TaxTMI 
TaxTMI 
2010 (9) TMI 940
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.... of Finance empowered to, inter alia, investigate into commission of offences under the Central Excise Act, 1944 (hereinafter referred to as 'the said Act'). (b) The main respondent manufactures "Hans" branded chewing tobacco falling under sub-heading No. 2404.41 of the First Schedule to the Central Excise Tariff Act, 1985. They are registered with the Central Excise Department and have their factories at Mukherjee Nagar, North Delhi; Holambi Kalan, Laldora, Delhi; Patparganj Industrial Area, East Delhi and Rejender Nagar Industrial Area, Mohan Nagar, Ghaziabad. (c) On the basis of intelligence inputs that respondent no. 1 was indulging in evasion of Central Excise duties by clandestinely removing Hans brand Khaini without payment of duty, a case was booked by the petitioner-Department against the respondent no. 1 to 16. (d) On 3rd November, 2004 during search operation on the premises of the respondent no. 1 and its directors, the petitioner found, apart from other incriminating goods/documents, Indian currency amounting to Rs. 20,42,61,000/- and 15 kilograms of foreign marked gold biscuits purportedly the sale proceed....
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....sp; The petitioner-Department filed its reply to the revised application on 10th January, 2006. The Settlement Commission after hearing arguments of the parties admitted the application of respondent no. 1 to 6 on 23rd January, 2006. Thereafter, on 16th February, 2006 respondent no. 7 to 13 filed application before the Settlement Commission. The Department filed its reply to the applications on behalf of respondent no. 7 to 13 on 3rd April, 2006. The Settlement Commission admitted the application of respondent no. 7 to 13, after hearing arguments of the parties, on 2nd May, 2006. (j) On 17th March, 2006 respondent no. 14 to 16 filed application for settlement before the Settlement Commission. The reply thereto on behalf of the petitioner-Department was filed on 2nd May, 2006. The Settlement Commission admitted the application of respondent no. 14 to 16 after hearing parties on 16th May, 2006. (k) In the meantime, vide its order dated 9th May, 2006 the Settlement Commission directed the Commissioner (Investigation), Settlement Commission, to conduct investigation on certain points. On 21st July, 2006 the respondent ....
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....dent no. 15 amounting to Rs. 3,13,18,500/- and other seized excisable goods were not considered appropriate for confiscation. Apart from the above relief, the Settlement Commission granted immunity from penalty and prosecution to the respondent no. 1 to 16. (q) Aggrieved by the said impugned order dated 15th February, 2007 the petitioner-Department challenges its correctness by way of the present petition. 3. Mr Mohan Parasaran, the learned Additional Solicitor General, appearing on behalf of the petitioner-Department, urged that the Settlement Commission should not have gone into the complex facts and issues that arose as a result of the subject show cause notice. Counsel also argued that the Settlement Commission did not go into the question of full and true disclosure at the stage of admission of the application filed by the respondents herein. It was further submitted that the impugned order is invalid as there is no recording therein of satisfaction of true and full disclosure on behalf of the respondents herein. Furthermore, it was urged on behalf of the petitioner-Department that the impugned order settled issues which were anterior to the issuance ....
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....tion 32E : Application for settlement of cases. - (1) An assessee may, in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled, in such form and in such manner as may be prescribed and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short-levy on account of misclassification, under-valuation, inapplicability of exemption notification or Cenvat credit but excluding the goods in respect of which no proper record has been maintained by the assessee in his daily stock register and any such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless,- (a) the applicant has filed returns showing production, clearance and Central excise duty paid in the prescribed manner; (b) a show cause notice for recovery....
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....eded with, or reject the application as the case may be, and the proceedings before the Settlement Commission shall abate on the date of rejection : Provided that where no notice has been issued or no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with. (2) A copy of every order under sub-section (1), shall be sent to the applicant and to the Commissioner of Central Excise having jurisdiction. (3) Where an application is allowed or deemed to have been allowed to be proceeded with under sub-section (1), the Settlement Commission shall, within seven days from the date of order under sub-section (1), call for a report along with the relevant records from the Commissioner of Central Excise having jurisdiction and the Commissioner shall furnish the report within a period of thirty days of the receipt of communication from the Settlement Commission: Provided that where the Commissioner does not furnish the report within the aforesaid period of thirty days, the Settlement Commission shall proceed further in the matter without the report of the Commissioner. (4) Where a report of the ....
