TaxTMI 
TaxTMI 
2013 (10) TMI 238
X X X X Extracts X X X X
X X X X Extracts X X X X
....03.2012 and for upholding the minority opinion expressed therein, and for issuance of any other directions or orders deemed fit and proper, in favour of the petitioners. 2. A preliminary point was raised in the course of the hearing of the writ petition to the effect that the Assistant Director (Investigation) who is petitioner No.2, has no locus standi to challenge the order of the Settlement Commission as he is only an investigative authority without any power of assessment. The learned Additional Solicitor General, purporting to meet the point filed a copy of the Circular No.44/2011-CUS dated 23.09.2011 and submitted that the petitioner No.2 came within the scope of the circular and was authorised to file the writ petition jointly with the Union of India. A perusal of the circular shows that consequent to the judgment of the Supreme Court on 18.02.2011 in Civil Appeal Nos.4294-4295/2002, 2603/2005 and 4604/2005 in the case of Sayed Ali 2011 (265) ELT 17 (SC), an amendment to Section 28 of the Customs Act, 1962 was made w. e. f. 16.09.2011 by insertion of clause (11) which reads as follows: - "(11) Notwithstanding anything to the contrary contained in any judgment, decree or or....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the following circumstances. The first respondent is a private limited company carrying on the business manufacturing of various brands of paan masala, gutkha containing tobacco and mouth freshner. It has 11 factories in all, of which two are located in Noida and the rest all are located in Guwahati, Assam. Respondent Nos.2 to 5 are directors of the first respondent. Information is stated to have been received by the petitioner that the first respondent was suppressing the production and clandestinely clearing its products which resulted in evasion of payment of excise duty. There was also intelligence to the effect that all the close relatives of the Chairman and CMD of the first respondent were managing all the activities of the first respondent. A search was therefore conducted on 16.07.2008 in the course of which documents showing accounts of purchase of "catechu" and supply of the same to the various units of the first respondent, who is hereinafter referred to as "DSL", were recovered. The following amounts of cash were also recovered: Rs. 47,00,000/- from the residence of Subhash Chand Gupta, a senior member of the family and uncle of respondent No.2, Rs. 9,00,000/- from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se facts, the central excise authorities inferred that the information was deliberately being suppressed from them which indicated that the accounts for production of finished goods are not reliable and could have been manipulated. 10. In the course of the search of the premises No.43/1, Rajpur Road, Delhi a file containing 166 pages was recovered under panchnama dated 16.07.2008. The respondent No.2, Ajay Kumar Gupta who is a director of DSL stated that he and his father were looking after the purchase of kattha and supari and explained the various entries in the file to the central excise authorities. After considering the explanation of Ajay Kumar Gupta with regard to the papers in the recovered file, it appeared to the central excise authorities that all these papers in the file showed the actual transactions of kattha by DSL from their suppliers. The details available in the file were tabulated by the central excise authorities (page 15-16 of the show-cause notice) and it was noticed that there were several quantities of kattha which, though have been received by DSL, were not shown in the accounts of the suppliers. According to the central excise authorities, DSL has actuall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not been paid by them, Central Excise invoices has not been issued by them, production and clearances has not been accounted in the daily stock accounts. The Central Excise duty was not paid by way of suppression of facts and contravention of above said Central Excise Rules with a deliberate intent to evade payment of duty. Therefore, the duty of excise as detailed in Annexure No.2, Annexure No.3, Annexure No.4 and Annexure No.5 not paid by them on the goods which were manufactured and clandestinely cleared by them from their registered factory premises in the aforesaid manner, is recoverable by invoking the extended period as provided under sub section (1) of Section 11 (A) of the said Act and proviso thereto. They are also liable for penal action under Section 11AC of the Central Excise Act, 1944 and are also liable to pay interest as per provisions of section 11 AB of the Central Excise Act, 1944." 12. In the other paragraphs of the show-cause notice the specific charges against the other respondents in the present proceedings were made. 13. The show-cause notice summarizing the aforesaid facts and seeking the explanation of DSL and its directors was issued on 14.07.2009 by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sense that at one breath they say that there was no clandestine manufacture/ clearance of catechu and at the same breath they say that there are some doubts raised with regard to the entries regarding purchase of catechu and, therefore, they want to pay commensurate duty on the same. It was prayed, for the above reasons, that the settlement application should not be entertained. 