai - 400 009.                             ....  Respondents

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      suresh                                                  14-WP-10788.2015.doc




                                                                                 
     Mr. V. Sridharan, Senior Counsel with Mr. Durga Prasad




                                                         
     Poojari, Mr. Jas Sanghavi & Ms Shilpi Jain i/by M/s. PDS
     Legal for the Petitioners.
     Mr. M. Dwivedi with Ms Ruju Thakkar for the Respondents.




                                                        
                                         CORAM: S.C. DHARMADHIKARI &
                                                        B.P. COLABAWALLA, JJ.

DATE : DECEMBER 13, 2016

ORAL JUDGMENT (Per Shri S.C. DHARMADHIKARI, J.):

1. This writ petition under Article 226 of the

Constitution of India seeks the following relief:-

"(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under

Article 226 of the Constitution of India calling for the records pertaining to the Petitioners case and after going into the validity and legality thereof to quash and set aside the (i) Order-in-Original dated 29.1.2008 passed by the Respondent No.3, (ii) Order-

in-Appeal dated 25.10.2011 passed by the Commissioner (Appeals) & (iii) Final Order dated 26.3.2014 passed by Respondent No.4;"

2. With the consent of both sides, we take up this writ

petition for hearing and final disposal forthwith. Hence, rule.

suresh 14-WP-10788.2015.doc

The respondents waive service.

3. The petitioners have filed this writ petition in this

Court on 8-10-2014. They state that they are engaged, inter alia,

in the manufacture of Insulated Wares of Plastic, Table Ware

and Vacuum Flask, falling under Chapter Heading 3924, 3923

and 9617, respectively, of the First Schedule to the Central

Excise Tariff Act, 1985.

4. They are holding a Central Excise Registration. It is

their case that they were manufacturing and clearing excisable

final products on payment of applicable excise duty. They were

duly maintaining all the records and accounts. Those were filed

at the time of clearance.

5. The petitioners purchased duty paid inputs/raw

materials from outside suppliers for the purpose of

manufacturing final products. They received such inputs under

the cover of appropriate duty paying documents, as required by

Rule 7(1) of the Cenvat Credit Rules, 2002 (for short, "the CC

suresh 14-WP-10788.2015.doc

Rules"). They availed cenvat credit of excise duty paid on the

inputs received in their factory in terms of Rule 3(1) read with

Rule 3(3) of the CC Rules. They have maintained proper cenvat

register/account for the inputs so received and the cenvat credit

availed by them in terms of Rule 7(4) of the CC Rules.

6. The petitioners also have a unit/factory at Silvassa

and Bhayander. These units are separately registered with the

Central Excise Department. They are also manufacturing and

clearing their excisable products. The petitioners state that these

two units and the petitioners are purchasing inputs

independently from various outside suppliers for manufacturing

their final product and availing cenvat credit on such

production.

7. However, on few occasions and to meet certain

urgent requirements, the petitioners indulged in what is called

as stock transfer. In such cases, inputs which are a stock with the

other units were transferred on reversal of appropriate excise

duty under the cover of an invoice. The petitioner-unit after

suresh 14-WP-10788.2015.doc

setting out this elaborate procedure has claimed that there was

no warrant to issue Show Cause-cum-Demand Notice dated

19-4-2007 for recovery of cenvat credit amounting to

Rs.7,98,869/- availed on inputs during the period 1-4-2002 to

28-2-2003. The recovery was threatened under Rule 12 of the

CC Rules read with Section 11A of the Central Excise Act, 1944.

8.

Mr. Sridharan, learned Senior Counsel appearing on

behalf of the petitioners, would submit that the petitioners are

not challenging the order passed by the Customs, Excise and

Service Tax Appellate Tribunal (CESTAT) dismissing their

statutory appeal. They are also not challenging the order passed

by the Commissioner of Central Excise (Appeals). He submits

that both appeals were dismissed on the ground of

limitation/time barred. The petitioners accept the fact that their

appeals to the said authorities were barred by limitation, but

they are not estopped in law from questioning the Original

Order. Particularly Mr. Sridharan submits that this can be done

in the facts of the present case where the said order passed on

the Show Cause Notice by the Adjudicating Authority fails to

suresh 14-WP-10788.2015.doc

take note of an important contention and that is, that the Cenvat

Credit Rules were amended by Notification No.13/2003, dated

1-3-2003. Rule 7 of the CC Rules which hitherto employed the

word "Purchased" was substituted by inserting the word

"Procured". The question is, whether during the period of

availment of cenvat credit from 1-4-2002 to 28-2-2003, whether

this amended provision would apply? Whether that amended

provision is clarificatory or a substantive one and, therefore,

would operate prospectively is a question or issue not addressed

in the order passed by the Joint Commissioner on 29-1-2008, is

the submission of Mr. Sridharan.

9. Mr. Dwivedi, appearing on behalf of the

respondents, on the other hand, would submit that as far as the

limitation goes, the finding of fact rendered in both orders,

namely, that of the Commissioner of Central Excise (Appeals)

and the CESTAT does not require any interference as the same is

consistent with the statutory provision. However, he fairly states

that in the order of the Joint Commissioner the above aspect has

not been discussed and all that is held is that because of the

suresh 14-WP-10788.2015.doc

period of availment of the cenvat credit, the amended

Notification and the provision will not apply.

10. After having heard both sides, we find that the

finding of fact that there is violation of Rule 7(4) read with Rule

13(2) of the CC Rules and that would attract penalty and

interest is a finding rendered without adverting to the important

contention raised before us, namely, whether the provision in

question, as amended, is clarificatory and, therefore, would

apply irrespective of the date of clearance or availment of the

cenvat credit or will it have prospective operation, namely, from

the date of its introduction. That ought to be considered. That

issue has not been addressed. We have perused carefully the

findings in the order passed on 29-1-2008 from running pages

93 to 95 (internal pages 6 to 8). However, there is no discussion

on this aspect, though squarely raised.

11. In the light of the above, we are of the opinion that

in the facts and circumstances of the present case and without

this order being treated as a precedent for future cases, the

suresh 14-WP-10788.2015.doc

impugned demand can be and is accordingly quashed and set

aside. However, the Show Cause Notice is kept alive for

adjudication. The petitioners shall appear before the

Adjudicating Authority on 22-12-2016. The Adjudicating

Authority, if the petitioners so appear, shall hear the matter

again and pass a fresh order. While passing the fresh order on

the point noted above, the Adjudicating Authority shall not be

influenced by any earlier conclusions. We expressly keep open

the rival contentions. We clarify that we have not held the said

provision to be prospective or clarificatory. That issue must be

squarely addressed and decided by the authority in terms of our

directions.

12. We clarify that we have not allowed the petitioners

to raise any ground before us on the point of limitation, as

applicable to the appellate remedy. But we clarify that insofar as

the demand is concerned, our order and findings do not

preclude the petitioners from raising appropriate contentions

and pointing out that the Show Cause Notice itself could not

have been issued in the light of the bar of limitation and as

suresh 14-WP-10788.2015.doc

amended in the statute.

13. The writ petition succeeds accordingly. There will be

no order as to costs.

(B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.)