Settlement authority limits on fine and appropriation: inconsistent directions unsupported by findings are legally unsustainable and may be remitted.

A settlement authority cannot direct payment and appropriation of fine against a person where its own findings show that duty-related liability rested with a co-applicant and the record does not support such liability. The Bombay HC held that a direction requiring fine in lieu of confiscation, and appropriation from the petitioner's recovered amount, was inconsistent with the settlement order's conclusions under the Central Excise Act and was therefore beyond jurisdiction and legally unsustainable. That direction was quashed and the matter remitted to the Settlement Commission to redetermine any fine in accordance with law after hearing both applicants and the Revenue, while the remaining settlement findings were left undisturbed.

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Issues: Whether the Settlement Commission was justified in directing imposition and appropriation of fine against the petitioner despite its own findings that the responsibility for duty-related liabilities rested with the co-applicant.

Analysis: The settlement order, passed under Section 127C(5) of the Central Excise Act, 1944, recorded findings that the goods were liable to confiscation and that the co-applicant had accepted responsibility for the short payment of duty and related liabilities. The impugned direction in paragraph 35, however, required payment of fine in lieu of confiscation and appropriation from the petitioner's recovered amount. That direction was held to be inconsistent with the Commission's own conclusions and unsupported by the material on record. The direction was therefore treated as beyond jurisdiction and legally unsustainable.

Conclusion: The impugned direction imposing fine and ordering appropriation was quashed and set aside, and the matter was remitted to the Settlement Commission to redetermine the fine, if any, in accordance with law after hearing both applicants and the Revenue.

Final Conclusion: The writ petition succeeded to the limited extent of the fine and appropriation directions, while the remaining parts of the settlement order were left undisturbed.

Ratio Decidendi: A settlement authority cannot sustain a direction for fine or appropriation that is inconsistent with its own findings and unsupported by material showing liability against the person proceeded against.

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