Settlement application rejected at threshold without proper scrutiny of return-filing compliance; remand ordered for merits consideration.

Threshold rejection of a settlement application for alleged non-compliance with the return-filing condition was held unjustified because the correspondence and disclosures indicated that the applicant had explained its processing activity, job work and relevant returns. The factual aspects bearing on compliance with the statutory preconditions required scrutiny, particularly where duty liability had been admitted. The matter was therefore remanded to the Settlement Commission for fresh consideration on merits in accordance with law.

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Issues: Whether the Settlement Commission was justified in rejecting the settlement application at the threshold for alleged non-compliance with the return-filing condition, and whether the matter required remand for fresh consideration on merits.

Analysis: The settlement application was rejected on the ground that the applicant had not satisfied the statutory condition relating to filing of returns showing production, clearance and duty payment. However, the correspondence with the Central Excise Department showed that the applicant had explained its processing activity, the nature of job work undertaken, and the filing of the relevant declarations and returns. In these circumstances, the factual aspects bearing on compliance with the statutory preconditions required examination, particularly when the applicant had admitted the duty liability. The Commission ought not to have declined to entertain the application without such scrutiny.

Conclusion: The threshold rejection was not justified. The matter was required to be remanded to the Settlement Commission for fresh consideration and decision on merits in accordance with law, in favour of the assessee.

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