M/S Vision Metalik Company vs. The Union Of INDIA And 2 Ors

Held

The Court held that the respondents cannot proceed with coercive action against the petitioner based on the rates provided in Notification No. 20/2008-Central Excise dated 27.03.2008 without first deciding the petitioner's application for a special rate under Clause 3(1) of the said notification. The reasoning was that Clause 3(1) grants a legal right to the assessee to claim a special rate if there are add-ons to the manufactured goods. The ratio decidendi is that statutory provisions granting a right to an assessee must be considered and decided before coercive measures are taken. The Court directed the Principal Commissioner of GST, Dibrugarh, to consider the petitioner's application dated 28.09.2020 for a special rate within six weeks. Further proceedings against the petitioner are to be initiated only after a decision on the special rate is arrived at. No coercive action is to be taken against the petitioner until such a decision is made. No issue was expressly left undecided.

Facts

The petitioner, M/s Vision Metalik Company, engaged in manufacturing instant tea, is challenging the respondents' intention to attach its bank accounts for alleged non-payment of excise duty. The petitioner had claimed benefits under the Northeast Industrial Policy, which involved a refund mechanism for excise duty paid. Initially, a 100% refund was provided. Notification No. 20/2008-Central Excise dated 27.03.2008 altered this, providing for refunds based on rates specified in the notification. Clause 3(1) of this notification allowed manufacturers to apply for a special rate representing actual value addition. The petitioner applied for such a special rate on 28.09.2020. However, the respondents intended to proceed with recovery based on the rates in the 2008 notification, without considering the petitioner's application for a special rate. This writ petition was filed due to the lack of consideration of the petitioner's application and the threat of coercive action.

Key Issues

1. Whether the respondents can proceed with coercive action against the petitioner for recovery of excise duty based on Notification No. 20/2008-Central Excise dated 27.03.2008, without first considering the petitioner's application for a special rate under Clause 3(1) of the said notification? The petitioner argued that Clause 3(1) of Notification No. 20/2008-Central Excise provides a legal right to an assessee to claim a special rate for value addition. They contended that without a decision on their application for a special rate, it is inappropriate for the department to proceed with recovery based on the standard rates in the notification. The petitioner relied on the existence of this provision within the notification. The respondents, represented by the GST department and CGC, did not record any specific arguments against the petitioner's claim for consideration of their special rate application. However, their action of intending to attach bank accounts suggests an assertion that the refund should be as per the rates provided in the 2008 notification.