TaxTMI 
TaxTMI 
2012 (10) TMI 1014
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....ders passed by the Customs and Central Excise Settlement Commission (hereinafter referred to as 'the Settlement Commission for sake of brevity ) under section 32-F(7) of the Central Excise Act, 1944 (hereinafter referred to as 'the Act' for sake of brevity) and the subsequent related orders. 2. We heard learned advocate Mr. Hasit Dilip Dave for the petitioners in all four petitions, and Ms Sejal K. Mandavia for the Department appearing in all the petitions, at length. Factual Profile 2.1 For convenience, the facts relating to the petitioner of M/s Jagat Textiles of SCA No. 17314 of 2006 and SCA No. 13798 of 2010 are set out in detail. It was found in the investigation that petitioner M/s Jagat Textiles had clandestinely removed manufactured goods of value of Rs. 3,37,80,147/- involving excise duty of Rs. 31,07,774/-. The Additional Director, Directorate General of Central Excise (Intelligence) issued show cause notice dated 25.05.2005 to the petitioner. At the stage of pendency of said show cause notice, the petitioner firm approached the Settlement Commission making an application under section 32E of the Act. The petitioner initially admitted the duty liability to the extent of....
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....ll as the main order dated 9.1.2006 of the Settlement Commission. 2.4 M/s Uma Textile, the petitioner of Special Civil Application No. 17315 of 2006 was given show cause notice on 24.06.2005 on the allegation of suppression of actual production and clandestine removal of the goods. In the notice, duty demand to the tune of Rs. 8,44,329/- was raised. The petitioner had already deposited Rs. 3,25,000/- out of the total duty. The Settlement Commission settled the duty at Rs. 8,44,229/- by order dated 23.01.2006 and directed the balance Rs. 5,19,329/- to be paid within 30 days. The immunity from interest payment as well as the immunity from penalty and prosecution were granted by the Settlement Commission in the same way as was granted in the case of petitioner of Special Civil Application 17314 of 2006. M/s Uma Textiles also filed a Miscellaneous Application pleading inability to pay interest on the ground of financial crunch, which was dismissed by the Settlement Commission on 26.05.2006 and in its case also the immunities came to be withdrawn. In the writ petition, the said order dated 26.5.2006 as well as the original order dated 20.1.2006 were sought to be set aside 2.5 This Cou....
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.... reasoning of the adjudicating authority that the order of the Hon'ble High Court was being misinterpreted. The authorities dealt with the matter in that way. 3.2 The adjudicating authority passed a common order dated 29.02.2008 and in case of M/s Jagat Textile, it imposed penalty of Rs. 31,07,774/- under section 11AC of the Act read with the relevant Rules, equivalent to the duty amount. In case of the other petitioner M/s Uma Textiles, equivalent penalty of Rs. 8,44,329/- was imposed. A personal penalty of Rs. 5,00,000/- was imposed on the proprietor - Shri Babubhai Patel. By corrigendum order dated 12.06.2008, recovery of interest was provided in the original order portion under section 11AB of the Act on the amount of duty already settled by the Settlement Commission. It was observed by the authority that Shri Babubhai S. Patel, Power of Attorney Holder of M/s Shree Jagat Textiles was the main person in the activities of both the units. 3.3 Against the aforesaid Order-In-Original (OIO), the petitioners preferred appeals which came to be dismissed by the Appellate Commissioner on 31.12.2008. Thereafter the Tribunal dismissed the appeals by common order dated 12.07.2010. 3....
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....t Section 32M of the Act. On the other hand, they wanted to take advantage of the order dated 13th June 2007 to say that the proceedings stand final. " "In view of the aforesaid fact, and as even according to the respondents, the last portion of the observation made by this Court is against Section 32M of the Act and since the applicants are now not being given advantage of the said observation, we are of the view that this is a fit case to review and recall the order dated 13th June 2007. We, therefore, recall the order dated 13th June 2007 in Special Civil Application Nos.17315 of 2006 and 17314 of 2006 and restore the said writ petitions Special Civil Application Nos.17315 of 2006 and 17314 of 2006 to their original file. (para 6,7 ) 3.7 The above clarification put the matters at the stage of section 32M of the Act. It was also clarified by the Court that the applicants were not being given the advantage of the stage "prior to the Settlement Commission" as earlier observed. Statutory provisions 4. The relevant statutory provisions in Chapter V of the Act regarding settlement of cases may be usefully referred to. Section 31(g) defines 'Settlement Commission', which is co....
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....ere an application was made under sub-section (1), before the 1st day of June, 2007 but an order under subsection (1) of section 32F has not been made before the said date or payment of amount so ordered by the Settlement Commission under sub-section (1) of section 32F has not been made, the applicant shall within a period of thirty days from the 1st day of June, 2007, pay the accepted duty liability failing which his application shall be liable to be rejected. (2) Where any excisable goods, books of accounts, other documents have been seized under the provisions of this Act or rules made thereunder, the assessee shall not be entitled to make an application under sub-section (1), before the expiry of one hundred and eighty days from the date of the seizure. (3) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed. (4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant. 4.2 The Settlement Commissioner has power to grant immunity from prosecution and penalty under section 32K, which is as under, "32K. Power of Settlement Commission to grant immunity from prosecution and penalty. -....
