Bench Imposes Penalty and Grants Immunity in Central Excise and Customs Case

The Bench settled the case by imposing a penalty of Rs. 10,000/- on M/s. Royal Touch Fablon Pvt. Ltd. (Unit-I) and granting full immunity from penalties to co-applicants Shri Vikas Kandoi, Shri Raj Kr. Jaisansaria, and Shri Pawan Sharma. Immunity from prosecution under the Central Excise Act, 1944, and the Customs Act, 1962, was extended to all co-applicants upon payment by co-applicant No. 1 within 30 days. The immunities are subject to withdrawal if material particulars are withheld or false evidence is provided.

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Issues Involved:
1. Settlement of Central Excise and Customs duty evasion.
2. Confiscation of goods and imposition of penalties.
3. Applicability of Section 32-O of the Central Excise Act, 1944.
4. Immunity from penalties and prosecution.

Issue-wise Detailed Analysis:

1. Settlement of Central Excise and Customs Duty Evasion:
The main applicant, M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV), was found to have evaded Central Excise duty and Customs duty through unlawful manufacture, clandestine removal of finished goods, illegal diversion of raw materials, and unauthorized shifting of capital goods to their DTA Unit (Unit-I). The Settlement Commission settled the case with the applicant under specific terms, including settling Central Excise duty at Rs. 13,45,257/- on finished goods, Rs. 7,38,995/- on 20 looms after depreciation, and Customs duty at Rs. 7,47,335/- on raw materials. Confiscation orders were issued for various goods, with redemption fines imposed. A penalty of Rs. 50,000/- was imposed on the applicant, with immunity granted from further penalties.

2. Confiscation of Goods and Imposition of Penalties:
The show cause notice (SCN) issued to M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV) and co-applicants proposed the confiscation of finished goods, capital goods, and raw materials, and demanded Customs and Central Excise duties along with interest. Penalties were proposed under Section 11AC of the Central Excise Act, 1944, and Section 114A of the Customs Act, 1962. The Commission ordered confiscation and allowed redemption of the goods on payment of fines. The co-applicants were also called upon to show cause why penalties should not be imposed under Rule 26 of the Central Excise Rules, 2002, read with Section 112 of the Customs Act, 1962.

3. Applicability of Section 32-O of the Central Excise Act, 1944:
The co-applicant No. 1, M/s. Royal Touch Fablon Pvt. Ltd. (Unit-I), had previously approached the Settlement Commission and was penalized Rs. 50,000/-. The Commission examined whether this earlier penalty barred the co-applicant from applying for settlement again under Section 32-O. The Commission concluded that the penalty in the previous order was of a general nature and not for concealment of particulars of duty liability. Therefore, the co-applicant was not barred from applying for settlement in the current case.

4. Immunity from Penalties and Prosecution:
The co-applicants requested immunity from penalties and prosecution, arguing that they had cooperated fully during the proceedings and that the main applicant had already been granted partial immunity. The Commission considered the cooperation and the full and true disclosure of duty liability by the main applicant. The Commission granted full immunity from penalties to co-applicants No. 2 (Shri Vikas Kandoi), No. 3 (Shri Raj Kr. Jaisansaria), and No. 4 (Shri Pawan Sharma). A penalty of Rs. 10,000/- was imposed on co-applicant No. 1, with immunity granted in excess of this amount. Immunity from prosecution under the Central Excise Act, 1944, and the Customs Act, 1962, was also granted to all co-applicants.

Decision of the Bench:
The Bench settled the case with the following terms:
- Imposition of a penalty of Rs. 10,000/- on M/s. Royal Touch Fablon Pvt. Ltd. (Unit-I) and waiver of excess penalties.
- Full immunity from penalties to Shri Vikas Kandoi, Shri Raj Kr. Jaisansaria, and Shri Pawan Sharma.
- Immunity from prosecution to all co-applicants under the Central Excise Act, 1944, and the Customs Act, 1962, subject to payment of the ordered amount by co-applicant No. 1 within 30 days.
- The immunities are granted under Section 32K of the Central Excise Act, 1944, and are liable to be withdrawn if any material particulars are found to have been withheld or false evidence is provided.

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