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..... (7) Subject to the provisions of Section 32A, the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench before passing any order under sub-section (5) and, in relation to the passing of such order, the provisions of Section 32D shall apply. (8) The order passed under sub-section (5) shall provide for the terms of settlement including any demand by way of duty, penalty or interest, the manner in which any sums due under the settlement shall be paid and all other matters to make the settlement effective and in case of rejection contain the reasons therefor and it shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts: Provided that the amount of settlement ordered by the Settlement Commission shall not be less than the duty liability admitted by the applicant under Section 32E. (9) Where any duty, interest, fine and penalty payable in pursuance of an order under sub-section (5) is not paid by the assessee within thirty days of receipt of a copy of the order by him, the amount which remains unpaid....
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....sed under sub-section (5) of Section 32F, have, subject to the provisions of sub-section (4) of that section, exclusive jurisdiction to exercise the powers and perform the functions of any Central Excise Officer, under this Act in relation to the case. (3) In the absence of any express direction by the Settlement Commission to the contrary, nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission. (4) The Settlement Commission shall, subject to the provisions of this Chapter, have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers, or of the discharge of its functions, including the places at which the Benches shall hold their sittings." (f) Section 32L of the said Act reads as under : "Section 32L : Power of Settlement Commission to send a case back to the Central Excise Officer. - (1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 32E has not co-operated with the Settlement Commission in the....
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....ement under Section 32E in relation to any other matter : Provided that such assessee shall not be prevented from filing an application for settlement if the issue in the subsequent application is, but for the period of dispute and amount, identical to the issue in respect of which the earlier application is pending before the Settlement Commission." 6. Before proceeding further it would be necessary to extract the relevant portions of the decision cited by the parties. (i) In M/s Picasso Overseas and Others v. The Director General of Revenue Intelligence and Another, WP(C) 1495/2007, a Division Bench of this Court held : "4. The Senior counsel for the petitioners has contended before us that the Settlement Commission cannot make adjudication of highly contested and disputed question of facts. He has argued that the basic purpose of the Settlement Commission is to settle the matter and not to decide the questions of fact on which there is a wide variance between the parties......... 6. ......... and the second issue is, can the Settlement Commission substitute itself for the Adjudicating Officer and arrive at a decision on highly contentious issues requ....
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....liability of duty which is accepted by him. Thus, it cannot be said that when an applicant comes for settlement he can be fastened with a liability which he never intended as accepted to be payable by him. We may further hold from sub-section (1) of Section 127C which uses the expression "complexity of the investigation" meaning thereby a Settlement Commission would not in cases of complexity of the investigation have jurisdiction to decide and admit such an application. Therefore, when there are highly complex and contentious questions of fact, a Settlement Commission would not ordinarily even admit the application in as much as the scope and object of scheme of Sections of Chapter XVA is settlement and not adjudication of highly complex questions of facts. Section 127-I also throws further light by entitling Settlement Commission to refer the case back to the proper officer who shall dispose of the case in accordance with the provisions of the Act as if no application for settlement has been made under Section 127B. 11. We now refer to provision of Section 127F sub-section (2) which has been relied upon by the counsel for the respondents. This provision states that Settlement Co....
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....f facts. Of course, we may hasten to add in certain cases in spite of a huge variation and dispute which may be sought to be raised by the Department, it can be found that the disputes raised by the Department as to rates or other relevant facts may not be supported by other admitted facts which may appear from the records or the report which is called for by the Commission or such enquiry if the Commission may want to perform under Section 127F(2) and in such a case the Settlement Commission in spite of a contentious stand of the Department of Customs may still choose to go ahead and accept the figure of duty as acceptable by the applicant to the Commission as the said duty would be clearly born out from records of the Department of customs itself. 13. We feel that if we do not adopt the interpretation as stated above in favour of the petitioner and accept the interpretation as urged by the counsel for the customs, then it will discourage people from approaching the Settlement Commission as they will feel that a huge amount of duty not acceptable by them will be fastened upon them and to which their ordinary right of appeals will not be available. 14. In view of the above, thoug....