14. Another reply was filed, which was a detailed reply, on 19.12.2011 before the Settlement Commission by the DGCEI, a copy of which is annexed as Annexure P-2 to the writ petition. After reiterating the earlier submissions by letter dated 05.12.2011, the DGCEI placed the following further objections to the processing of the settlement applications: - (a). The applicants before the Settlement Commission have adopted a contradictory stand. Though they have deposited the duty liability of Rs. 81,71,625/- along with interest of Rs. 66,91,245/-, yet they maintain in their application that the entry for the receipt of 2700 kg catechu on 03.05.2005 in the bunch of documents contained in the seized file, was a mere accounting mistake. There is thus no full and true disclosure. (b). The applicants have taken a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he penalty proceedings under Section 11AC of the Central Excise Act, 1944 and for granting immunity from prosecution of the case. Parawise comments on the points raised in the settlement applications were made. 16. The parawise reply is somewhat important and may be noticed in some detail. It contained the following assertions by the DGCEI: (a). The true and complete facts relating to the manufacturing operations at Noida and north-east factories were not submitted to the Settlement Commission. The applicants have planned a systematic evasion of huge amounts of excise duty. (b). Show-cause notice is based on solid documentary evidence recovered through the search, including details of catechu received from the suppliers, which are corroborated by various persons including directors and employees of DSL. Despite ample opportunity given, the seized records were not properly explained by the applicants. (d). The interpretation placed by the applicants upon the entries of purchase of catechu in the seized records is contrary to what was reflected in the private records and the written submissions of the parties. The explanation of the applicants before the Settlement Commission is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved by the applicants. A large number of entries in the file tally with the details furnished by the suppliers of catechu; however, there is an equally large number of entries showing receipt of catechu in the file, which are not reflected in the books of accounts of the suppliers who sold catechu to DSL. It is, therefore, clear that all the 166 pages of the recovered file show the actual transactions of the catechu by DSL. It is thus apparent that DSL has actually received the excess catechu which has not been accounted for in its books as well as in the books of accounts of the supplier. There can be no other objective except to use such catechu in the production of the products such as paan masala, gutkha and mouth freshner with kattha which was suppressed and cleared without payment of duty. (k). All the statements recorded from the employees and the directors of DSL confirmed that DSL was actually receiving more quantity of catechu but indulging in fudging their accounts by showing such receipt with the sole intent to use the suppressed quantity for clandestine manufacture and sale without duty. 16. The above is a brief summary of the parawise reply of DGCEI to the settlemen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 14 of the Central Excise Act. On the contrary, he has accepted the statement of the assessee that wrong figures were provided at the time of investigation due to oversight and, therefore, the present claim must be accepted. The information submitted by the applicants under Section 14 of the Act cannot be repudiated or withdrawn since they are judicial proceedings and the acceptance of the claim that incorrect figures were given during investigation due to oversight "would make a mockery of the settlement proceedings". (c). After receipt of the show-cause notice, DSL manipulated their records and furnished untenable reasons without supporting evidence, which are all contrary to the statements of the directors and employees of DSL recorded under Section 14 and contrary also to the private records recovered from the premises of the directors of DSL. The Commissioner (Investigation) has accepted the reasons given by the applicants without further verification. (d). The applicant did not make any full disclosure of the facts during the investigation, nor were these facts given to the Commissioner (Investigation). Despite this, the Commissioner (Investigation) has not taken any actio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich suited them, which was accepted by him without further verification. It is quite improbable that there could be so many mistakes and oversights which could occur and by accepting the explanation of the applicants that the entries were incorrectly made, the entire investigating proceedings became a mockery. (f) The Commissioner (Investigation) has lost sight of the fact that the time gap between the issue of show-cause notice and the filing of the applications before the Settlement Commission was sufficiently long "to manipulate their records cleverly to accommodate the entries which they could not have explained" and for