Mandovi Ispat PVT. LTD., Thr. Its Director, Jatinder Singh. vs. Union Of INDIA, Thr. Its Secretary, Ministry Of Finance, New Delhi And 2 Ors.

Held

The Court held that the Petitioner's contention regarding the determination of annual capacity of production based on actual power supply was not entirely ignored, but whether it was properly considered was a matter that could be agitated in an appeal. Therefore, on this ground, the Court was not inclined to entertain the writ petition. However, the Court found merit in the Petitioner's argument concerning the invalidity of Rule 96ZO(3). Citing the Supreme Court's decision in Shree Bhagwati Steel Rolling Mills, the Court held that the Additional Commissioner was not justified in levying interest or imposing penalties relying on Rule 96ZO, which had been declared ultra vires. Similarly, the Commissioner (Appeals) was not justified in upholding such levies. The Court concluded that the levy or upholding of interest under Rule 96ZO and the levy or upholding of penalty in excess of Rs. 10,000/- constituted an exercise in excess of jurisdiction. Consequently, the impugned order and the original order were modified to the extent that interest and penalty in excess of Rs. 10,000/- were set aside. The Court explicitly stated it had not examined the issue of whether a penalty up to Rs. 10,000/- was leviable, leaving liberty to the Petitioner to agitate this in a further appeal. The writ petition was partly made absolute to this extent.

Facts

The Petitioner, M/s. Mandovi Ispat Pvt. Ltd., challenged an order dated 27.02.2018 passed by the Commissioner (Appeals), Central GST and Customs, Goa. This order upheld an earlier order dated 18.08.2004 by the Additional Commissioner, Customs & Central Excise, Panaji. The original order confirmed duty demands totaling Rs. 82,25,529/- across multiple show cause notices (SCNs) and imposed penalties equivalent to the confirmed duty amounts under Rule 96ZO(3) of the Central Excise Rules, 1944. The Petitioner argued that the annual capacity of production should have been based on actual power supply, not sanctioned supply, a contention allegedly ignored by the Commissioner (Appeals). The Petitioner also argued that the penalty and interest levies were invalid as the relevant rules were declared ultra vires by the Supreme Court.

Key Issues

1. Whether the Petitioner's contention regarding the determination of annual capacity of production based on actual power supply, rather than sanctioned supply, was properly considered by the Commissioner (Appeals), and if not, does this failure to exercise jurisdiction warrant entertaining the writ petition despite an alternative remedy? 2. Whether the levy and confirmation of interest and penalty under Rule 96ZO(3) of the Central Excise Rules, 1944, are valid, given the Supreme Court's decision in Shree Bhagwati Steel Rolling Mills Vs Commissioner of Central Excise, which declared these provisions ultra vires? Petitioner's Arguments: The Petitioner contended that the Commissioner (Appeals) failed to consider their vital argument regarding the determination of annual production capacity based on actual power supply, citing a previous High Court order directing consideration of this issue. They argued that this non-consideration amounted to a failure to exercise jurisdiction, justifying the writ petition. Furthermore, the Petitioner argued that the imposition of interest and penalty was in excess of jurisdiction because Rule 96ZO(3) had been declared ultra vires by the Supreme Court in Shree Bhagwati Steel Rolling Mills, rendering any levy or confirmation under it invalid. Revenue's Arguments: The Revenue, through Ms. Asha Desai, raised a preliminary objection to the maintainability of the writ petition, arguing that the Petitioner had an alternate statutory remedy of appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against the impugned order, as indicated within the order itself.