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2020 (3) TMI 306
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....-applicant 4'), under Section 32E of the Central Excise Act, 1944 (in short 'Act') These applications have been filed for settlement of the dispute arising out of show cause notice issued under F. No. 574/CE/63/2015/Inv./21347-51, dated 22-12-2015 (hereinafter referred to as 'SCN') by Additional Director, Directorate of Central Excise Intelligence (HQ), New Delhi [(now Directorate General of GST Intelligence) (DGGI/Department in short)], New Delhi. 2. Earlier, in respect of the dispute arising out of the show cause notice issued under F. No. 574/CE/63/2015/Inv./21347, dated 22-12-2015, the main applicant M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV), filed Settlement Application No. 1135/2017, (hereinafter referred to as 'applicant') under Section 32E of the Central Excise Act, 1944 (in short 'Act'). 3. M/s. Royal Touch Fablon Private Limited is having manufacturing unit as Unit-I i.e. Domestic Tariff Area Unit (hereinafter referred to as "DTA Unit") and Unit-IV i.e. Export Oriented Unit (hereinafter referred to as "EOU") located at Panchghara, Beghumpur, Dankuni Expressway, Distt. Hooghly, Pin-712306, and are engaged in the manufacture of HDPE/PP Woven Sacks, Jumbo B....
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...., 1944 on the finished goods i.e. PP Fabrics and PP Sacks removed from EOU to DTA unit, along with interest under Section 11AA of the Central Excise Act, 1944. (iv) Central Excise duty amounting to Rs. 16,74,780/- should not be demanded from them under proviso to Section 11A of the Central Excise Act, 1944 read with Section 3 of the Central Excise Act, 1944 on the removal of 22 number of looms from EOU to DTA unit, along with interests under Section 11AA of the Central Excise Act, 1944. (v) Central Excise duty amounting to Rs. 26,60,000/- paid by the applicant during investigation should not be appropriated towards the demand of Central Excise duty. (vi) Penalty should not be imposed upon them under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 and under Section 114A read with Section 112 of the Customs Act, 1962. (B) The co-applicant 1 was called upon to show cause to the Joint/Additional Commissioner of Central Excise, Kolkata-IV Commissionerate, MS Building, Custom House, 15/1, Strand Road, Kolkata-700001 as to why penalty should not be impos....
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....eir case now. The notice under Section 32F(1) of the Central Excise Act, 1944, to the co-applicants were issued on 24-12-2018 and on receipt of their reply, the applications were allowed to be proceeded with vide order dated 15-1-2019. 8. In the notice issued by the Commission on 24-12-2018, it was asked to clarify that why bar under Section 32-O of the Act ibid will not be applicable in the case of co-applicant 1 as they earlier approached Customs, Central Excise & Service Tax Settlement Commission, Additional Bench, Kolkata (Settlement Application Nos. 447-448/2007, dated 10-5-2007) and was subsequently penalized Rs. 50,000/- vide Final Order No. 180/CE/07-SC(KB), dated 25-7-2007. 9. Co-applicant 1 vide their reply dated 4-1-2019 (also reiterated in their reply on 15-5-2019) inter alia submitted that in terms of Section 32-O of the Act, where an order of Settlement provides for the imposition of penalty on the ground of concealment of particulars of duty liability, then such person shall not be entitled to apply for Settlement under Section 32E of the Act in relation to any other matter. They have stated that no penalty has been imposed upon the applicant (co-appl....
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....submit a report within 15 days. The applicants were directed to submit the copy of the recorded statements by DGGI during investigation. 12.4 The applicants have submitted the copy of the statements vide their letter dated 15-5-2019. The DGGI has also submitted their comments on the applications of the co-applicants, vide their letter dated 22-5-2019 which was also forwarded by the Commissionerate. 13. A second date for personal hearing was fixed on 27-6-2019. 13.1 2nd Personal Hearing : 13.2 Shri Arvind Baheti, Executive Director, C/o, Khaitan & Co., Solicitors & Advocates, concerned on behalf of the co-applicants, M/s. Royal Touch Fablon Private Limited (Unit-I) Shri Vikas Kandoi, Director, Shri Raj Kr. Jaisansaria, in-charge of Accounts and Shri Pawan Sharma, Manager, of M/s. Royal Touch Fablon Private Limited. Shri Arvind Baheti submitted that no statements have been taken from Shri Vikas Kandoi, Director, or any other responsible persons from M/s. Royal Touch Fablon Private Limited (Unit-I), which is also evident from the relied upon documents at Annexure-A to the SCN. In a mechanical manner, the SCN has proposed imposition of penalty against al....