this purpose they may have created forged ledger, forged documents showing return of catechu, etc. which the Commissioner (Investigation) has taken as sacrosanct document. The applicants have thus thrown a challenge to most of the allegations in the show-cause notice on the basis of which the demand of duty has been worked out. Such an issue can only be sorted out before the proper adjudicating authority and cannot be taken to the portals of the Settlement Commission. The adjudicating authority is equipped with sufficient investigative powers and authority an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ttlement Commission cannot enter into the realm and domain of the adjudicating authority and must in the very nature of things leave the disputed facts and legal position for adjudication. It was further submitted that the Settlement Commission is not vested with the power to decide disputed questions of law and fact and cannot play the role of the adjudicating authority. According to the Central Excise Department, the legislature has conferred sufficient powers and authority upon the adjudicating officers/ forums before whom the assessee may challenge or dispute any question of fact or law but that is not possible before the Settlement Commission which was constituted to deal with errant taxpayers who want to turn a new leaf and settle all their disputes. It is not possible, according to the central excise department, to convert the Settlement Commission into an adjudicating body to deal with disputed question of fact and law nor was it an appellate body examining the merits of the show-cause notice. There are separate forums in which the applicants before the Settlement Commission can take such matters and contest them, but not before the Settlement Commission. The Settlement Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also placed on the following judgments: - (i) Australian Foods Ltd. v. CCE, Chennai, II 2010 (254) ELT 392; (ii) Ashwani Tobacco Company Pvt. Ltd. v. Union of India & Ors. [W.P. (C) No.9104/2009 decided by the Delhi High Court]. 22. The provisions of Section 32E, 32I, etc. of the Central Excise Act were analysed and it was submitted before the Settlement Commission that there is a distinction between an adjudication before the adjudicating authority and settlement before the Settlement Commission which has been brought out in the judgment of the Delhi High Court cited above. It was the duty of the Settlement Commission to weigh the additional evidence/ disclosure made by the applicant to ensure that there was a true and honest disclosure. Attention was drawn to the fact that the department has found various incriminating documents during the search which contain strong evidence of duty evasion involving huge revenue and the applicants cannot be permitted to approach the Settlement Commission when fraud is about to be unraveled and the department is in possession of adequate material to do so, just to enable the applicants to settle their dispute and obtain immunity from penalty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, it cannot be said that he is denying his statement. It is only a case of elaboration or clarification. The Settlement Commission thus held that to say that a statement recorded under Section 14 which is a judicial proceeding and, therefore, any deviation or attempt to clarify the statement would involve a question of fact and law which the Settlement Commission cannot examine, has no basis and would be opposed to the scheme of the law. 25. The Settlement Commission (majority) agreed with the contention of the Revenue that the settlement proceedings are different from adjudication proceedings, but at the same time observed that merely because the settlement proceedings also involved or required appreciation or evaluation of evidence, particularly in cases where the applicants do not admit in full the duty liability as demanded in the show-cause notice, it cannot be said that wherever appreciation of evidence is involved, there can only be adjudication proceedings and not settlement proceedings. The Settlement Commission agreed in principle with the contention of the Revenue that the question of adjudication would arise where there is a huge gap between the duty demanded in the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ms Act, an applicant before the Settlement Commission can approach the Settlement Commission only after a show-cause notice is issued and in this aspect the provisions of customs law are different from the provisions of the Income Tax Act with which Ajmera Housing Corporation was concerned and that under the customs provisions, it was only a person who had committed fraud or smuggling or deliberate mis-declaration who would receive a show-cause notice and, therefore, there was no question of the application before the Settlement Commission being voluntary under the Customs Act and that even if the show-cause notice alleges fraud, the Settlement Commission can be approached. On the basis of the judgment of the Bombay High Court, the Settlement Commission observed that even in cases of fraud an application can be made (under the Central Excise law) for settlement, but hastened to add that in the present case "we are not convinced that the applicant has committed any fraud". According