Case Note & Summary
The petitioner, Essel Propack Limited, a company engaged in manufacturing plastic tubes, filed a writ petition under Article 226 of the Constitution of India challenging an order dated 28.08.2019 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai. The impugned order rejected the petitioner's miscellaneous application seeking recall of a finding of mis-statement and fraud made by CESTAT in its earlier order dated 27.09.2018, and imposed costs of Rs.10,000. The background of the case involves an excise audit conducted in February 2013 for the period October 2010 to September 2012, where the auditors found that the petitioner had availed ineligible CENVAT credit of service tax paid on certain input services, including labour services for civil work and shifting of machinery, amounting to Rs.36,224. A show cause-cum-demand notice was issued on 23.12.2015, alleging that the services were not connected with manufacturing activities and thus not admissible as input service. The petitioner replied on 16.03.2016 and was granted a personal hearing on 16.02.2017. The adjudicating authority confirmed the demand and imposed penalties. The petitioner appealed to CESTAT, which dismissed the appeal on 27.09.2018, holding that the petitioner had made mis-statements and practiced fraud. The petitioner then filed a miscellaneous application seeking recall of that finding, which was dismissed by the impugned order with costs. The High Court examined the submissions and found that the CESTAT's finding of mis-statement and fraud was based on the petitioner's conduct in not disclosing the true nature of the services. The court noted that the petitioner had not challenged the merits of the order but sought recall of the fraud finding, which was not permissible as the order had merged with the appeal. The court also held that the CESTAT had inherent power to impose costs to prevent abuse of its process, and such power is not excluded by the Central Excise Act, 1944. The High Court further observed that the petitioner had an alternative remedy of appeal under Section 35G of the Act, and the impugned order did not suffer from any jurisdictional error or patent illegality warranting interference under Article 226. Accordingly, the writ petition was dismissed.
Headnote
A) Central Excise - CENVAT Credit - Mis-statement and Fraud - Rule 9(2) of CENVAT Credit Rules, 2004 - The petitioner availed CENVAT credit on labour services not connected with manufacturing, which was held to be ineligible. The CESTAT found that the petitioner had made mis-statements and practiced fraud, leading to dismissal of the appeal. The High Court upheld the finding, noting that the petitioner had not challenged the merits of the order but sought recall of the fraud finding, which was not permissible as the order had merged with the appeal. (Paras 3-5, 10-12) B) Central Excise - CESTAT - Power to Impose Costs - Inherent Power - The CESTAT imposed costs of Rs.10,000 on the petitioner for filing a frivolous miscellaneous application seeking recall of the fraud finding. The High Court held that the Tribunal has inherent power to impose costs to prevent abuse of its process, and such power is not excluded by the Central Excise Act, 1944. (Paras 13-15) C) Constitutional Law - Writ Jurisdiction - Article 226 - Scope of Interference - The High Court declined to interfere with the CESTAT order under Article 226, as the petitioner had an alternative remedy of appeal under Section 35G of the Central Excise Act, 1944, and the impugned order did not suffer from any jurisdictional error or patent illegality. (Paras 16-18)
Issue of Consideration
Whether the CESTAT order dated 27.09.2018 dismissing the appeal on the ground of mis-statement and fraud could be recalled by way of a miscellaneous application; and whether the CESTAT had the power to impose costs while dismissing such application.
Final Decision
The High Court dismissed the writ petition, upholding the CESTAT order dated 28.08.2019 rejecting the miscellaneous application and imposing costs of Rs.10,000.
Law Points
- CENVAT Credit Rules
- 2004
- Rule 9(2)
- Rule 14
- Rule 15
- Central Excise Act
- 1944
- Section 11A
- Section 35G
- Section 35H
- Section 35L
- Article 226 of the Constitution of India
- Doctrine of merger
- Inherent power to impose costs
- Abuse of process of law
