2010 (3) TMI 18 - HC - Central Excise

Settlement Commission Exceeded Jurisdiction: Appellant Denied Benefits Under Central Excise Act

The court held that the appellant was not entitled to benefits under Section 4-A of the Central Excise Act as the goods fell under exemptions. ... Removal of goods – violation of procedure – section 4 versus 4A – transaction value versus MRP based value – jurisdiction of the Settlement Commission – held that - goes out of the jurisdiction of the Settlement Commission, since it has not been vested with the power to decide such a question of direct assessment. By such an act, the Settlement Commission has usurped the jurisdiction of the adjudicating authorities and as has been rightly commented on the part of the Revenue, by the impugned order, the Settlement Commission has set a bad precedent. – regarding applicability of section 4A - From the materials placed on record it is seen that the assessee is supplying their final product 'Cookies' to their institutional customers like M/s.Taj Group of Hotels, M/s.GRT Grand Hotels, M/s.Jet Airways etc. in bulk, on specific contracts entered into by them. Admittedly, these institutional customers are not selling these cookies but are supplying it to their customers free of cost - But, during the course of arguments, the learned senior counsel for the appellant produced before us the cartons of 'Cookies' and showed us that they have printed the Maximum Retail Price on the packets and therefore, they are entitled to claim the benefits of Section 4-A of the Act. - The Department is right in contending that the appellant is not at all entitled to claim any benefit under Section 4-A of the Central Excise Act, since his goods are chargeable under Section 4 of the Central Excise Act. – decided in favor of revenue Issues Involved:1. Whether the assessee is entitled to claim benefits under Section 4-A of the Central Excise Act.2. Jurisdiction of the Settlement Commission in deciding the applicability of Section 4 or Section 4-A of the Central Excise Act.3. Compliance with procedural requirements under Sections 32-E and 32-F of the Central Excise Act by the Settlement Commission.Detailed Analysis:1. Entitlement to Benefits Under Section 4-A of the Central Excise ActThe primary issue was whether the appellant could claim abatement under Section 4-A of the Central Excise Act. The court noted that Section 4-A applies to goods where the retail sale price must be declared under the Standards of Weights and Measures Act, 1976. The appellant supplied cookies in bulk to institutional customers like hotels and airlines, who did not resell the products but provided them free to their customers. These packages were marked 'not for retail sale' and did not display the Maximum Retail Price (MRP), thus falling under the exemptions provided in Rule 34(a) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Consequently, the appellant was not required to declare the MRP on these packages, making Section 4-A inapplicable. The court concluded that the appellant's goods should be valued under Section 4, not Section 4-A.2. Jurisdiction of the Settlement CommissionThe court examined whether the Settlement Commission had the jurisdiction to decide on the applicability of Section 4 or Section 4-A of the Central Excise Act. The court highlighted that Section 32-E of the Central Excise Act allows an assessee to approach the Settlement Commission for settling undisclosed duty liabilities. However, it does not empower the Commission to adjudicate disputed questions of law or fact, such as the applicability of specific sections of the Act. The court found that the Settlement Commission overstepped its jurisdiction by deciding on the applicability of Section 4-A, a matter reserved for adjudicating authorities. This misstep rendered the Commission's order invalid.3. Compliance with Procedural RequirementsThe court scrutinized the procedural adherence of the Settlement Commission under Sections 32-E and 32-F of the Central Excise Act. It was noted that the Commission failed to address the jurisdictional challenge raised by the Revenue in its para-wise remarks. The Commission's order, labeled as an 'admission-cum-final order,' bypassed the mandated procedural steps, including calling for a report from the Commissioner of Central Excise and conducting further inquiry if necessary. This procedural lapse further invalidated the Commission's order.ConclusionThe court upheld the decision of the learned single Judge, affirming that:1. The appellant is not entitled to the benefits under Section 4-A of the Central Excise Act.2. The Settlement Commission lacked jurisdiction to decide on the applicability of Section 4 or Section 4-A.3. The Settlement Commission did not follow the prescribed procedures under the Central Excise Act.The writ appeal filed by the assessee was dismissed, and the order of the learned single Judge was affirmed. No costs were awarded.