to the Settlement Commission, the question was whether the applicant (DSL) received any unaccounted catechu which it used for the clandestine manufacture and removal of its products and that in case the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... into an adjudicating authority overlooking its primary function as a settlement authority and it should not enter the domain of the adjudicating authorities, is concerned, the majority found no merit in the contention on the ground that "This is a simple factual issue relating to the receipt and accounting of one raw material namely catechu and no complex investigation/ enquiries are involved in verifying these mismatches". It referred to the judgment of the Supreme Court in the case of CIT v. Express Newspapers Ltd. (supra) and Kuldeep Industrial Corporation v. ITO (supra) and observed that in these cases it was held that in ascertaining the complexity of investigation even the material brought after the date of receipt of the settlement applications and till the date of furnishing the report of the Commissioner can be considered. It was held that the Commissioner (Investigation) as pointed by it has conducted an investigation and rendered his findings only after considering the documents and explanations provided by both the sides. The Settlement Commission thereafter proceeded to provide examples of how the Commissioner (Investigation) had gone about the matter. After elaborate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll tower on sinking sand without laying any foundation; once the accounting mistakes in the catechu account are reconciled, the sand sinks and the tower collapses. In the facts of the case before us, there is neither any unexplained discrepancy in the receipt of catechu except the 2000 Kgs., which the applicant has already admitted, nor DGCEI has been able to produce any worthwhile evidence to support their allegation of illicit manufacture and removal of goods in the absence of which their allegations cannot be sustained." 31. As regards the contention of the DGCEI that the applicants did not make a full and true disclosure of the duty liability, the Settlement Commission observed that the only basis for the allegation is the fact that the applicant DSL could not explain 2000 kg of catechu, which it has admitted before the Settlement Commission. In respect of all other quantities of catechu, the applicant has explained all of them and it does not lie in the mouth of DGCEI to assail the basis adopted by the applicant to admit the duty liability of unexplained quantity of 2000 kg catechu or to allege that it has not made a full and true disclosure of the duty liability and the mann....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the submissions and evidence produced along with the settlement application cannot be viewed in isolation, as the two aspects were inter-related. According to him, the acceptance of the duty liability to the extent of Rs. 81,75,625/- required examination of the matter in the light of the provisions for settlement contained in Chapter-V of the Central Excise Act, 1944 whereas the second aspect, namely, the setting aside of the duty demand raised in the show-cause notice required appreciation of evidence. The dissenting member then proceeded to refer to the settlement application under the heading "amount of duty admitted in the application and basis thereof". He referred to entry No.3 of the table in para 5.6 of the show-cause notice, which was sought to be explained in the settlement application. He noted that the explanation of the applicant was as under: - "However, with regard to entry No.3 in the said table corresponding to purchase of 135 cases (2700 Kg) on 03.05.2005 noted on Page No.127 of 166 papers recovered from the residence of Late Shri S. N. Gupta, the supplier M/s. Girdhari Lal & Sons in his account statement provided to DGCEI has admitted supply of only 35 cases....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Wanchoo Committee and the reason for the establishment of Settlement Commission both under the direct and indirect taxes regime and noted that the provisions relating to the settlement under both of them are meant for errant tax evaders who resort to concealment of facts relating to their transactions in statutorily prescribed records. According to him, "The instant case is such where the applicant asserts that he has not concealed any thing which, it disclosed, would fasten him with additional duty liability. His admission of duty is on a presumption: that is, a presumption by default, that since the concerned person, who made an entry in the private documents is no more, a presumption could be drawn that Catechu relating to the entry had been procured which was not accounted and was used in the clandestine manufacture and clearance of excisable goods on which duty works out to be Rs. 81,75,625/-". 36. Apart from the above observation, the dissenting member also referred to the fact that out of the list of 35 suppliers of catechu provided by the applicant, only 18 could be located at their addresses and in respect of 17, the applicant did not disclose their correct address or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... powdering. He, however, opined that unless an empirical study by an expert in the field based on the data from other manufacturers of similar products in the country is made, the claim of the DSL cannot be decided. He, however, felt that the Settlement Commission was not the proper forum to undertake any inquiry into such matter or pass any order on the claim made by an applicant to appoint an expert committee for the said purpose. 