Charu Technology PVT LTD And Anr vs. The Union Of INDIA And 3 Ors

Held

The Court held that the respondents cannot proceed with the recovery of excise duty as per the rates provided in Notification No. 20/2008-Central Excise dated 27.03.2008 without first considering the petitioner's application for a special rate. The Court acknowledged that Clause 3(1) of the notification provides a legal right to the assessee to claim a special rate if there are add-ons to the manufactured goods. Since the petitioner had submitted an application on 01.04.2021 for such a special rate after the Supreme Court restored the notification, it was deemed inappropriate for the department to initiate recovery proceedings without an appropriate decision on this claim. The reasoning was that the existence of a legal right to claim a special rate necessitates its consideration before enforcing general provisions. The ratio decidendi is that statutory rights for special considerations must be addressed before coercive recovery measures can be taken under general provisions. The Court directed the Principal Commissioner of GST, Guwahati, to consider the petitioner's application dated 01.04.2021 for a special rate within six weeks. No coercive measures are to be taken against the petitioner for recovery of refund or to pursue the communication dated 22.03.2021 until a decision is taken.

Facts

The petitioners, Charu Technology Pvt Ltd and another, are manufacturers of UPVC Pipes and fittings, operating under the Central Excise Act, 1944, and claiming benefits under the Northeast Industrial Policy. Initially, they received a 100% refund of excise duty paid. 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 based on actual value addition. The notification was initially set aside by the High Court, restoring the 100% refund. However, 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. The petitioners submitted an application on 01.04.2021 under Clause 3(1) for a special rate due to add-ons, but it was not considered. The respondents intended to recover excise duty based on the rates in the 2008 notification without deciding the special rate application.

Key Issues

1. Whether the respondents can proceed with the recovery of excise duty as per Notification No. 20/2008-Central Excise dated 27.03.2008 without considering the petitioner's application for a special rate under Clause 3(1) of the said notification? Petitioner's contention: The petitioner argued that Clause 3(1) of Notification No. 20/2008-Central Excise grants a legal right to apply for and obtain a special rate for refunds when there are add-ons to manufactured goods. They contended that their application dated 01.04.2021, made after the Supreme Court restored the notification, was not considered. Therefore, the respondents should not proceed with recovery based on the general rates in the notification until their claim for a special rate is decided. They relied on the principle that a statutory right cannot be ignored. Revenue's contention: The judgment records that the learned counsel for the GST department agreed to the disposal of the petition as indicated in the order, implying no specific argument was made against the petitioner's claim for consideration of their special rate application.