AI Drafter 
TaxTMI 
TaxTMI 
2018 (2) TMI 283
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2016 before this Court, challenging the order of the first respondent / Settlement Commission dated 25.05.2016, on an application filed by the petitioner for settlement of their case, after a show cause notice dated 22.09.1997, demanding duty to the tune of Rs. 3,28,27,082/- under Section 72(1)(2) of the Customs Act,1962 and proposing to levy penalty, under Section 112 of the Customs Act, 1962. The said Writ Petition was dismissed by a learned single Judge. Against which, the present Writ Appeal has been filed raising the following grounds:- i) The order passed by the learned Judge is contrary to law, weight of evidence and probabilities of the case. ii) The finding of the learned Judge that there was no allegation made as to the violation of principles of natural justice. In ground 20.a), the appellant raised the specific plea of violation of principles of natural justice which has not been properly considered. iii) The learned Judge failed to appreciate that the order passed by the 1st respondent is beyond the scope of application filed by the appellant before the 1st respondent. iv) The finding given by the learned Judge about the shortage of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before the 1st respondent that there is no liability with regard to raw materials. That alone was not taken into account by the 1st respondent which is the portion of which the appellant is aggrieved and is entitled to agitate the same before this Hon'ble Court. x) If the 1st respondent found that there is no true and full disclosure in the application of the appellant or if there was non-cooperation on the part of the appellant, then the 1st respondent was empowered to send the entire matter to the adjudicating authority. The appellant has also filed C.M.P.No.1233 of 2017 under Section 151 of CPC praying to grant stay of the operation of the order passed in Order No.25 of 2016-Cus. Dated 25.05.2016 passed by the first respondent pending disposal of the Writ Appeal. 3. Learned counsel for the appellant would submit that in the application filed before the 1st respondent, the appellant has claimed NIL liability, insofar as the raw materials is concerned, which amount was not mentioned anywhere by the Department in the report and 90% depreciation claimed by the petitioner was objected by the Department and the first respondent fixed the admitted liability, even tho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion claimed by the appellant was also objected to, by the department and it was also submitted before the Settlement Commission that since the LOP functioning as an EOU had been cancelled, depreciation should not be allowed and benefit of depreciation is available only if the export obligation has been discharged. Learned counsel for the respondents would also submit that the goods were not lost or destroyed, but the raw materials lost its utility due to the appellant's failure to clear the goods and leaving it to become unworthy and therefore, it cannot be construed, as a case of goods lost or destroyed, and such cases are not covered by the provisions of Section 23 of the Customs Act. 8. Learned counsel would further contend that the letter dated 10.05.2016, is the reply to the letter of Settlement Commission dated 28.04.2016, calling for comments for the letter dated 25.04.2016 received by the department from the learned counsel for the applicant, and in the said letter itself, the department has mentioned about the duty on raw materials. Learned counsel would further submit that the appellant cannot challenge an order of the Settlement Commission, in a piecemeal manner, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 (346) ELT 90 (Mad.) (Hi-Design ..vs.. Commissioner of Central Excise, Pondicherry) are as follows:- "10. It is not the case of the petitioner that it did not have an opportunity to put forth its submissions. It was represented by counsel; it made actual and legal submissions and the Settlement Commission has considered the matter elaborately and recorded a finding that the applicants are attempting to hoodwink the legal provisions and therefore, while settling the case, directed the entire Central Excise duty to be paid, apart from imposing penalty of Rs. 50,00,000/- on the applicant and giving an option of redemption of the seized goods on payment of redemption of fine of Rs. 2,00,000/- with simple interest and settling the interest at 10% (simple interest), and granting immunity from prosecution to the applicant and co-applicants. 11. The Constitutional Bench of the Hon'ble Supreme Court in the case of Brij Lal & Ors., vs. Commissioner of Income Tax, (Civil Appeal Nos.516-527 of 2004, reported in (2011) 1 SCC 1 held that the order of Settlement Commission under Section 245D(4) of the Income Tax Act shall be final and conclusive. In UOI vs. IndSwift Laborat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... before the Settlement Commission were that the said M/s.Chemcrown (India) Limited [now known as M/s.Standard Shoe Sole & Mould (India) Ltd, as per the Certificate of Incorporation dated 14.12.2001] is a 100% EOU concern, as per the approval granted vide LOI No.EOB/14/90/EO/ 562/89-Comp. dated 07.03.1990 for manufacturing and exporting "Thermo Plastic shoe and polyurethane shoe soles". The appellant unit has been registered by the Assistant Commissioner of Central Excise, Pondicherry Division, as a Private Bonded Warehouse with Licence No.3/92. The EOU imported machinery, spare parts and raw materials for the value of Rs. 6,28,12,691/- in terms of Notification No.13/81-Cus. dated 09.02.1981. However, the imported machineries were found to be old and used machineries and because of the wrong supply of the sub-standard machines, the appellant could not produce any goods, as per the norms and fulfill the export obligation. 