TaxTMI 
TaxTMI 
2021 (8) TMI 446
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....eriod for which the Discharge Certificate has been sought, upon payment of fee computed in terms of section 124 of the Scheme. 3. Briefly, the petitioner is a partnership concern against which an Orderin Original No. 2/A/Ayukt/M-/97 dated 14.08.1997 had been passed creating duty demand of Rs. 1,05,99,382/- together with penalty Rs. 60 lac under the Central Excise Act, 1944. Also, by that order, redemption fine Rs. 30 lac had been determined against the petitioner, in lieu of confiscation of goods under that Act. 4. Upon introduction of the Scheme through the Finance (No.2) Act, 2019, the petitioner applied for issue of the Discharge Certificate under section 127 of the Scheme, with respect to the aforesaid Order-in-Original dated 14.08.1997. It was required to deposit Rs. 63,59,629.20. Undisputedly, the petitioner deposited that amount on 30.06.2020. It did not discharge the liability of redemption fine Rs. 30 lac imposed vide the aforesaid Order-in- Original dated 14.08.1997. The Designated Committee did not issue the Discharge Certificate in absence of deposit of redemption fine Rs. 30 lacs. At that stage, the petitioner filed Writ Tax No. 483 of 2020 wherein, vide order da....
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....e invoked the rule of strict interpretation and submitted, the Scheme does not, in any way, include 'redemption fine' within the ambit of consequences of the Discharge Certificate under section 129 of the Scheme. Therefore, unless the petitioner were to pay the entire amount of 'redemption fine' - Rs. 30 lacs, the Discharge Certificate cannot be issued. Referring to the communication dated 20.12.2019, he would submit that the position in this regard has been clarified by the Central Board of Indirect Taxes and Customs (CBIC in short), to exclude 'redemption fine' from 'penalty' and therefore, from the scope of the Scheme. He has further submitted that the petitioner had given an undertaking before the Designated Committee to pay the redemption fine once the Discharge Certificate is issued to it. Therefore, invoking estoppel against the petitioner, it has been submitted, the petitioner cannot go against its own undertaking and that the challenge now raised, is merely an afterthought. 7. Having heard learned counsel for the parties and having perused the record, first, we find that the object of the Scheme is only one, being to end legacy disputes. For that object and purpose, the....
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....nt of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty; (c) where the tax dues are relatable to an amount in arrears and,- (i) the amount of duty is, rupees fifty lakhs or less, then, sixty per cent, of the tax dues; (ii) the amount of duty is more than rupees fifty lakhs, then, forty per cent of the tax dues; (iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,- (A) rupees fifty lakhs or less, then, sixty per cent, of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty per cent, of the tax dues; (d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is- (i) rupees fifty lakhs or less, then, seventy per cent, of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent, of the tax dues; (e) where the tax dues are payable on account of a voluntary disclosure by the declarant, then, no relief sh....
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....ation; (c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enactment. (2) Notwithstanding anything contained in sub-section (1), - (a) no person being a party in appeal, application, revision or reference shall contend that the central excise officer has acquiesced in the decision on the disputed issue by issuing the Discharge Certificate under this scheme; (b) the issue of the Discharge Certificate with respect to a matter for a time period shall not preclude the issue of a show cause notice,- (i) for the same matter for a subsequent time period; or (ii) for a different matter for the same time period; (c) in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the Discharge Certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted." 12. Thus, upon the Discharge Certificate being issued under section 129 of the Scheme, the same would be conclusi....
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.... and Customs may, from time to time, issue such orders, instructions and directions to the authorities, as it may deem fit, for the proper administration of this Scheme, and such authorities, and all other persons employed in the execution of this Scheme shall observe and follow such orders, instructions and directions: Provided that no such orders, instructions or directions shall be issued so as to require any designated authority to dispose of a particular case in a particular manner. (2) Without prejudice to the generality of the foregoing power, the Central Board of Indirect Taxes and Customs may, if it considers necessary or expedient so to do, for the purpose of proper and efficient administration of the Scheme and collection of revenue, issue, from time to time, general or special orders in respect of any class of cases, setting forth directions or instructions as to the guidelines, principles or procedures to be followed by the authorities in the work relating to administration of the Scheme and collection of revenue and any such order may, if the said Board is of opinion that it is necessary in the public interest so to do, be published in the prescribed....
