2005 (3) TMI 22 - HC - Central Excise

Settlement Commission's Decision Upheld in Excise Act Case

The Court upheld the Settlement Commission's decision to reject the petitioner's application under Section 32F(1) of the Central Excise Act, 1944, due to ... Petitioner contends that obligation to make truthful disclosure of duty liability would arise after the settlement application is admitted and not before – held that such premise of petitioner is erroneous – commission found that petitioner did not satisfy mandatory requirements of full and true disclosure – no violation of natural justice in rejecting application – writ petition is liable to be and is accordingly dismissed at admission stage. Issues Involved:1. Rejection of the application by the Settlement Commission.2. Alleged failure to make a full and true disclosure of duty liability.3. Violation of principles of natural justice.Detailed Analysis:1. Rejection of the Application by the Settlement Commission:The writ petition challenges the Order No.39/2004-CE, dated 22-12-2004, by the Customs & Central Excise Settlement Commission, which rejected the petitioner's application under Section 32F(1) of the Central Excise Act, 1944, due to the petitioner not making a full and true disclosure of duty. The Commission directed that the Revenue shall adjudicate the case as if no application for settlement was filed.2. Alleged Failure to Make a Full and True Disclosure of Duty Liability:The petitioner, a company manufacturing P or P Medicaments, was accused of clearing these without proper invoices and accounting. The show cause notice alleged a duty evasion amounting to Rs.13,64,684/- and an additional Rs.13,50,000/- due to ineligibility for SSI unit benefits. The petitioner applied for settlement under Section 32E, claiming to end litigation and buy peace. However, the respondents contended that the petitioner failed to truthfully disclose duty liability, a mandatory condition for settlement. The Commission, after examining the records and reports, found the petitioner's disclosure untruthful, particularly regarding the valuation of clearances and excess stock recorded at M/s. Arsa Pharmaceuticals.3. Violation of Principles of Natural Justice:The petitioner argued that the Settlement Commission violated natural justice principles by not allowing them to verify or go through the reports submitted by the second respondent on 3-6-2004 and 20-9-2004. The petitioner claimed that the application was rejected without the opportunity to lead evidence at the admission stage. However, the Court noted that the petitioner was cautioned to provide prima facie evidence and reconcile entries with the Revenue, which they failed to do. The petitioner did not apply for copies of the reports under Section 32J, thus, the claim of violation of natural justice was unfounded.Conclusion:The Court upheld the Settlement Commission's decision, finding no procedural defects or violations of natural justice. The petitioner's failure to make a full and true disclosure of duty liability justified the rejection of their application. The writ petition was dismissed at the admission stage.