TaxTMI 
TaxTMI 
2014 (3) TMI 1078
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....e been filed for settlement of the dispute arising out of show cause notice No. 50/ADC/Bol/12, dated 4-9-2012 (hereinafter referred to as 'the SCN') issued under C. No.-V (15) 50/Adj/CE/Bol/12 by the Addl. Commissioner, Central Excise, Bolpur Commissionerate, Nanur Chandidas Road, Sian, Bolpur - 731204. 2. The allegations in the show cause notice are that the applicant are engaged in the manufacture of excisable goods, viz., M.S. Ingots, Oxygen gas and Nitrogen gas falling under Chapter sub-heading numbers 7206 10 90, 2804 40 90 and 2804 30 00, respectively, of the First Schedule to the Central Excise Tariff Act, 1985. On the basis of intelligence a team of officers of DGCEI visited the factory premises on 22-10-2011 and checked the stock of finished goods, MS Ingots and input stock of Pig Iron. Joint physical verification and checking of records, revealed shortages of 154.250 MT and 892.060 MT of MS Ingots and Pig Iron (input), respectively. Subsequently, applicant paid Rs. 16 lakhs and reversed Rs. 9,04,134/- from the Cenvat credit account towards duty involved on removal/shortage of finished goods and input. It is alleged that applicant intentionally suppressed the actua....
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....ty liability of more than Rs. 3 lac, and claiming to have made full disclosure while approaching for settlement both the applicant and the co-applicant requested for grant of immunity from payment of fine, penalty and interest and also for grant of immunity from prosecution under any Central Act. 5. Notice under Section 32F(1) was issued on 30-5-2013 and case was allowed to be proceeded with by the then two-Member Bench. A report under Section 32F(3) along with relevant case records was called for on 11-6-2013 from the Commissioner, Central Excise, Bolpur. In his report dated 28-11-2013 under Section 32F(3) of the Act the Commissioner, inter alia, submitted that during joint verification of stock, shortages were found. The applicant had removed 154.250 MT of M.S. Ingot (finished goods) involving duty of Rs. 3,97,194/- (including cesses) clandestinely without making entry in the DSA register, without cover of any valid document, without assessing duty liability and without payment of duty and thus rendered themselves liable for penalty; that, it is a case of clandestine removal of finished goods and input resulting in evasion of Central Excise duty. Commissioner prayed that ....
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....r the statutory provisions of Section 32F(3) Settlement Commission is required to call for a report from the jurisdictional Commissioner and also, if the Settlement Commission is of the opinion that further enquiry or investigation is necessary, it can also ask the Commissioner (Investigation) to cause such further enquiry or investigation as per the provisions of Section 32F(4). However, the remaining part of his contention, i.e., "... and if it is found that if there is concealment of its duty liability in the application and for that imposition of penalty may be warranted. In case such penalty is imposed the provisions of Section 32-O will prevail. In other words, applicant would be barred from filing application under Section 32E of the said Act.", is far from correct and nowhere specified in the statutory provisions. Learned consultant has arrived at this contention by inserting words in the plain and apparent meaning of the provisions of Section 32-O(l)(i) which reads as : "SECTION 32-O. Bar on subsequent application for settlement in certain cases. - (1) Where - (i) an order of settlement passed under sub-section (7) of se....
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....tation. The words are to be interpreted as they are. Words are not to be inserted by implication. Necessity of interpretation would arise only where the language of a statutory provision is ambiguous, not clear or where two views are possible or where the provision gives a different meaning defeating the object of the statute. If the language is clear and unambiguous, no need of interpretation would arise. "A literal construction would not be denied only because the consequences to comply with the same may lead to a penalty. The courts should not be over zealous in searching for ambiguities or obscurities in words which are plain." [Tata Consultancy Services v. State of A.P. - (2005) 1 SCC (308) = 2004 (178) E.L.T. 22 (S.C.)] Constitution Bench of five-Judges of the Hon'ble Supreme Court in R.S. Nayak v. A.R. Antulay, AIR 1984 SC 684 has held : "... If the words of the statute are clear and unambiguous, it is the plainest duty of the Court to give effect to the natural meaning of the words used in the provision. The question of construction arises only in the event of an ambiguity or the plain meaning of the words used in the statute would be self-defe....
