SANGHI POLYESTERS LIMITED Vs. SUPRINTENDENT OF CENTRL EXCIES

JUDGEMENT

(1.) The petitioner, a company registered under the Companies Act, 1956, filed this writ petition for a Mandamus to declare that sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002 (for short, "the Rules") is not retrospective and for a consequential declaration that the demand of duty of Rs.1,63,24,762/- with interest by respondent No.1, as illegal and arbitrary.

(2.) The facts, which are not in dispute, are as under: The petitioner manufactures polyester yarn (textured and non-textured). The polyester yarn is liable for excise duty under the Central Excise Tariff Act, 1944 (for short, "the Act"). The petitioner purported to pay excise duty for the months of January, 2005 and February, 2005 through certain outstation cheques. Those cheques were dishonoured. The amount, which fell due by 5th February, 2005, was eventually paid by the petitioner through account current. Nearly three years thereafter, respondent No.1 issued notice dated 01.05.2009 to the petitioner, wherein the latter was called upon to pay a sum of Rs.1,63,24,762/- and interest thereon for the period from 01.06.2006 to 14.06.2006, within ten days of receipt of the said letter. The petitioner vide its letter dated 06.05.2009, replied to the said demand by stating that during the period between 01.06.2006 and 14.06.2006, it discharged the duty liability from the Cenvat account in view of availability of adequate cenvat credit and that no reasons were mentioned in the letter of respondent No.1 for making the said payment. In response to the said letter, respondent No.1 addressed letter dated 14.05.2009, wherein it was inter alia mentioned that the duty liable from January, 2005 and in respect of which outstation cheques were issued by the petitioner and were bounced, was paid only on 15.06.2006 and that with effect from 01.06.2006, Rule 8 of the Rules was amended under which it is provided that if default in payment of duty continues beyond 30 days, the defaulter is not entitled to avail cenvat credit during the period of default. It was further stated that while the default continued beyond 30 days, the duty was paid only on 15.06.2006 and that therefore the consignment-wise clearance ought to have been made from 01.06.2006 to 14.06.2006 in account current and not by availing cenvat credit. This stand taken by respondent No.1 was disputed by the petitioner through its letter dated 01.06.2009, wherein the petitioner maintained that the amended sub-rule (3A) of Rule 8, which came into force on 01.06.2006, is applicable only to the defaults of payment occurred on or after 01.06.2006 and not to those which occurred prior to the said date. The petitioner further stated that the penal action which was envisaged in sub- rules (3) and (3A), as it was in force at that time, was not taken by the respondents when the default was committed and that in the absence of any order of forfeiture passed by the respondents at that time, no action can be taken to deny utilization of cenvat credit almost 4 years thereafter.

(3.) By his order dated 19.08.2009, respondent No.1 ordered for detention of excisable goods i.e., finished products, inputs, raw material etc., by invoking his powers under Section 11 of the Act. It is this order, which is assailed in this writ petition.