38. The dissenting member thereafter proceeded to summarise the rival claims before the Settlement Commission and express the following view regarding the complexity of the nature of the case: - "90. In a case like this, a noticee has right to cross examine any witness whose statement is relied upon in the allegations made against him. In support of his defense, he has a right to produce evidence before the adjudicating authority. As already mentioned, to prove their case, the applicant had requested the Commissioner to allow cross examination of 13 persons who tendered statements or furnished other information before the Investigating Officers. At the same time, Revenue cannot be deprived of its right to cross examine the witnesses including depositi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Settlement Commission are outlined in Section 32A. Section 32E describes the procedure for making an application before the Settlement Commission for settlement of a case. "Case" has been defined in clause (c) as any proceeding under the Act or any other Act for the levy, assessment and collection of excise duty pending before an adjudicating authority on the date on which the application is made. This definition is new, having been substituted w. e. f. 01.06.2007 and would, therefore, govern the present case because the application for settlement has been made on 01.08.2011. The proviso to the clause is not relevant for our purpose. The condition to be satisfied before an application is made to the Settlement Commission is that some proceeding for the levy, assessment and collection of excise duty should be pending before an adjudicating authority. Section 2 (a) defines "adjudicating authority as any authority competent to pass any order or decision under the Act, but excluding the Central Board of Excise and Customs, Commissioner of Central Excise (Appeals) or the Customs, Excise and Service Tax Appellate Tribunal". Going back to Section 32E, sub-section (1) thereof provide....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to be proceeded with the Settlement Commission shall call for a report along with the relevant records from the Commissioner of Central Excise having jurisdiction. This shall be done by the Settlement Commission within 7 days from the date of the order allowing the application to be proceeded with. The report shall be furnished by the Commissioner of Central Excise within 30 days of the receipt of communication. 41. On receipt of the report from the Commissioner of Central Excise the Settlement Commission is empowered to order a further inquiry or investigation, if it is found necessary, after reasons are recorded by the Settlement Commission. Thereafter it is open to the Settlement Commission to have the matter investigated by the Commissioner (Investigation) and direct a report to be filed within a particular time period. Such report shall relate to the matters covered by the settlement application and any other matter relating to the case. 42. Sub-section (5) provides for passing of the order of settlement. After taking into account the records received from the Commissioner of Central Excise and the report of the Commissioner (Investigation) and after hearing both the sides ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and penalty if it is satisfied that the applicant "has cooperated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his duty liability". In such a case, the Settlement Commission can grant immunity to the applicant from prosecution for any offence under the Act and also, wholly or partly, grant immunity from the imposition of any penalty or fine under the Act with respect to the case covered by the settlement. 47. The Wanchoo Committee report provided for settlement of huge tax disputes and immunity from criminal proceedings by a Commission to be constituted by the Central Government, when approached without objection from the Income Tax Department. These recommendations were made in the Chapter titled "Black Money and Tax Evasion". In partial implementation of the report, Chapter XIX-A was introduced into the Income Tax Act, 1961 by the Taxation Laws (Amendment) Act, 1975. In the Central Excise Act, Chapter V providing for a Settlement Commission to settle cases was inserted by Act 21 of 1998 w. e. f. 01.08.1998. 