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....ates that "order under Section 32F(5) shall provide for terms of settlement including any demand by way of penalty or interest..." The procedure for determining the demand for duty is explained in Section 32F(5), which reads as : "32F(5) After examination of the records and the report of the Commissioner of Central Excise received under sub-section (3), and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (4), and after giving an opportunity to the applicant and to the Commissioner of Central Excise having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner of Central Excise and Commissioner (Investigation) under sub-section (3) or sub-section (4)." 15. Thus, what is considered by the Settlement ....
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....or at the stage of final disposal of the application. 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 that the requirement of such a full and true disclosure is a continuing requirement that needs to be satisfied from the beginning of the proceedings till the conclusion thereof." 16. Once the Settlement Commission, arrives at the correct duty liability to its satisfaction, the other things that remain to be settled are the interest, penalty and grant of immunities, if any. Interest is always in relation to the duty liability and the period for which this duty liability was not discharged. Wherever under the Central Excise Act, 1944 penalty is provided for evasion of duties, the quantum of penalty is always in relation to the amount of duty evaded. It is thus, clear that when Settlement Commission settles a case, it has to be with reference to total duty liability, i.e., duty admitted in the application plus any additional duty liability unearthed during the settlement process. The penalty and interest which are dependent on the total duty liability are als....
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....ntral excise officer and approach Settlement Commission again and again since the bar under Section 32-O(1)(i) shall not apply to them. Such a situation shall not only encourage rampant evasion of Government revenue but also render the adjudication procedures in Central Excise Act redundant. 21. Now, coming to the 3 cases, cited by the learned Consultant for the applicants in their written submissions in defence, namely : (i) 2009 (242) 504 (Mad.), Commissioner of Central Excise (Chennai-II) v. Australian Foods Ltd. (Para 18) (ii) 2013 (291) E.L.T. 484 (Del.) DG of CEI v. Harish Chand Jaiswal Pvt. Ltd. (Para 3) and (iii) 2002 (141) E.L.T. 290 (Sett. Comm.) Re : Procter and Gamble Hygiene and Healthcare Ltd. The first two cases mentioned above do not relate to the issue at hand. The third case of Procter and Gamble does refer to Section 32-O of the Act, but it only addresses the issue of eligibility of an applicant to come before the Settlement Commission again in the circumstances when his earlier application was not admitted. It is thus not a citation relevant to the present context o....
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.... (filed on the same day, which was the date of hearing) - "On the question of whether the applicants are barred under Section 32-O(i) of the Central Excise Act, 1944 as on earlier occasions(s) penalty was imposed on the applicants, it is submitted in addition to the submissions made on 16-1-2014 that this bar would be applicable only in cases where the Hon'ble Commission imposes penalty on earlier occasion under Section 32F(5)/(7) for concealment of the particulars declared in the application for settlement when and if the same is so found out from the report of the jurisdictional Commissioner/Commissioner (Investigation). The penalty imposed with reference to the allegations in the SCN is not relevant for this purpose." From the above, it is seen that the argument and contention of the learned Consultant is two-fold, that is - (i) Firstly, that the bar under Section 32-O(1)(i) would be applicable only in cases where the Commission imposes penalty on earlier occasion under Section 32F(5)/(7) for concealment of the particulars declared in the application for settlement when and if the same is so found out from the report of the jurisdictional Commissioner/ Commi....
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....l Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. The penal provisions of Section 11AC of the Act are attracted in the case of - (i) a person "who is liable to pay duty" and (ii) where the duty has not been levied or paid or short-levied or short-paid "by reason of fraud or collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty". Being a case of clandestine clearance of excisable goods from the factory without payment of duty invoking the provisions relating to suppression of facts, there can be no doubt that the penalty that was imposed by reference to the provisions invoked in the show cause notice (Section 11AC of the Act and Rule 25 of the Central Excise Rules, 2002), by the Settlement Commission, was for concealment of duty liability particulars. These duty liability particulars were not disclosed before the Central Excise Officer. From these acts and contraventions, arose the "case" [defined at clause (c) of Section 31 of the Act] that eventually became the basis for the settlement a....
