SALEM TEXTILES LIMITED Vs. SUPERINTENDENT OF CENTRAL EXCISE

JUDGEMENT

(1.) THE present writ petition has been filed for quashing the order dated 11.6.2002 in O.C.No.334 of 2002. THE petitioner, a company registered under the Companies Act is running a Textile Mill and engaged in the manufacture of cotton yarn, viscose yarn and flex cotton yarn. THE petitioner purchased viscose fibre on which Excise duty is payable. THE petitioner also purchased several other materials which are subject to CENVAT. It is claimed that the petitioner Unit became a Sick Industrial Company and the matter has been referred to the Board for Industrial and Financial Reconstruction, hereinafter referred to as BIFR. While the matter stood thus, on 13.7.2001, an ex-parte order was passed by the second respondent under Rule 8(4)(ii) of the Central Excise Rules. Under the said order it was indicated that the petitioner had defaulted thrice in discharging the duty liability. It was also indicated that facility of payment of Excise duty in instalments stood forfeited for a period of two months from the date of communication of the said order and the petitioner was directed to pay Excise duty for each consignment by debiting the duty amount in his Account Credit (PLA). It was further indicated " . . . And in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow." On receipt of the said order, the petitioner had written to the second respondent by letter dated 20.7.2001 that the Unit had become a sick unit and had been referred to BIFR and a case has been registered as Case No.168/2001. Subsequently, under the impugned communication dated 11.6.2002, the petitioner was informed that the petitioner had utilised CENVAT Credit from 1.7.2001 to 31.5.2002 to an extent of Rs.92,46,670/- in gross negligence of the forfeiture order dated 9.7.2001. THE petitioner was called upon to pay CENVAT availed duty of Rs.92,46,670/- with interest thereon.

(2.) THE aforesaid order is being impugned mainly on the ground that since the matter is pending before the BIFR, the respondents should not take any coercive steps except in accordance with the provisions contained in the Sick Industrial Companies (Special Provisions) Act, 1985. It is also contended that the impugned order is passed without following the principles of natural justice. Learned counsel for the petitioner has further contended that there is no irregularity in the petitioner discharging its liability by making necessary adjustment under CENVAT Credit as contemplated under Rule 3(3) of the CENVAT Credit Rules, 2002.

(3.) IN the present case, there is no dispute that while passing the impugned order, principles of natural justice had not been followed. On this ground alone, the impugned order is liable to be quashed.