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....otice, or one or more appeals arising out of such notice which is pending as on 30.06.2019' [explanation to rule 3, SVLDRS Rules, 2019]. In the instant case, the SCNs also involve imposition of redemption fine. There are two scenarios that can emerge: (a) The SCN involving redemption fine has been adjudicated. In this case, redemption fine has been imposed and quantified. (b) The SCN involving redemption fine is yet to be adjudicated. In other words, the redemption fine has not been imposed or quantified. The Discharge Certificate [Section 129] which is issued at the end of the proceeding under the Scheme is a full and final closure of the matter and time period stated therein. Therefore, the Discharge Certificate in such cases can only be issued after settlement of redemption fine. In scenario (a) above, it would be mean payment of redemption fine. In scenario (b) above, it would mean adjudication of show cause notice for imposition of redemption fine and payment thereof. 4. The Hon'ble High Court may be apprised of the above position along with the relevant facts of the case. Yours sincerely, Sd/- (Navraj Goyal) OSD(CX)" ....
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....59 , it was conclusively laid down by the Supreme Court: "40. A petition seeking grant of special leave to appeal may be rejected for several reasons. For example, it may be rejected (i) as barred by time, or (ii) being a defective presentation, (iii) the petitioner having no locus standi to file the petition, (iv) the conduct of the petitioner disentitling him to any indulgence by the court, (iv) the question raised by the petitioner for consideration by this Court being not fit for consideration or deserving being dealt with by the Apex Court of the country and so on. The expression often employed by this Court while disposing of such petitions are - "heard and dismissed", "dismissed", "dismissed as barred by time" and so on. May be that at the admission stage itself the opposite party appears on caveat or on notice and offers contest to the maintainability of the petition. The Court may apply its mind to the merit worthiness of the petitioner's prayer seeking leave to file an appeal and having formed an opinion may say "dismissed on merits". Such an order may be passed even ex parte, that is, in the absence of the opposite party. In any case, the dismissal would rem....
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....igh Court merge in that order of the Supreme Court. Therefore, the Gujarat High Court decision has only persuasive value. That we are bound to consider. 19. With all respect, we face our own difficulty and reservations in accepting (in toto), the reasoning contained in the decision of the Gujarat High Court. Merely because the petitioner was eligible to apply for Discharge Certificate under the Scheme, it would not therefore make it entitled to issue of a Discharge Certificate. That eligibility arises under section 125 of the Scheme whereas the consequences of issue of the Discharge Certificate arise under section 129 of the Scheme. Therefore, a person who may be eligible and who may apply under and comply with the terms of the Scheme, may be issued the Discharge Certificate, yet, the benefit of the same may remain confined to the extent provided under section 129 of the Scheme only. In short, in our view, in scope and ambit sections 125 and 129 of the Scheme are different and largely independent of each other. Merely because the person may be entitled to apply for issue of a Discharge Certificate it would not determine the consequences of its issue. He may continue to remain li....
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.... apply only to cases where, in the first place, the revenue authorities have looked at the law in a particular way and that view taken in favour of the assessee has sustained over a period. Here, neither condition is satisfied. The view taken by the Central Board of Indirect Taxes and Customs is not in favour of the petitioner and, in any case, the Scheme is a recent enactment over which there is no consistent view taken by the departmental authorities. 24. Coming to the main issue, whether 'redemption fine' falls within the meaning of the word 'penalty' used in section 129 of the Scheme, we find neither word has been defined under the Scheme or the Rules framed thereunder or the principal Act, namely the Central Excise Act, 1944. Indisputably, the 'redemption fine' imposed on the petitioner was payable in lieu of 'confiscation'. As to 'confiscation', historically, under the Roman Law, it was an act or desire of taking into hands of the Emperor and, to transfer it to the imperial treasury, the goods or the commodity forfeited. That principle appears to be existing in favour of the State, under the Central Excise Act, 1944 read with the Customs Act, 1962. Here, it may ....
