2006 (8) TMI 502 - AT - Central Excise

Tribunal Upholds Settlement Under KVSS Preventing Revenue Appeal; Section 92 Interpretation Key

The tribunal dismissed the Revenue's appeal, upholding the decision that the settlement under the Kar Vivad Samadhan Scheme (KVSS) and the interpretation ... Appeal by Department - Kar Vivad Samadhan Scheme Issues:1. Appeal against the dropped demand of duty.2. Entertaining appeal by the Revenue after settlement under KVSS.3. Interpretation of Section 92 of the Finance Act, 1998.4. Validity of proviso to Section 92 in light of Article 14 of the Constitution.Analysis:1. The case involved an appeal by the Revenue against the part of the order dropping the demand of duty. The Commissioner (Appeals) rejected the Revenue's appeal, stating that since the tax recovery was settled by the designated authority under the Kar Vivad Samadhan Scheme (KVSS), the appeal could not be entertained. The Revenue challenged this decision in the present appeal.2. The appellate tribunal considered the provisions of Section 92 of the Finance Act, 1998, which restrict the appellate authority from proceeding in cases where the disputed chargeable expenditure has been settled under Section 90 by the designated authority. However, an exception is carved out in the proviso to Section 92, allowing the department to file an appeal against such issues. The tribunal noted a judgment by the Hon'ble Delhi High Court declaring the proviso to Section 92 as ultra vires Article 14 of the Constitution, as it creates artificial classes among assessees. The tribunal found that the department had accepted this decision based on a circular dated 8-12-98.3. Considering the legal position and the Delhi High Court's judgment, the tribunal upheld the decision of the Commissioner (Appeals) that the Revenue's appeal was not maintainable. The tribunal concluded that the appeal filed by the Revenue was rightly rejected, in line with the legal interpretation provided by the Delhi High Court's judgment and the department's circular.In summary, the tribunal dismissed the Revenue's appeal, affirming that the settlement under the KVSS and the legal interpretation of Section 92 of the Finance Act, 1998, precluded the Revenue from challenging the dropped demand of duty. The tribunal's decision was based on the principles of law established by the Delhi High Court's judgment regarding the proviso to Section 92 and the department's acceptance of the same.