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....of furnishing certificates about assessment from unconnected persons is sufficient to show misrepresentation of facts. No returns of income were filed by the lenders up to the relevant time. Therefore, it was submitted that the order of the Commission needs to be set aside. 13. Section 245-F dealing with powers and procedure of Settlement Commission provides that in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it has all the powers which are vested in the income-tax authority under the Act. Sub-section (2) is of vital importance and provides that where an application made under Section 245-C has been allowed to be proceeded with under Section 245-D, the Commission shall until an order is passed under Sub-section (4) of Section 245-D, subject to the provisions of Sub-section (3) of that section have exclusive jurisdiction to exercise the powers and perform the functions of the income-tax authority under the Act in relation to the case. In essence, the Commission assumes jurisdiction to deal with the matter after it decides to proceed with the application and continues to have the jurisdiction till it makes an order under Section 245-D. Section ....
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....closure and making a full and true disclosure of the income are necessary pre-conditions for invoking the Commission's jurisdiction." (iii) In Light Engg. Corporation v. Union of India, 2007 (207) E.L.T. 40 (P & H), the Division Bench of the High Court of Punjab and Haryana observed as under : "12. Thus, the Commission is justified in not entertaining an application where full and true disclosure is not made by an assessee, which is sine qua non for entertainment of application by the Commission. 13. In exercise of power of judicial review, this court does not act as an appellate court by substituting its own opinion for the opinion of Settlement Commission arrived at after following due procedure under the law." (iv) In Commissioner of Central Excise, Visakhapatnam v. True Woods Pvt. Ltd., 2006 (199) E.L.T. 388 (Del.), the court observed as follows : "8. We regret our inability to accept that line of reasoning. It is true that the foundation for settlement is an application from the assessee in which the asessee must make a full and true disclosure as required under the provision of Section 245C of the Income-tax Act or Section 32E of the Central Excis....
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....r challenge is ultra vires the powers conferred on the said authority. Such an action can be ultra vires for the reason that it is in contravention of a mandatory provision of the law conferring on the authority the power to take such an action. It will also be ultra vires the powers conferred on the authority if it is vitiated by mala fides or is colourable exercise of power based on extraneous and irrelevant considerations. While exercising their certiorari jurisdiction, the Courts have applied the test whether the impugned action falls within the jurisdiction of the authority taking the action or it falls outside such jurisdiction. An ouster clause confines judicial review in respect of actions falling outside the jurisdiction of the authority taking such action but precludes challenge to such action on the ground of an error committed in the excise of jurisdiction vested in the authority because such an action cannot be said to be an action without jurisdiction. An ouster clause attaching finality to a determination, therefore, does oust certiorari to some extent and it will be effective in ousting the power of the Court to review the decision of an inferior tribunal by certior....
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.... respondents herein. Therefore, if the respondents have not made a complaint against the amount settled by the Settlement Commission, which is twice the amount admitted by them before the Commission, it does not lie in the mouth of the petitioner to assail that amount. 8. It was next urged by the petitioner that the Settlement Commission did not go into the question of full and true disclosure at the stage of admission of the application filed by the respondents herein. It was also urged that the impugned order is invalid as there is no recording of satisfaction of true and full disclosure. In this behalf the petitioner relied on the decision of this Court in Commissioner of Central Excise, Visakhapatnam (supra). However, that decision itself states that it is permissible for the Commission to keep the question of true and full disclosure open at the stage of admission of the application to be examined at a later stage or at the stage of final disposal of the application. That decision categorically states that, "What is important is that there must be full and true disclosure to the satisfaction of the Commission before any relief can be granted to the applicants which implies th....