Kar Vivad Samadhan Scheme extended to co-noticees, with appellate pendency treated as continuing adjudication.

Acceptance of a declaration under the Kar Vivad Samadhan Scheme was treated as extending to co-noticees in the same excise matter, because the Removal of Difficulties Order was read with the Scheme to cover proceedings still pending in appeal. The Court held that appellate proceedings are a continuation of the original adjudication, so the fact that the show-cause notice had already been adjudicated did not exclude the case from "pending adjudication" for the purpose of the Order. It also noted that the Tribunal should have considered the statutory Order, and the settlement in favour of the main noticee operated to remove the penalty exposure of the co-noticees.

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Issues: Whether the petitioners, being co-noticees against whom penalty had been imposed under Rule 209A of the Central Excise Rules, 1944, were entitled to the benefit of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 once the main noticee had settled the dispute under the Scheme, and whether the Tribunal erred in refusing to delete the penalty.

Analysis: The Scheme and the Removal of Difficulties Order were read as a whole to determine the intended reach of the settlement mechanism. The governing principle applied was that an appeal is a continuation of the original proceedings and, so long as proceedings remain pending in appeal, there is no finality to the adjudication. On that construction, the expression "pending adjudication" in the Order was held not to exclude cases where the show-cause notice had already been adjudicated but appeals were pending. The Court treated the settlement in favour of the main declarant as operating fully and finally in respect of other persons on whom show-cause notices had been issued in the same matter. It was also held that the Tribunal ought to have considered the statutory Order, and its non-consideration could not be ignored merely because the point had not been argued earlier.

Conclusion: The petitioners, as co-noticees, were held entitled to the benefit of the Scheme and were not liable for penalty.

Final Conclusion: The writ petitions succeeded, the Tribunal's orders were set aside, and the penalties imposed on the petitioners were deleted.

Ratio Decidendi: Where a declaration under the Kar Vivad Samadhan Scheme is accepted in respect of the main noticee, the accompanying removal-of-difficulties order extends the settlement to co-noticees in the same matter, and the benefit cannot be denied merely because the related proceedings had reached the appellate stage.

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