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....t clarifies the scope of settlement and has an important bearing on the issue of duty liability and penalty. (I) The proviso stipulates "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".                       [Emphasis supplied]. (ii) It follows from (i) above "that the amount of settlement ordered by the Settlement Commission" can be equal to or more "than the duty liability admitted by the applicant in the application filed under Section 32E". (iii) From the above it follows that - (a) a case can be settled for an amount that is more than the duty liability admitted, initially, in the application filed under Section 32E of the Act. There is no prohibition against it. A case need not be rejected by the Settlement Commission merely on the ground that the duty liability can be settled for an amount more than that which was initially, admitted in the application filed under Section 32E o....
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....8) of Section 32F of the Act ensures that the final duty liability and, consequently, the penalty imposed for concealment of duty liability particulars under sub-section (5) of Section 32F of the Act includes within it that element of penalty which is imposed for concealment of duty liability particulars, that was admitted in the application filed under Section 32E of the Act. 31. A single penalty imposed in the case is a composite whole in relation to the final duty liability. - "Concealment" of "duty liability particulars" has been mentioned under Section 32-O(1)(i) of the Act. The words and expressions "disclosure", "of his duty liability" and "which has not been disclosed" are mentioned in the provisions under Section 32E of the Act, relating to the filing of the application for settlement - SECTION 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 Exci....
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....ioner, Commissioner (Investigation), evidence adduced during the hearings, evidence produced before it or obtained by it. The true and full liability of duty as mentioned in Section 32E, can, thus, undergo a change during the settlement process. This is aptly reflected in the case of Harish Chandra Murari Lal v. DGCEI ....... the applicant, M/s. Harish Chandra had approached the Settlement Commission, initially admitting duty liability of Rs. 3.84 crores. This liability was later revised by them to Rs. 5.79 crores and again revised upwards to Rs. 8.33 crores during the course of settlement proceedings. The Settlement Commission, however, settled the duty liability even further at an amount of Rs. 16.70 crores. In the case of Commissioner of Central Excise, Visakhapatnam v. True Woods Pvt. Ltd., 2006 (199) E.L.T. 388 (Del.), the Hon'ble Delhi High Court has explained this process of practices of arriving at true and full disclosure. "8. ... It is true that the foundation for settlement is an application from the assessee in which the assessee 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 Centr....
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....t. The word used in this sub-section [(3) of Section 32K of the Act] is, "concealed material particulars to the Settlement Commission". In this connection it is observed that - (1) The word "disclosure" appearing in the expression "disclosure of duty liability which has not been disclosed" in sub-section (1) of Section 32E of the Act, is already there in the provisions of Chapter V relating to the Settlement of cases, from which it is evident that the factor of "concealment of duty liability particulars", is already covered by the provisions of Section 32E of the Act, which in turn, has been, specifically, mentioned at clause (i) of Section 32-O(1) of the Act, which is the provision under consideration. Thus it is not a relevant argument that the word "concealment" does not appear anywhere in the penalty section. (2) there are other words deployed in Chapter V of the Central Excise Act, 1944 regarding the Settlement of cases, which may not find mention at other places in the Central Excise Act, 1944, like, "full and true disclosure", "duty liability which has not been disclosed" and "settlement". Non-appearance of identical words in other Chapters of t....
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....of the Central Excise Act, 1944 but not elsewhere in the said Act. (6) When "suppression of facts" is mentioned in the mandatory penalty Section 11AC of the Central Excise Act, 1944, which penalty Section 11AC is, in turn, specifically, mentioned in the show cause notice issued to the noticee (applicant) and further that, while passing its earlier order (2nd Order dated 18-5-2011) holding that the applicant is an habitual offender in the case of clandestine evasion of Central Excise duty, the Settlement Commission has referred to "the provisions invoked in the SCN", while imposing penalty of Rs. 1.5 lakhs, then it is evident that the said penalty was imposed for concealment of the duty liability particulars by the applicant in that previous case. 35. Agreeing with the observations and findings of the learned Member (Shri Karan K. Sharma ) - (a) The provisions of Section 32-O(1)(i) are clear and there is no ambiguity in its scope or application, (b) Once a penalty is imposed on the person who files the application under Section 32E for concealment of particulars of his duty liability, then he automatically stands debarred from app....