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....the land revenue. When such a payment took place, it cannot be said that the assessment for land revenue remained. The land was freed from that assessment as completely as if there was no assessment. Thenceforward, the land would be classed as revenue-free, in fact and in law. In The Land-Law of Bengal (Tagore Law Lectures, 1895) p. 81 S.C. Mitra described these revenue-free lands as follows: "There is another class of revenue-free lands which comes within these rules laid down in the Registration and Tenancy Acts, namely, lands of which Government has, in consideration of the payment of a capitalised sum, granted proprietary title free in perpetuity from any demand of land-revenue."" 26. Section 34 of the Central Excise Act, 1944 creates a fine in lieu of 'confiscation'. It reads: "34. Option to pay fine in lieu of confiscation .-Wherever confiscation is adjudged under this Act or the rules made thereunder, the officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks". The above provision is similar in scope and ambit to section 125 of the Customs Act, 1962 which reads:....
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....nder/person whereas confiscation was held to be a penalty in rem, visiting the goods. That penalty being imposed on the offending goods may be imposed even if the ownership in the goods remains undetermined or in doubt or in dispute and even if a penalty in personam may remain from being imposed. In paragraph 15 of that decision, it was held as below: "(15) We do not so decide, but let us assume that the construction put forward on behalf of the appellant is the one that should be accepted in this case. The question then is-does S. 23 of the Foreign Exchange Act apply o the facts of this case and could the appellant Company be proceeded against under that section? A distinction must at once be drawn between an action in rem and a proceeding in personam. Section 23 of the Foreign Exchange Act is a proceeding against the offender, and is applicable to the person who contravenes any of the provisions of that Act, even though on a conviction for such contravention, the Court may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that the goods in respect of which the contravention has taken place be confiscated. In substance it....
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....provisions indicates that proceedings for confiscation of contraband goods are proceedings in rem and the penalty of confiscation under the first part of the entry in column (3) of clause (8) of the Schedule, is enforced against the goods irrespective of whether the offender is known unknown. But, imposition of the other kind of penalty, under the second part of the entry in column (3), is one in personam ; such a penalty can be levied only on the "person concerned" in any offence described in column (I) of the clause. 23. Goods found to be smuggled can, therefore, be confiscated without proceeding against any person and without ascertaining who is their real owner or who was actually concerned in their illicit import." 30. Last, in Union of India & Anr. Vs. Mustafa & Najibai Trading Co. & Ors., (1998) 6 SCC 79, the above noted principle of law was again reiterated in the context of the Customs Act, 1962. It was thus held as below: "33. Similarly, in the case of D. Bhoormall, (1974) 2 SCC 544, this Court, while considering the provisions of Section 167(8) of the Sea Customs Act, 1878, has pointed out that proceedings for confiscation of contraband goods are pro....
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....from a single transaction. Clearly, both penalties are part of the same dispute, for a common period. It is so because even according to the revenue both those penalties were imposed vide the Order-in-Original 2/A/Ayukt/M/97 dated 14.08.1997. Though that order has not been shown to us, yet it is not the case of the revenue that the 'redemption fine' in question was imposed on the petitioner, independent of that order. The revenue only contends that by its very nature, 'redemption fine' is not a 'penalty' at all. That submission is contrary to the law laid down by the Supreme Court. We have no hesitation to hold, 'redemption fine' is a kind or type of 'penalty' under the Central Excise Act, 1944. 32. Now, we choose to consider the intent and object of the Scheme. Though incorporated with reference to a fiscal statute, it does not create a charge or levy of tax. Rather, it represents and implements the Union Government's policy to reduce legacy litigation involving disputed levies of indirect taxes under twenty-eight (28) specified indirect tax enactments under section 122 (a) and (b) of the Scheme and, any other enactment that may have been notified for that purpose. To end su....
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....o be read keeping with the intention of legislation. The exclusion cannot be read by ipse dixit but only through clear and unimpeachable evidence. The legislature further makes it clear through sub-section (9) of Section 2 of Act 30 of 1963 that it is only such area of grant which is not included within the purview of Act 26 of 1963 as will constitute to be "minor inam" under Act 30 of 1963". 35. As noted above, the Scheme being a piece of reformative legislation, 'redemption fine' that is a penalty in rem must clearly be shown to have been excluded from the meaning of the word 'penalty' used in section 129 of the Scheme, before it may be inferred that a Discharge Certificate may be issued only upon payment of the 'redemption fine'/penalty in rem. In absence of any provision to exclude 'redemption fine'/ penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, 'redemption fine' would always remain a 'penalty' covered under the meaning of that word used in section 129 (1) (a) read with section ....