AI Drafter 
TaxTMI 
TaxTMI 
2022 (10) TMI 922
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the history of the litigation thus far and the facts that may be relevant which are as follows: a) The appellant has two units. Unit-I is engaged in the manufacture of CTD Bars. MS Ingots and billets were manufactured in Unit-II. The MS Ingots/Billets was cleared from Unit-II to Unit-I on payment of duty, the duty so paid is taken as credit in Unit-I and set off against the duty paid in respect of clearances of CTD Bars manufactured in Unit-I. b) On 30.01.2006, there was an investigation by the Officers of the 3rd respondent along with the Officers of the 1st respondent during the course of which certain materials were seized which inter-alia included incriminating records, CPU of two computers, note-books and pocket diaries which indicated that there was clandestine removal of MS Ingots and CTD Bars/rods. c) The seized computers with the CPUs were kept in sealed boxes and opened in the presence of appellant/representatives. The data contained in the computer were copied in a hard disc and handed over to the Appellant. The hard disc was sent for imaging to the Government Examiner of Questioned Documents, (hereinafter referred to as ''GEQD''). d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... c. Quantum of expansion of production capacity if any, prior to or during the period of dispute and corresponding increase in production, shift-wise, heat-wise etc. d. The technical literature supporting the manufacturer's contention regarding the installed capacity of the furnace for manufacturing MS ingots. e. Production capacity of Unit No.I. f. Evidence if any, available for excess purchase of raw materials for manufacture of MS ingots that is accounted for in the statutory / private records. g. Evidence if any, available for unaccounted removal of quantum of goods i.e., MS ingots/CTD bars as alleged in the SCN? h. No. of days the factory was working during the impugned period and the period prior to and after the said period and evidence thereof. i. Any other independent evidence to corroborate the production clearance particulars of MS ingots/CTD bars found in the GEQD reports. j. Standard Input-output ratio / norms for manufacture of MS Scrap to MS Ingots & MS Ingots to CTD Bars / Rods and the applicant's ratio during the impugned period. Reasons for deviation / variation if any. k. Inter-unit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the 1st investigation Report. The Report was made taking into account confirmation by the manufacturer of the furnace that any attempt to obtain in excess of 10 M.T., per heat continuously can put the safety of men and machinery in jeopardy and the appellant's submission that though additional machinery had been purchased for increasing production however, for want of clearance from the Pollution Control Board, the same was not installed atleast during the relevant period in question. It was concluded in the 1st Report that during the period in issue, the production is likely to vary between 55000 M.T., to 59600 M.T., 7. The 1st Respondent Commission on receipt of the above Report dated 24.05.2012 vide order dated 29.4.2013 directed the Commissioner(Investigation) of the 1st Respondent Commission to conduct further investigation on the following aspects: (i) What is the actual data present in the seized hard disc? (ii) Whether the data present at the time of seizure underwent any alteration or whatsoever at the subsequent stages in the investigation involving the GEQD report? (iii) At the time of seizure the data in CPC was copied in 2 CDs as well. Ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... period. That the 1st Respondent has misdirected itself in placing reliance upon the website of the year 2013 while determining the production for the years 2004-06. 10. The Respondent/ Settlement Commission after recording the sequence of events and the appellant's apprehension that the hard disc sent by GEQD and kept with DGCEI for more than 10 days could have been tampered with to feed wrong information concluded that the investigation ordered on 29.04.2013 was only acceding to the request of the appellant for investigation relating to authenticity of GEQD Report. The 1st Respondent Commission after finding that the authenticity of the GEQD Report cannot be disputed, though the same was recorded as a "prima-facie" view in the light of the Commissioner's Report dated 21.06.2013, proceeded to remand the case to the Commissioner of Central Excise in terms of Section 32 L of the Central Excise Act, 1944 on finding that there was non-cooperation of the appellant, before the Bench, though the same was recorded as a prima facie view. 11. Aggrieved by the same, the appellant had challenged the order of the Respondent/ Settlement Commission by way of W.P.No.1962 of 2014 which came ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... b) The scope of enquiry while examining challenge to orders of Settlement Commission is limited to examining whether the order of the Commission is contrary to any of the provisions of the Act and if it has caused any prejudice apart from the ground of bias, fraud and malice which constitute a separate and independent category. 15. Heard both sides. Perused the materials on record. 16. We find that the challenge of the appellant may have to succeed for the following reasons: i) That the order of the 1st Respondent appears contrary to Section 32 F(4) of the Central Excise Act, 1944, insofar as it places reliance on the 2nd Report dated 21.06.2013. In this regard, the relevant portions of Section 32 F of the Central Excise Act, 1944, is extracted hereunder: "SECTION 32F.Procedure on receipt of an application under section 32E. - (1) On receipt of an application under sub-section (1) of section 32E, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the application made by him should be allowed to be proceeded with, and after taking into consid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ioner 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 subsection (3) or sub-section (4)." From a cumulative reading of the above provisions of Section 32 F of the Central Excise Act, 1944, the following position appears to emerge: a. That on receipt of an application under Section 32 F of the Central Excise Act, 1944, the Respondent Commission may issue the notice within 7 days from the date of receipt of such application seeking explanation from ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a quasi judicial body, the Settlement Commission should have gone ahead with considering the merits of the main application made under Section 32 F of the Central Excise Act, 1944. The purport of introduction of Section 32 F of the Central Excise Act, 1944 is to see that protracted proceedings before the authorities is avoided by resorting to settlement of the cases. In the absence of any such consideration bestowed, I feel, the proper course herein would be to restore the matter back to the Settlement Commission to consider the merits of the main application...." In the light of the above said order of this Court, the Bench observes the plea of the applicant deserves to be acceded to and investigation ordered in the case. The Bench, therefore, in exercise of the powers conferred on it under Section 32 F of the Central Excise Act, 1944 directs the Commissioner (Investigation) allotted to the Bench to conduct Investigation and make a comparison between the production capacity that would be ascertained by Commissioner (Investigation) and the Jurisdicational Commissioner's report on the same." 18. We intend to make it clear that we are not testing the legality of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilure to comply is provided under the proviso to Section 32 F (4) of the Central Excise Act, 1944 viz., that the Commission would proceed to pass orders. It has been consistently held that one of the test for determining whether a provision is mandatory or directory is to examine if the legislature provides for the consequences, which it does in the present case by requiring the Commission to proceed to dispose all the matters in terms of Section 32 F (5) if the Report is not received within the timelines prescribed. It is trite law that when consequences of failure to comply with a prescribed requirement is provided by the statute itself, there can be no manner of doubt that such statutory requirement must be interpreted as mandatory. (2008) 2 All ER 865 (H.L.). The periods prescribed in the Schedule to the Indian Limitation Act, 1908, for bringing a legal proceeding are mandatory as the consequence of the expiry of the period of limitation is provided by Section 3 of the Act in that the court is enjoined to dismiss a legal proceeding instituted after expiry of the prescribed period. Rajasekhar Gogoi vs. State of Assam, AIR 2001 SC 2315 : (2001) 6 SCC 46 (para 11). Similar resu....