Ms Sypher Impex Alloys PVT LTD And Ors vs. Union Of INDIA And Anr

Held

The Court held that the writ petition was maintainable, overriding the preliminary objection regarding alternative remedy, as the issue touched upon the jurisdiction of the adjudicating authority. The Court found substantial similarities between the two show cause notices, concluding that the subsequent notice dated May 2, 2017, was issued based on material discovered in the investigation referenced in the earlier notice dated March 1, 2016. The Court ruled that Clause 11.2 of the Master Circular was applicable, as it was issued to avoid divergent views from different adjudicating authorities on common evidence. Since the show cause notice dated March 1, 2016, involved a higher amount of duty (Rs. 22,45,79,860/-) compared to the notice dated May 2, 2017 (Rs. 12,86,71,912/-), the adjudication should be consolidated. The Court found the revenue's argument regarding the rescinded circular and the adjudicating authority's power to be untenable. The Court set aside the impugned Order-in-Original and directed the proceedings pursuant to the show cause notice dated May 2, 2017, to be transferred to the Additional Director General, DGCEI, Delhi, for decision along with the proceedings initiated by the first show cause notice.

Facts

The petitioners, M/s. Sypher Impex Alloys Pvt. Ltd. and M/s. Skyward Rolling & Alloys Ltd., along with their directors and authorized signatory, challenged an Order-in-Original dated November 30, 2017, passed by the Commissioner, Central Goods and Service Tax Commissionerate, Alwar. The challenge was based on Clause 11.2 of Master Circular No. 1053/2/2017-CX. The case involved two show cause notices: one dated March 1, 2016, issued by the Directorate General of Central Excise Intelligence (DGCEI) to M/s. Chandra Protech Ltd. for CENVAT credit of Rs. 22,45,79,860/-, and another dated May 2, 2017, issued by the Commissioner, CGST Alwar, to the petitioners for CENVAT credit of Rs. 12,86,71,912/-. The petitioners contended that the subsequent show cause notice was based on the investigation referenced in the earlier notice and that both notices shared striking similarities.

Key Issues

1. Whether Clause 11.2 of Master Circular No. 1053/2/2017-CX, which mandates that in cases involving the same issue answerable to different adjudicating authorities, the show cause notice involving the highest amount of duty shall be adjudicated by the competent authority, is applicable to the present case? The petitioner argued that Clause 11.2 mandates that the show cause notice involving the highest amount of duty (Rs. 22,45,79,860/- issued by DGCEI) should be adjudicated by the competent authority, which is the Additional Director General, DGCEI, Delhi, where proceedings are still pending. The revenue contended that the writ petition is not maintainable due to the alternative remedy of appeal under Section 35B of the Central Excise Act, 1944. Furthermore, the revenue argued that Circular No. 1000/7/2015-CX, which dealt with DGCEI cases, was not applicable as it was rescinded and that the present case was not booked by DGCEI. The revenue also claimed that the request for transfer was made late and was beyond the power of the adjudicating authority in Alwar.