Messrs Inductotherm (INDIA) PVT. LTD. vs. Union Of INDIA

Held

The Court found the petitioner's grievances to be genuine. While acknowledging that the petitioner had previously lost before the High Court in the department's appeal, the Court noted that the petitioner had subsequently managed its affairs in a manner that did not offend the directives and declarations of law made by the High Court. The Court emphasized that if the petitioner had changed its payment procedure and complied with Section 11D, as recognized by the Commissioner's order dated October 25, 2013, the department could not continue with the old impression and issue blanket letters for the reversal of Cenvat credits by the purchasers. The Court held that any instance of non-available Cenvat credit being passed on must be examined and adjudicated individually. If the finding in the Commissioner's order of October 25, 2013, holds good, there should be no further question of reversal of Cenvat credit. The Court expected the departmental authorities to consider these observations and directions before taking any further action against the petitioner or its buyers.

Facts

The petitioner, M/s Inductotherm (India) Pvt. Ltd., was engaged in manufacturing engineering goods. A dispute arose concerning the clearance of certain parts of induction furnaces on an 'as is' basis at a higher value, and the subsequent adjustment of Cenvat credit. The Department alleged that the petitioner collected amounts from buyers representing excise duty, which could not have been collected as excise duty, and thus was liable to be paid to the Central Government under Section 11D of the Central Excise Act, 1944. This led to a prior appeal by the department before the High Court (Tax Appeal No. 1744 of 2007), which was allowed. Subsequently, the petitioner changed its mode of payment to cash for excise duty. A Commissioner's order dated October 25, 2013, dropped proceedings against the petitioner, acknowledging the changed procedure and compliance with Section 11D. Despite this, departmental authorities continued to issue communications to buyers of the petitioner's goods, requesting them to reverse Cenvat credit.

Key Issues

1. Whether the departmental authorities are justified in continuing to issue communications to the buyers of the petitioner's goods to reverse Cenvat credit, despite a previous High Court judgment allowing the department's appeal on the issue and a subsequent Commissioner's order dropping proceedings against the petitioner based on a changed payment procedure? Petitioner's contention: The petitioner argued that since 2008, they changed their mode of payment of excise duty to cash, which was reflected in their ER-1 returns. They relied on the Commissioner's order dated October 25, 2013, which dropped the show cause notice, acknowledging compliance with Section 11D and the changed procedure. The petitioner contended that the continued issuance of letters to buyers to reverse Cenvat credit was unjustified and caused harassment. Revenue's contention: The judgment does not record any specific arguments made by the revenue in this writ petition. However, the underlying dispute stems from the revenue's prior contention that the petitioner had irregularly collected amounts representing excise duty and was liable to refund them.