Court overturns rejection of settlement applications, orders fresh hearing based on statutory grounds.

HH Interior & Auto Components Limited Versus Commissioner Of Central Excise & Anr

HH Interior & Auto Components Limited Versus Commissioner Of Central Excise & Anr - 2016 (337) E.L.T. 175 (Del.) , 2017 (52) S.T.R. 98 (Del.) Issues:
Challenge to orders of Customs and Central Excise Settlement Commission under Central Excise Act, 1944; Rejection of settlement application by the Petitioner; Discrepancy regarding diary maintained by employee; Consideration of ITSC order in CCESC proceedings; Grounds for rejection of settlement application by CCESC; Judicial review of CCESC order under Article 226 of the Constitution of India.

Analysis:
The judgment deals with a petition challenging orders of the Customs and Central Excise Settlement Commission (CCESC) under the Central Excise Act, 1944, dismissing the settlement application filed by the Petitioner. The dispute arose from a search conducted at the premises of Mr. Pawan Goel, leading to the issuance of a show cause notice to the Petitioner for wrongful Cenvat credit availed. The Petitioner filed two settlement applications, the first being rejected due to lack of consensus between the Petitioner and the Department, and the second rejected on similar grounds despite a corrected mistake in the order. The Petitioner also sought consideration of an order by the Income Tax Settlement Commission (ITSC) that favored the Petitioner based on the same evidence.

The key issue raised was the grounds on which the CCESC could reject a settlement application. The Court highlighted that the CCESC can reject an application if there is a failure to make a full and true disclosure of material facts or lack of cooperation by the applicant. The CCESC cannot decline to examine an application solely due to differences between the applicant and the Department. The judgment emphasized that the CCESC's rejection must be based on the specific grounds outlined in the Central Excise Act, rather than differences of opinion between the parties.

The Court noted that the CCESC had erred in rejecting the applications based on incorrect premises, such as the absence of Mr. Rai's diary, which was later rectified. The judgment emphasized the limited grounds for rejection under the Act and the necessity for the CCESC to consider the ITSC's decision favoring the Petitioner. Consequently, the Court set aside the CCESC's orders rejecting the settlement applications and directed a fresh hearing considering the ITSC's decision. The second application was restored for further proceedings before the CCESC, emphasizing the importance of adhering to statutory grounds for rejection and considering relevant decisions in settlement proceedings.