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....8-SC(KB), dated 24-10-2018 under the terms and conditions, as stated in Para-6 supra. Apart from the said settlement of the duty, confiscation of goods, a penalty of Rs. 50,000/- was also imposed on the applicant M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV). 15. The co-applicants in the settlement applications, as stated above, (1165/2018 to 1168/2018) have requested for grant of immunity from imposition of penalty and prosecution. Since the request of all the 4 co-applicants are identical and the proposal for imposition of penalty and prosecution has emanated from the same show cause notice (F. No. 574/CE/63/2015/Inv./21347, dated 22-12-2015), the Commission issues a common order deciding their case. 16. The Commission has observed that co-applicant No. 1, M/s. Royal Touch Fablon Pvt. Ltd. (Unit-1) earlier had applied for settlement of a case of evasion of Central Excise duty arising out of SCN No. DGCEI F. No. 350/KZU/Kol/ Gr. F/05/2674-76, dated 16-4-2007 which was issued to him. His application was settled by the Hon'ble Commission, Kolkata Bench, in Final Order No. 180/Central Excise/07-SC(KB), dated 25-7-2007. In the said order, apart from settlement of Central....
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....present case (request for grant of immunity from penalty and prosecution) is not hit by the bar of Section 32-O of the Act. 19. The wordings of Section 32-O prior to its amendment, i.e. prior to 1-6-2007 and the wordings after subsequent amendments are given as under : • Section 32-O (Prior to 1-6-2007) "Bar on subsequent application for settlement in certain cases. - where - (i) an order of settlement passed under sub-section (7) of Section 32F provides for the imposition of a penalty on the person who made the application under Section 32E for settlement, on the ground of concealment of particulars of his duty liability; or (ii) after the passing of an order of settlement under the said sub- section (7) in relation to a case, such person is convicted of any offence under this Act in relation to that case; or (iii) the case of such person is sent back to the Central Excise Officer having jurisdiction by the Settlement Commission under Section 32L, then, he shall not be entitle....
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....nged by the Revenue in the Division Bench of the Calcutta High Court. The relevant portion of the Order dated 23-2-2016 of the Divn. Bench of the Hon'ble High Court of Calcutta in APO 187 of 2015/W.P. No. 392 of 2014 reported in 2019 (365) E.L.T. 870 (Cal.)) wherein the judgment of the Single Judge Bench has been set aside, is reproduced below :- 5. The issues which require consideration are :- (i) Whether with the introduction of the "Explanation" to Section 32-O(1)(i) there was a change in law with regard to the one time-bar under the said section? (ii) Whether with the introduction of sub-section (2) to Section 32-O with effect from 1st June, 2007, subsequently omitted on 8th May, 2010, the concept of one time approach under Section 32-O was removed? and (iii) Whether in the earlier proceedings before the Settlement Commission penalty was imposed on the respondents, that is the writ petitioners, for concealment of particulars of their duty liability? 9. So far as the first issue is concerned, it is to be noted th....
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....acts in proper perspective, it is to be noted that the Commission had disposed of the earlier application of settlement by order dated 26th November, 2010 by directing the respondents to pay duty of Central Excise. Therefore, as and when the Commission took up the application for settlement for hearing, no "earlier application" on the "identical" issue was "pending" before it. Hence, the Section 32-O(2) since deleted, does not come to the aid of the respondents herein, that is the writ petitioners. 11. So far as the third issue is concerned, as under Section 32-O(1)(i) the bar to file subsequent application was always in vogue, in view of the clear finding in detail by the Commission that in the previous proceedings penalty was imposed for concealment of particulars of duty liability, the argument of the respondent on this issue cannot be accepted. In the instant case the Learned Single Judge, in the judgment under challenge, had overlooked paragraphs 8, 24 and 28 of the order dated 28th March, 2014 passed by the Commission dealing specifically with the earlier proceedings and the order passed thereon, as noted hereinbefore. Be it noted that the said order, under Sect....
