Calcom Cement INDIA Limited vs. The Union Of INDIA And 4 Ors

Held

The Court held that it would be inappropriate for the department to proceed against the petitioner for recovery of excise duty based on the rates provided in Notification No. 20/2008-Central Excise dated 27.03.2008, without first taking an appropriate decision on the petitioner's applications for a special rate under Clause 3(1) of the said notification. The Court reasoned that the notification itself provides a legal right to the assessee to claim a special rate if there are add-ons to the manufactured goods. Therefore, the principle is that a statutory right to apply for a special rate must be considered before coercive measures are taken based on general rates. The Court directed the Principal Commissioner of GST Guwahati to consider the petitioner's two applications dated 02.02.2021 and 04.02.2021 for fixing a special rate. Following this decision, further proceedings can be initiated as per law. Until a decision is taken, no coercive measures are to be taken against the petitioner, and the communication dated 05.02.2021 to the State Bank of India is to be stayed.

Facts

The petitioner, Calcom Cement India Limited, is a manufacturer of cement clinker and cement. They were eligible for excise duty exemptions under the Northeast Industrial Policy, which initially provided for a 100% refund of excise duty paid. Notification No. 20/2008-Central Excise dated 27.03.2008 altered this, providing for refunds based on specified rates. Clause 3(1) of this notification allowed manufacturers to apply for a special rate based on actual value addition. The petitioner had applied for such a special rate. While this notification was initially set aside by the High Court, the Supreme Court in Union of India and Others -vs- V.V.P. Limited & Others (2020 SCC Online SC 378) restored Notification No. 20/2008-Central Excise. Subsequently, the petitioner submitted two applications on 02.02.2021 and 04.02.2021 for a special rate under Clause 3(1), but these were not considered. The respondents intended to attach the petitioner's bank accounts based on the rates in the 2008 notification.

Key Issues

1. Whether the respondents can proceed to attach the bank accounts of the petitioner for recovery of excise duty refund as per the rates specified in Notification No. 20/2008-Central Excise dated 27.03.2008, without considering the petitioner's applications for a special rate under Clause 3(1) of the said notification? Petitioner's arguments: The petitioner contended that Clause 3(1) of Notification No. 20/2008-Central Excise provides a legal right to claim a special rate based on value addition. They argued that it would be inappropriate for the department to proceed with recovery based on the general rates in the notification without first deciding their applications for a special rate. They relied on the existence of this provision within the restored notification. Revenue's arguments: The judgment records that the learned counsel for the GST department was heard, but their specific arguments are not detailed. However, their action of intending to attach bank accounts suggests they believed they were entitled to proceed based on the rates in the 2008 notification.