TaxTMI 
TaxTMI 
2005 (3) TMI 22
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....tioner that it established a small scale unit for the manufacture of P or P Medicaments. It started commercial production since January 1998. The officers of Central Excise, Anti Evasion Wing searched the factory-cum-office premises of the petitioner and taken over certain records. A search was also conducted at the depot premises of M/s. Arsa Pharmaceuticals (P) Ltd., which, according to the petitioner, is buyer of the petitioner's products, whereas, according to the Revenue, it is the petitioner's sole distributor. Certain records were seized from the premises of M/s. Arsa Pharmaceuticals (P) Ltd. The petitioner was served with a show cause notice dated 9-3-2004 alleging that the petitioner indulged in clearance of P or P Medicaments without cover of Central Excise duty paid invoice and without accounting for in the stock registers. A demand was raised of Rs.13,64,684/- and a further demand in the sum of Rs.13,50,000/- was also raised on the ground that the petitioner is not entitled to the benefit of Notification No.8 of 2000 applicable to SSI units. The petitioner was asked to show cause why the sums demanded should not be paid by it together with penalty. On receipt of the sai....
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....p; Sri A.Rajasekhara Reddy, learned Senior Standing Counsel for Central Government sought to sustain the impugned order for the reasons contained therein. It was further submitted that the orders being conclusive, the validity thereof has to be examined in the light of the limited scope of judicial review. It was strenuously urged that the petitioner failed to make true and full disclosure of their duty liability, which is a condition precedent for entertaining the application and, therefore, the impugned order does not warrant interference. 6. Before we deal with the rival contentions, a brief look at the relevant provisions of the Central Excise Act would be appropriate. 7. Chapter V containing Sections 31 and 32 has been inserted with effect from 1-8-1998 in the Central Excise Act, 1944 by the Finance Act 2 of 1998. 8. Under definition Section 31, any proceeding pending under the provisions of the Act has been defined as falling within the meaning of the word 'case' used in Chapter V. Under Section 32, Customs and Central Excise Settlement Commission is constituted for settlement of cases under Chap....
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....nbsp; (emphasis supplied) Power is conferred under Section 32F on the Settlement Commission to call for a report from the Commissioner of Central Excise and to pass orders allowing the application filed by the assessee to be proceeded with or to reject the application. Where an application is allowed to be proceeded with, the Settlement Commission may call for the relevant record from the Commissioner and if it forms the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner (Investigation) to make or cause to make further enquiry or investigation and furnish a report on the matters covered by the application and any other matters relating to the case. After examination of the records and report of the Commissioner under sub-section (1) and the report, if any, of the Commissioner (Investigation) of the Settlement Commission u....
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....o the Central Excise Officer. To the extent relevant, for the purpose of enquiry on hand, Section 32L is extracted hereunder: "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 proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under section 32E had been made." Section 32M lays down that the order of the Settlement Commission is final and conclusive as to the matters stated therein. Under Section 32N, any amount specified in an order of settlement passed under sub-section (7) of Section 32F can be recovered and penalty for default in making such payment can be imposed and recovered in accordance with the provisions under Section 11 by the Central Excise Officer. The proceedings before the Settlement Commission shall be deemed to be judicial proceedings within th....
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.... 12. For the said purpose, we deem it appropriate to extract the relevant reasons which persuaded the Settlement Commission to reject the application. The relevant portion of the order of the Settlement Commission impugned, in this proceedings, reads as under. "With reference to the plea that clearances enumerated in Annexure A were all physician's samples of two tablets per strip, the applicant was given an opportunity to prove their claim, but they have not advanced any evidence in this regard. Thus, the admission of miniscule duty amount of Rs.2,05,976/- with reference to clandestine clearances, based on unsubstantiated valuation claims in respect of Annexure A and non admission of duty liability on the excess stock recorded in M/s.Arsa Pharmaceutical stock register lead only to the inevitable conclusion that the applicant company is not making a true and full disclosure of duty. Therefore, we do not consider it necessary to go into other details of the arguments made by both sides. Even after being given an opportunity to reconcile the defects with Revenue and come out with revised submissions, we find that the applicant has not bud....
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....ed were strips of 10 like in other commercial packing or strips of two. Despite this opportunity, the applicant-petitioner did not make truthful disclosure. Instead, it was found by the Settlement Commission that applicant stuck to its original stand. The stand taken in the application filed by the petitioner is to the following effect. "As regards the simple note book vide (a) above, the department has taken the quantities of the medicaments mentioned therein and demanded duty applying the value relating to the sale value of the goods. In this connection it is submitted that this book was entitled "SAMPLE BOOK" and was used for the sole purpose of keeping an account of the samples removed for distribution free-of-cost. The said note book is referred at Sl.No.67 of the Panchnama. This sample book contains date wise dispatches of various P or P medicaments under two separate columns viz., Actual and invoice for the period between 06-01-2000to 01-02-2000. The SCN alleged that totally goods valued at Rs.30,10,835/- involving a duty of Rs.8,15,484/- has been cleared without payment of duty. The applicant admits, in this regard, that they have dispatched the said q....
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....4. The onus is on the applicant to make a full and true disclosure of the duty liability and the manner in which the same is arrived at. It is only when the Settlement Commission is satisfied that the applicant has made a full and true disclosure, the application can be admitted and proceeded with. This is for the reason that the object behind the enactment of the provisions relating to settlement is the creation of a forum for self-surrender. The Settlement Commission is constituted as an extraordinary measure for providing an opportunity to such persons to make a true confession and to have matters settled once for all. The contentions advanced before this Court by the learned counsel for the petitioner proceed on the premise that the obligation to make truthful disclosure of duty liability would arise after the application is admitted and not before and that the Revenue is required to first establish the stand taken in the SCN. In our view, such a premise is erroneous. The Settlement Commission is not a forum for challenging the legality of orders passed under the provisions of the Act. The Settlement Commission in the case on hand having found that the a....