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....urt, the Order of the Hon'ble Single Judge has been set aside and the scope of the Section 32-O(1)(i) has been enumerated as below :- (a) As per Section 32-O(1)(i), an order of settlement providing for imposition of penalty is always on a person who made the application under Section 32E for settlement on the ground of concealment of particulars of his duty liability. As per Section 32E(1), an assessee may in respect of a case relating to him, make an application before adjudication to the Settlement Commission to have his cases settled containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer. Therefore, under Section 32E(1), an application for settlement is only filed where there is a case of non-disclosure of duty liability before the Central Excise Officer. Thus, wherever a penalty is imposed by the Commission while deciding such application, it is always imposed on the ground of concealment of particulars of duty liability which has not been disclosed before the Central Excise Officer. Therefore, it is not correct to hold that the penalty which is imposed by the Commission is on the ground of concea....
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.... 32E(1) and is a clarificatory in nature. Therefore, the imposition of penalty by the Commission has been always on the ground of concealment of particulars of duty liability before the Central Excise Officer and the introduction of the explanation has not changed the position. (c) Summarising the above, it may be stated that wherever there is an Order for settlement imposing a penalty, it is always on the ground of concealment of particulars of duty liability before the Central Excise Officer and if such a person approaches the Settlement Commission for settlement any other case again, he would be debarred from approaching the Commission under Section 32-O(1)(i). 22. The co-applicant No. 1 in his submission dated 15-5-2019 (Para-16 supra) stated that the Commission in its previous order i.e., 2007 order, has imposed penalty which has been general in nature and has not stated anything about concealment of duty liability. In this context, it is to state that the co-applicant No. 1, to whom a SCN was issued (DGCEI F. No. 350/KZU/Kol/Gr. F/05/2674-76, dated 16-4-2007) was demanded certain amount of duty and the co-applicant No. 1 as an applicant for that case app....
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....ny duty liability. In other words, as per Section 32E(1), an assessee can apply for settlement of his duty liability and in the course of settlement if such person (assessee) is penalised on the ground of concealment of particulars of his duty liability, then such assessee (person) is debarred from approaching the Settlement Commission second time if again he applies under Section 32E. SECTION 32-O. Bar on subsequent application for settlement in certain cases. - Where, - (i) an order of settlement provides for the imposition of a penalty on the person who made the application under Section 32E for settlement, on the ground of concealment of particulars of his duty liability; Explanation. - In this clause, the concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer. then, he shall not be entitled to apply for settlement under section 32E in relation to any other matter. 25. As per Section 32E(1), "assessee" means any person who is liable for payment of C....
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....oceeding (SCN), he is debarred from approaching the Commission as he was penalised in an earlier case. • Therefore, such person who is liable for payment of Central Excise Duty and to whom there is a case of non-payment of duty and if such a case is settled by the Settlement Commission with imposition of penalty, then such person (assessee) is barred from approaching the Commission second time, if he approaches the Commission for settlement of another duty demand. • In other words, the debarring provision under Section 32-O(1)(i) refers to the position of a main applicant, the assessee himself to whom SCN is issued demanding certain amount of tax, and who is liable to pay the tax. 27. The position of the co-applicant however is different. The co-applicant approaches the Settlement Commission under Section 32E(5) of the Act which is given as under :- "Any person other than an assessee, may also make an application to the Settlement Commission in respect of a show cause notice issued to him in a case relating to the assessee which has been settled or is pending before the Settlement Commission and such notice is pending before an adjudicatin....
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....with a proposal of penal action, he has approached the Settlement Commission to settle his issue. He therefore cannot be barred from approaching the Settlement Commission, if he is penalised earlier, as a main applicant or a co-applicant because he is not the main applicant. 27.3 In the present case, M/s. Royal Touch Fablon Private Limited (Unit-1), the Co-applicant No. 1, has been proposed penalty in the SCN (F. No. 574/CE/63/2015/Inv./21347, dated 22-12-2015). This SCN was issued to M/s. Royal Touch Fablon Private Limited (Unit-IV). The case of M/s. Royal Touch Fablon Private Limited (Unit-IV) has already been settled by the Commission where he has applied as main applicant. 27.4 Here, the co-applicant, M/s. Royal Touch Fablon Private Limited (Unit-I), has approached the Settlement Commission under Section 32E(5) to decide the issue of imposition of penalty. He has been penalised earlier in a case relating to him where he was an assessee and the main applicant. Since he is not the main applicant in the present case, he will not be debarred from approaching the Settlement Commission. Had he been the main applicant in this case to whom a duty demand has been issued ....