48. It has been held in several judgments that the primary condition for approaching the Settlement Commission is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts of this Court is that the Settlement Commission is not a substitute for adjudication proceedings before the central excise authorities and where complex issues of fact and law are involved for which a detailed inquiry is necessary, settlement proceedings cannot act as a proper substitute for the adjudication proceedings. In Picasso Overseas and Others v. Director General of Revenue (Intelligence) and Another [W.P. (C) No.1495/2007 and W.P. (C) No.4401/2007] decided on 03.08.2009 by a Division Bench of this Court, the point directly arose for consideration. The issue posed before this Court was: "...........can the settlement commission substitute itself for the adjudicating officer and arrive at a decision on highly contentious issue requiring detail and complex investigation for arriving at an adjudication of such facts". In paragraph 9 the following principles were set out: - (i) The Settlement Commission cannot substitute itself for the adjudicating officer by deciding complicated and highly disputed or contentious questions and issues of facts themselves, because the expression "settlement" is used in the Customs Act in contra-distinction with "adjudication" and the very sc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ility. The dissenting member joins issue with the majority opinion on the facts of the present case. It is his view that having regard to the amount of duty admitted in the application and the basis thereof and the statements made in the Annexure to the settlement application, it cannot be said that there was full and true disclosure of the duty liability. According to him, the applicant has not accepted any procurement of unaccounted catechu or any clandestine manufacture of excisable goods therefrom without payment of applicable duty. The applicant has also asserted that all the quantity of excisable goods have been duly reflected in the returns filed with the Central Excise Officer. According to the dissenting member this does not satisfy the requirement of a full and true disclosure. All that the applicant has stated is based on a presumption and even the admission of duty on the basis of 2000 kg of catechu is also a presumption by default and what has been stated by him is merely that the person who made the entry (S. N. Gupta) is no more and, therefore, a presumption could be drawn that the catechu relating to that entry have been procured and not accounted for and used in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and facts which are properly left to the adjudicating authorities for decision. He also found that just as the applicants had requested for cross-examination of 13 persons who tendered statements or furnished other information before the investigating authorities under Section 14 of the Act, the Revenue also cannot be deprived of its right to cross-examine the witnesses including the deponents of the statements relied upon by the applicants, when the Revenue doubts the very authenticity thereof. For instance, the ledger accounts, transport documents and third party documents such as bank statements, etc. have to be put to strict proof by the revenue since these documentary evidences were not adduced in the course of the investigation but were produced before the Commissioner (Investigation) in the course of the proceedings before the Settlement Commission. According to the dissenting member, the apprehension of the revenue that the applicants had sufficient time to manipulate their records to accommodate all the entries which they could not adduce in the course of the investigation, cannot be brushed aside as unfounded. The authenticity of the documentary evidence can be proved onl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ows that on the basic principles that are applicable to the proceedings before the Settlement Commission, there is no major disagreement. All the three members, including the Chairman, are agreed that it cannot be said that there was no full and true disclosure of the duty liability merely because the applicant did not admit the duty liability mentioned in the show cause notice which, in the present case, is Rs. 245.56 crores. They are also agreed that if the case involves a detailed adjudication into complex facts and issues of duty liability, the proper forum would be the adjudicating officer and not the Settlement Commission. It is only in the application of these principles to the facts of the case that there is disagreement between the members, the Chairman and one member constituting the majority holding that the applicant has made a full and true disclosure of the duty liability and the case also does not involve any adjudication, and the lone dissenting member taking the view that on the facts of the case there was no full and true disclosure of the duty liability and further that the case involves adjudication and not settlement. 58. Taking the question of full and true d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....filed by the assessee disclosing higher income than the original application was itself taken as indicating that the assessee had not come out with full and true disclosure in the original application. The majority opinion however, brushed aside the contention of the revenue based on the judgment to distinguish the judgment on the ground that in the present case, the applicants did not file any revised applications upwardly revising the quantity of the catechu or the additional duty. This, with respect, shows the skewed consequences of distinguishing a judgment in total disregard of its ratio. The majority opinion has placed reliance on the judgment of the Bombay High Court in UOI Vs. Hognas India Ltd. (supra), in which proceedings for settlement of customs case were distinguished from proceedings of settlement of income tax case and it was held