M/S Charu Engineering Industries And Anr vs. The Union Of INDIA And 3 Ors

Held

The Court held that since Notification No. 20/2008-Central Excise dated March 27, 2008, has been restored by the Supreme Court, and Clause 3(1) of this notification provides a legal right to the assessee to claim a special rate in case of add-ons to manufactured goods, it would be inappropriate for the department to proceed with recovery based on the standard rates without deciding the petitioner's claim for a special rate. The Court directed the Principal Commissioner of GST, Guwahati, to consider the petitioner's application dated April 1, 2021, for fixing a special rate based on the add-ons. After arriving at a decision on the special rate, further proceedings against the petitioner may be initiated as per law. Until such a decision is taken, no coercive measures for recovery of refund shall be taken, and the communication dated March 22, 2021, from the Assistant Commissioner of GST shall not be pursued. The Principal Commissioner is to complete this process within six weeks.

Facts

The petitioners, M/s Charu Engineering Industries and its proprietor, are manufacturers of UPVC pipes and fittings, subject to the Central Excise Act, 1944. They were eligible for benefits under the Northeast Industrial Policy, which involved a refund of excise duty paid. Initially, a 100% refund was provided. Notification No. 20/2008-Central Excise dated March 27, 2008, altered this, stipulating refunds based on rates in the notification. Clause 3(1) of this notification allowed manufacturers to apply for a special rate if their value addition exceeded certain thresholds. The petitioners applied for such a special rate. The said 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.

Key Issues

1. Whether the respondents can proceed with the recovery of excise duty refund as per the rates in Notification No. 20/2008-Central Excise dated March 27, 2008, without considering the petitioner's application for a special rate under Clause 3(1) of the said notification? Petitioner's arguments: The petitioner contended that Notification No. 20/2008-Central Excise, having been restored by the Supreme Court, grants them a legal right to claim a special rate based on add-ons to their manufactured goods. They submitted an application on April 1, 2021, for this special rate, but it has not been considered. Proceeding with recovery based on the standard rates in the notification without deciding their special rate claim would be inappropriate. Revenue's arguments: The judgment records that the learned counsel for the GST department agreed to the disposal of the petition in terms of the directions issued by the Court. No specific arguments against the petitioner's claim for consideration of the special rate were recorded.