Full and final settlement under the KVS Scheme bars further challenge to connected penalty proceedings.

Once a dispute is settled under the KVS Scheme and Form 3 is issued recording full and final settlement, connected proceedings relating to the same matter cannot be pursued independently. The text states that, after the assessee's earlier appeal against duty demand and penalty was disposed of under the scheme, the Revenue's challenge to deletion of mandatory penalty under Section 11AC was no longer maintainable. The appeal was therefore rejected as barred by the concluded settlement.

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Issues: Whether the Revenue's appeal against deletion of mandatory penalty under Section 11AC could survive after the assessee's dispute had been settled under the KVS Scheme and Form 3 had been issued in full and final settlement.

Analysis: The assessee's earlier appeal against confirmation of duty demand and penalty had already been disposed of under the KVS Scheme. The designated authority had accepted the settlement application and issued Form 3, evidencing full and final settlement of the dispute. In view of such settlement, the controversy regarding mandatory penalty could no longer be pursued independently.

Conclusion: The Revenue's appeal was not maintainable after settlement under the KVS Scheme and was rejected.

Ratio Decidendi: Once a dispute is settled under the KVS Scheme and full and final settlement is recorded through the prescribed form, connected proceedings and appeals relating to the same matter cannot be agitated further.

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