that in every customs case there is a show cause notice and it is only thereafter that a person can approach the Settlement Commission and the issue of the show cause notice does not in any way take away the voluntary nature of the settlement application; in fact, it was held that there cannot be any voluntary application before the Settlem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esent case does not involve such an adjudication and therefore can be settled. They have preferred to look upon the need for testing a statement recorded under Section 14 of the Act as one which does not involve any complexity of facts or law and that merely because the statements may have to be tested by cross-examination, either at the instance of the applicant or at the instance of the revenue, it cannot be stated that the case is complex. The dissenting member has however met this finding effectively by pointing out in the quote extracted earlier that this is not the complete picture on the basis of which complexity of facts and law and the need for adjudication was put forth by the revenue. He has noticed that both the revenue and the assessee are to be accorded the right of cross-examination and this procedure is not conducive for a settlement of the case and it properly belongs to the domain of adjudication by the adjudicating authority. We are inclined to agree with this view taken by the dissenting member as against the rather simplistic view of the issue taken by the majority. The majority of the Settlement Commission have expressed the opinion that "the question of adjud....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... can be proved only after necessary verification of the furnished data by adjudicating upon third party documents such as those of the banks, the transporters and also the ledger which was allegedly got up for the occasion. We are unable to say that the dissenting member committed any error of law in finding justification for the apprehension of the revenue. It was firstly for the applicant to produce all the evidence in its possession before the central excise authorities while submitting its reply to the show cause notice. The fundamental rule of law is that every litigant is to adduce his entire evidence at the earliest point of time. The applicant did not do so. Further, they produced the documentary evidence before the Commissioner (Investigation) who gave a clean chit to them by accepting the evidence. Surprisingly, the majority opinion has not found fault with this procedure. There was a sufficiently long gap of time between the investigation proceedings and the settlement proceedings. The applicants undeniably had not only the time to prepare the documentary evidence, but they also had the motive. This should have prima facie raised suspicion in the minds of the Settlement ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act, again shocks the conscience of this Court. Even assuming that there was a lapse on the part of the investigating authorities in not visiting the factory premises, how can that wean the applicant away from the duty of adducing the documentary evidence before the investigating authorities or the adjudicating officers? If really the applicant had those documents in its factory, the most natural thing to do was to place them before the investigating authorities or the adjudicating authorities in an attempt to clear themselves of the charge of clandestine manufacture of goods and consequent evasion of excise duty. It is true that there should be evidence to prove that the documents are not genuine or authentic and it may also be true that in the absence of such evidence the Settlement Commission was right in presuming their genuineness or authenticity. However, the revenue cannot be found fault for raising the issue of the authenticity of the documentary evidence on grounds of delay in submitting them, when the applicant had everything to gain by submitting them in the course of the investigation or the adjudication, but did not. The genuineness or the authenticity of the do....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the unaccounted cash represents sale proceeds of clandestinely removed goods. It may be that the income tax authorities would also be required to be apprised of the seizure of the cash. That is an entirely different aspect, but it is unacceptable to say that the seized cash is not connected to the clandestine manufacture of the goods. We are unable to see what further evidence was required to connect the seized cash with the clandestine sales. One would be inclined to think that the seizure of the unaccounted cash substantiates the charge of clandestine manufacture and removal of goods. 63. We have earlier referred to judgments of this Court wherein it has been held that a case involving complexity of issues both of facts and law and disputed questions of fact for which detailed enquiry is necessary ought to be referred to the adjudicating officer by the Settlement Commission, to be taken up from the stage at which the matter was before the adjudicating officer, which is before the filing of applications before the Settlement Commission. The present case clearly appears to us to be eminently a case for adjudication and not for settlement. The decision making process adopted by th....