No Recovery of Central Excise Duty, Interest, and Penalty without service of Adjudication Order: Calcutta HC [Read Order]

The Single Bench of Calcutta High Court has held that no recovery of central excise duty, interest, and penalty without service of adjudication order.

The petitioner, Haldia Petrochemicals Limited approached the single bench of Calcutta High Court presided by Mr. Justice Md. Nizamuddin against the recovery of demand relating to central excise duty, interest, and penalty without service of adjudication order dated 17th October 2012 and without establishing from any material documents about actual proof of any service of the said adjudication order upon the petitioner in compliance of the statutory formalities required under Section 37C of the Central Excise Act, 1944.

The counsel for the petitioner submitted that a show-cause was issued to the petitioner proposing to disallow CENVAT credit taken by the petitioner in respect of Naphtha which was used for manufacturing of electricity and that the petitioner replied and also appeared for a personal hearing before the authorities concerned but thereafter petitioner did not receive any further notice or order.

The counsel for the petitioner further submitted that after seven years the petitioner was informed that while dealing with a different refund claim of the petitioner which was sanctioned for refund, the same has been adjusted against the demand relating to the aforesaid adjudication order dated 17th October 2012 which was never served upon the petitioner. The respondent also proceeded to attach the petitioner’s bank account with the State Bank of India.

The High Court observed that the respondent’s action of making recovery of demand more than the statutory pre-deposit amount required to be made in filing an appeal against adjudication order, from the other refundable amount and by attachment of bank account and recovery from the bank account of the petitioner by way of demand draft is not sustainable in law

The single bench directed the respondent to refund the amount recovered more than 20 percent of the demand from the petitioner based on the adjudication order dated 17th October 2012, from its bank and pass the necessary order for withdrawal of the impugned order of attachment of bank account in the question of the petitioner within seven days from date since the statutory pre-deposit amount for filing Appeal against the adjudication order dated 17th October 2012 has already been made by the petitioner.

Adv. Mr. J. P. Khaitan appeared on behalf of the petitioner and Adv. Mr. Bhaskar Prosad Banerjee and Adv. Mr. Raj Kr. Sain appeared for the respondent and Union of India respectively.

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