Full and true disclosure in customs settlement is mandatory; failure to cooperate can send the matter back to the excise officer.

A settlement application under the Central Excise Act must rest on a full and true disclosure of duty liability, including the manner of its derivation, together with cooperation in the proceedings. Where the applicants fail to substantiate the disputed demand, do not comply with directions to pay the admitted amount, and use the process to seek re-adjudication, the Commission may treat the settlement conditions as unmet. In that situation, Section 32L permits the matter to be sent back to the jurisdictional Central Excise Officer for disposal in accordance with law.

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Issues: Whether the applicants had made a full and true disclosure of duty liability and cooperated with the settlement proceedings so as to justify continuation of the settlement application, or whether the case had to be sent back to the jurisdictional Central Excise Officer.

Analysis: The statutory scheme of settlement under Section 32E of the Central Excise Act, 1944 requires a true and complete disclosure of duty liability, the manner of its derivation, and cooperation in the proceedings. The applicants repeatedly failed to substantiate the disputed portion of the duty demand, did not comply with the directions to pay the admitted amount, and continued to challenge the adjudication rather than making a complete disclosure. The Commission found that the application was being used as a forum for re-adjudication, which is outside the intended scope of settlement proceedings. In such circumstances, Section 32L empowers the Commission to send the case back to the jurisdictional officer.

Conclusion: The applicants were held not to have made full and true disclosure or cooperated in the proceedings, and the case was sent back to the jurisdictional Central Excise Officer under Section 32L of the Central Excise Act, 1944.

Final Conclusion: The settlement application failed and the matter reverted to the regular excise authority for disposal in accordance with law on the basis of the materials already placed before the Commission.

Ratio Decidendi: A settlement application under the Central Excise Act can proceed only on a full and true disclosure of duty liability coupled with cooperation in the proceedings, and failure of either permits the Commission to remit the case to the jurisdictional officer.

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