12. The further case of the appellant before the Settlement Commission is that the appellant has filed a suit before the Hon'ble Supreme Court of India, against the German Collaborator, who supplied the machinery, for breach of contract, which resulted in clo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Settlement Commission. 14. Meanwhile, the Settlement Commission called for a report from the Commissioner of Central Excise, Puducherry, who submitted a report dated 02.12.2005, which categorically stated that the appellant unit has not used the capital goods imported for the purpose to which it was imported; the unit has not exported any goods by using imported capital goods and raw materials; though they had undertaken to export 100% of their production excluding rejects during the entire period of 10 years under the EOU Scheme, their export was very minimal and they had exported only 4100 pairs of shoe soles against the annual capacity of 77.18 lakh; in ten years, they exported 0.005% of the permitted value, in total. The Development Commissioner has issued suo-motu exit order for non-functioning of the appellant unit under the scheme and to stop them from getting goods without payment of duties under EOU scheme; Suo-motu exit order could not be treated as permission for debonding and therefore, the appellant unit is not eligible for depreciation and the rate of duty applicable, which is prevalent at the time of suo-motu exit order. 15. On 21.02.2006, the Settlement Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s paid by the appellant. Record of proceedings shows that in the letter of the Superintendent of Central Exercise, Pudhucherry, it was informed that the appellant has paid the full amount of Rs. 10,17,283/- as ordered by Hon'ble Settlement Commissioner and the appellant has fulfilled the conditions of Settlement Commission as well as Hon'ble High Court of Madras. Subsequent to the said letter, the appellant moved the first respondent to fix the date of hearing in the case. The case was fixed for final hearing on 05.04.2016. The department representative confirmed that the admitted liability had been discharged by the appellant, however, pleaded for imposition of suitable penalty, and as regards immunities, the departmental representative left it to the discretion of the commission. 17. After affording necessary opportunities and recording the proceedings, under various hearing including post - hearing submissions made by the appellant dated 25.04.2016, as well as the revenue dated 10.05.2016, and accepting the claim of 90% depreciation on the capital goods by the appellant, the Settlement Commission, passed Final Order No.25 of 2016-Cus. dated 25.05.2016 and ordered that....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., as stated by them, show cause notice dated 22.09.1997 becomes significant, when the appellant had voluntarily invoked Section 127(B) of the Customs Act, 1962, before the Settlement Commission, seeking to pay the accepted additional liability of Rs. 25,29,277/- in 12 equal installments. After calling for the report, the Settlement Commission, directed the revenue and the appellant to rework the amount payable. After submission of the calculation, Settlement Commission, 1st respondent herein, has granted 10 days time to the appellant to pay the remaining amount. After affording full and fair opportunity, the 1st respondent has proceeded to pass final order dated 25.05.2016 settling the appellant's case, by arriving at the customs duty payable, at Rs. 46,52,571/- by giving credit to Rs. 10,27,099/-, which was deposited by the appellant, for the capital goods, on the depreciated value, apart from directing the appellant, to remit the remaining amount, with regard to raw materials. The appellant has sought settlement on the admitted liability, and prayed for immunity provided under the law. The direct answer to the grounds raised by the appellant are that even during the prelimina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Commission has taken note of the fact that the refund of duty under Section 27 of the Customs Act cannot be extended to the appellant, as the goods were neither lost nor destroyed as contemplated under Section 23 of the Customs Act and on the contrary, the appellant has accepted that the raw materials have lost its utility value due to the appellant's failure to clear the goods and leaving it to become unworthy and in such cases, remission of duty cannot be covered under Section 23 of the Customs Act, 1962. The appellant, on his own volition, has rendered the goods unfit for consumption and therefore, the same cannot be construed as the goods being destroyed or lost. Decisions cited by the learned counsel for the respondents are against the case of the appellant and that the appellant cannot be permitted to accept a portion of the order, which is favourable to them and make contra submissions against another portion, which is against to them. It is rightly held by the Writ Court that findings of fact recorded by the Commission are not open for examination or re-examination, by the High Court under Article 226 of the Constitution of India. Merely because, the order of the Settle....