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....entire modus operandi of shifting the imported raw materials, capital goods and finished goods from the EOU Unit to the DTA Unit of M/s. RTFPL without obtaining permission from the department of Central Excise to de-bond these goods and without payment of applicable duties thereon. Shri Raj Kumar Jaisansaria appears to have concerned with transporting, removing, depositing, keeping, concealing, selling and purchasing of these goods, which he was having knowledge or reason to believe were liable to confiscation under the provision of Customs Act, 1962, Central Excise Act, 1944 and Central Excise Rules, 2002. Thus, Shri Raj Kumar Jaisansaria appears to have rendered himself liable for penal action under Rule 26 of the Central Excise Rules, 2002 read with Section 112 of the Customs Act, 1962. 10(3) Shri Pawan Sharma, Manager, M/s. RTFPL appears to be involved in entire modus operandi of shifting the imported raw materials, capital goods and finished goods from the EOU Unit to the DTA Unit of M/s. RTFPL without obtaining permission from the department of Central Excise to de-bond these goods and without payment of applicable duties thereon. Shri Pawan Sharma appe....
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....ted in 2005 (180) E.L.T. 129. 29.2 Co-applicant No. 1 submitted that being a company it is not a natural person and penalty should not be imposed on it. 29.3 They have further submitted that the main applicant in this case has made a full and true disclosure of the duty liability and has co-operated during the process of the proceedings before the Settlement Commission and accordingly, the Settlement Commission has granted partial immunity from penalty to the main applicant. During the course of the proceedings before the Settlement Commission and during the process of investigation, the co-applicants have also fully co-operated. Therefore, they have prayed for complete immunity from penalty under the Central Excise Act, 1944, and the Customs Act, 1962, and also immunity from prosecution under the Central Excise Act, 1944, and the Customs Act, 1962. 30. The Directorate General of GST Intelligence, vide their letter F. No. 574/CE/63/2015/Inv./1472, dated 22-5-2019 while commenting on the contentions of the co-applicants submitted the following :- • That the Commission in its Order bearing No. F-508/CE/2018-SC(KB), dated 24-10-2018 has settled the....
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....penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater. Section 112 of the Customs Act, 1962 Penalty for improper importation of goods, etc. - Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111, shall be liable, to penalty. 33. The scope of Rule 26 has been discussed in the case of M/s. Pentagon Steel Pvt. Ltd. reported in 2013 (288) E.L.T. 271 (Tri.), the relevant portion of which is reproduced below :- 8. However, we are of the view that mere shortage of finished goods or raw materials in the stock cannot by itself construed that the said goods were removed clan....
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....ntelligence, vide their letter F. No. 574/CE/63/2015/Inv./1472, dated 22-5-2019 has also pointed out the charges framed at Para 10 of the SCN in this regard. The Bench has noted that the imported raw materials and finished goods have been kept in the premises of the Co-applicant No. 1 and was unaccounted for and the allegation was that it has been done with an intent to evade Customs duty and thereby rendering them liable for penal action under Rule 26 of the Central Excise Rules, 2002, and Section 112 of the Customs Act, 1962. Further, certain number of looms and sewing machines which were meant for 100% EOU (Unit-IV) were also found in the premises of the Co-applicant No. 1 and were found to be working. Those machines were admitted to have been placed in the premises of the Co-applicant No. 1 without any permission. However it has been observed that the SCN has not explained in any Para as to the role played by the Co-applicant No. 1 in depositing the finished goods and raw materials. The wordings of Para 10 of the SCN have been made in a routine manner without substantiating any charges. However, the Bench is not convinced about the non-involvement of Co-applicant No. 1 with reg....
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....emanding duty has been issued. The said SCN has been settled with imposition of penalty of Rs. 50,000/- after granting a partial immunity to M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV) who applied as main applicant. The statement of Shri Vikas Kandoi, Director, has not been taken/relied upon in the SCN. However, as the Director of the company, he cannot absolve his responsibility of adhering to the law and procedure. He is the person who takes all decision with regard to functioning of the units, both the main applicant and of the Co-applicant No. 1. Shri Vikash Kandoi however has co-operated with the proceedings in the commission and made a full and true disclosure of the duty liability of Unit-IV of which he is the Director and has complied with the settlement order of the main applicant. 36.1 Therefore, since the Unit-IV has been granted partial immunity from penalty (with imposition of penalty of Rs. 50,000/-) as they have admitted the offence of removal of raw materials, finished goods and machineries from their 100% EOU Unit to another DTA Unit (Co-applicant No. 1 in this case) and made a full and true disclosure of their duty liability, the Bench considers grant of f....