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....e reopened in any proceeding under this Act or under any other law for the time being in force." 4.4 Section 32N is regarding recovery of sums due under order of the Settlement Commission and provides that any sum specified in the order passed under section 32F(7) shall be recovered and any penalty for default may be imposed and recovered as sum due to the Central Government in accordance with provisions under section 11 by an officer of competent jurisdiction. Under section 32-L, the settlement Commission has power to send a case back to the Central Excise Officer in those csaes where, after applying under section 32E, the applicant does not cooperate. Section 32-I speaks of the powers of and procedure before the Settlement Commission. 4.5 An attentive reading of section 32K, as it stood before the amendment suggests that the Settlement Commission may grant immunity in respect of prosecution for any offence. It may also grant immunity wholly or in part from imposition of penalty, fine and interest. The section refers to prosecution, penalty, fine and interest only. No immunity can be granted with respect to any part of excise duty. An application for settlement would be adjudic....
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....ities could be faulted. As the petitioners did not comply with the order of the Settlement Commission and failed to pay the sum required to be paid as per its order, the immunities in respect of penalty, fine and interest were liable to be withdrawn. The immunity in penalty and prosecution as well as the immunity in payment of and interest at lesser rate of 10% was conditional, and the conditions were not complied with by the petitioners. The sum specified in the order of the Settlement Commission was not paid. In fact, the immunities stood withdrawn automatically and by virtue of operation of sub section(2) of section 32K. The operation of section 32K(2) is irrespective of any express order, as the bare reading of the said provision makes it clear. 5.3 With regard to the conclusiveness to the order of Settlement Commission provided under section 32M. The Apex Court in Union of India & Others vs. Ind-swift Laboratories Ltd. (2011) 4 SCC 635 may be noticed. The facts before the Supreme Court were similar to those involved in the present case. In that case the Settlement Commission imposed 10% simple interest on the wrongly availed Cenvate Credit. 10% interest was minimum, whereas l....
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....2005 and 24.06.2006, ending up with common order dated 12.07.2010 of the Tribunal, which came to be challenged in the subsequent petitions as stated above. Before the excise authorities, the contention of the petitioners was that as per the observations in the order of this Court, the matter was placed at the stage prior to the Settlement Commission order i.e. at the show cause notice stage. So as to complete the linking of the factual sequence, it may be repeated that it was after filing of Special Civil Application No. 17397 of 2010 and cognate petition, a review application was filed by the petitioners and in that order dated 06.07.2011 was passed. 6.1 Learned advocate for the petitioners raised various contentions in support of the prayers in SCA No. 13798 of 2010 and 13797 of 2010. He submitted with reference to the show cause notice that the entire case was booked merely on presumptions and assumptions, and without any corroborative evidence, the clandestine removal was established. It was submitted that the orders of the excise authorities were erroneous and the Tribunal passed order for payment of interest without due notice to them. It was repeated that it was not possibl....
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....was already paid, the consequences of penalty and interest have to follow. It was submitted that the petitioners had not disputed the charges in the show cause notices that they suppressed vital information regarding production, storage and consumption of cotton yan in order to evade the duty. Learned advocate highlighted the conduct of the petitioners to submit that there was no real willingness to pay. It was submitted that the Tribunal was justified in dismissing the appeal. 6.6 On going through the decision in Mahendra Petrochemicals (supra), it was in respect of exercise powers of the Settlement Commission under section 127H(2) of the Customs Act, 1962 to withdraw the immunity. For paying the amount, the assesse in that case was given an extension once, and the party requested the extension for the second time, which was not allowed by the Settlement Commission. That was challenged before the High Court. In that case, the party was willing to pay the total amount of interest and further interest on the delayed payment was to be awarded and there was a willingness to pay the total. Even otherwise the factual background of this case is totally different. In Mahendra Petrochemic....
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....excise duty liability and payment thereof, section 11AB as regards interest liability and sec. 11AC regarding penalty operated and are required to be allowed to operate to their full import. The authorities rightly held the view that the case being of suppression of facts the penalty under Sec. 11AC was imposable and for that no discretion was available as per the law laid down by the Supreme Court in Union of India vs. Dharmendra Textile Processors. Furthermore, as the immunity in interest came to be withdrawn under section 32K(2), the interest became chargeable under section 11AB of the Act. 7.3 It may also be pertinently stated that the petitioners-assessee did not contend at any stage of the long drawn proceedings that they had wrongly admitted the duty liability before the Settlement Commission. Permitting the petitioners to resile would mean circumventing from the backdoor the mandate of section 32M for conclusiveness of the order of the Settlement Commission. 8. The lack of willingness on the part of the petitioner to make the payments as per the orders of the competent authorities, was evident from the events and orders noted above which were passed subsequent to the orde....