AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1159
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....ignated Committee, Delhi-East, CGST, to declare that the two show cause notices dated 12th March, 2014 and 22nd July, 2014 pertain to the same matter and the discharge certificate issued in respect of Show Cause Notice dated 22nd July, 2014 concludes the proceedings initiated vide Show Cause Notice dated 12th March, 2014 as well. 3. These petitions are a part of the batch of petitions wherein the question that arises for consideration of this Court is whether redemption fine is to be considered as part of duty, penalty or the amount eventually payable and is hence, covered by the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter, 'the SVLDR Scheme') or not. 4. The background giving rise to the petitions is that initially, on 13th September, 2013, some officers from the Central Excise department visited the business premises of M/s Gaurav Enterprises and factory premises of M/s S.K. Jain & Co. from where the jack hammers & their manufactured parts, which were being produced and traded by the Petitioners were seized. 5. Pursuant to such seizure, a show cause notice dated 12th March, 2014 (hereinafter, 'SCN-I') was issued to the Petitioners proposing confisc....
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.... reply/replies as to whether he/they wish to be heard in person or through his/then legal representative before the case is adjudicated 19. If no cause is shown to this notice against the action to be taken within the time above, or he/they or his their legal representative do not appear before the adjudicating authority at the time of hearing, the case will be decided ex-parte on the basis of the facts already available on the record. 20. This show cause notice is issued without prejudice to any other action that may be taken against the above named persons or any other firm(s)/ companies/ Person(s) whether mentioned here-in-above, or not under the Central Excise Law or any other law for the time being in force. 18. This show cause notice is being issued for the seized goods only and further investigations are in progress. Show Cause Notice for the extended period under Sub-Section (4) of Section 11A of Central Excise Act, 1944 Including the appropriation of the amount tendered voluntarily shall be issued separately. 25. All documents relied upon to the Show Cause Notice are enclosed as RUD's. A list of RUDs is also annexed with the Show Cau....
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....e in the said evasion of central excise duty and hence contravention of the provisions of Central Excise Act, 1944 and Rules made thereunder. 23. Further, Shri Satish Kumar Jain, Prop. M/s Reliance International, Darya Ganj, Delhi and Director M/s Swasti Drilling Co., 2778/8, Hamilton Road, Mori Gate, Delhi is hereby called upon to show cause to the Additional Commissioner, In-charge of Div-II Central Excise, Delhi-I, C.R. Building, I.P. Estate, New Delhi - 110 109 as to why: i) Penalty should not be imposed upon him in terms of Rule 26 of the Central Excise Rules, 2002 for his connivance in the said evasion of central excise duty by M/s S.K. Jain & Co. and hence contravention of the provisions of Central Excise Act, 1944 and Rules made thereunder. 24. The Noticees to this show cause notice are further directed to produce all the evidence(s) upon which he/they intent to rely in support of his/their defense at the time of showing cause. He/they should also clearly mention in his/their written reply/replies as to whether he/they wish to be heard in person or through his/their legal representative before the case is adjudicated. 25. If no с....
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.... involving confiscation of goods are eligible to avail the benefits of SVLDR Scheme and thus, their application with respect to SCN-I ought to be considered by the Designated Committee in accordance with law and discharge certificates deserve to be issued in respect thereof. It is further argued that since SCN-I & SCN-II pertain to the same subject matter and the discharge certificate has been issued in respect of SCN-II, thus, SCN-I would also stand covered under the SVLDR Scheme. Hence, the Petitioners pray for reconsideration of declaration in SVLDR Scheme-I form filed with respect to SCN-I and issuance of a discharge certificate in respect thereof. 15. On the other hand, it is submitted on behalf of the Respondents that cases involving confiscation of goods are not covered under the SVLDR Scheme, unless the issue of redemption fine has been adjudicated. In this regard, reliance is placed upon para 3 of reference dated 20th December, 2019 of Ministry of Finance, CBIC, wherein it is categorically stated as under: "3. A 'case' under the Scheme means a show cause notice, or one or more appeals arising out of such notice which is pending as on 30% July, 2019'....
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....iling appeal; or (ii) an order in appeal relating to the declarant attaining finality; or (iii) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it (d) "amount of duty" means the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment; (e) "amount payable" means the final amount payable by the declarant as determined by the designated committee and as indicated in the statement issued by it, in order to be eligible for the benefits under this Scheme and shall be calculated as the amount of tax dues less the tax relief; 123. For the purposes of the Scheme, "tax dues" means - 123 (a)...... (b) where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of June, 2019, then, the amount of duty stated to be payable by the declarant in the said notice: Provided that if the said notice has been issued to the declarant and other persons making them jointly and severally liable for an amount, then,....
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....unt of pre-deposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund. 127(8)-On payment of the amount indicated in the statement of the designated committee and production of proof of withdrawal of appeal, wherever applicable, the designated committee shall issue a discharge certificate in electronic form, within thirty days of the said payment and production of proof. 129. (1) Every discharge certificate issued under section 126 with respect to the amount payable under this Scheme shall be conclusive as to the matter and time period stated therein, and- (a) the declarant shall not be liable to pay any further duty, interest, or penalty with respect to the matter and time period covered in the declaration; (b) the declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration; (c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enact....
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....d stand waived under the scheme. The question that then arises for consideration is whether redemption fine would constitute duty, interest or penalty. 24. A perusal of form SVLDR Scheme-I would show that the only amount mentioned even in this form, in cases where there is pending litigation, is in respect of duty/tax/cess and then amount of penalty, amount of late fee. However, there is no mention of redemption fine in this form as well. 25. A further reading of the FAQs/ the flyer published by the CBIC would show that in the said document, there is a clear benefit mentioned in the following words: "Benefits under the Scheme: ● Total waiver of interest, penalty and fine ● Immunity from prosecution ● Cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is Rs. 50 lakh or less and 50% if it is more than Rs. 50 lakh." The said flyer of the SVLDR Scheme, as published by the CBIC can also be accessed via the following URL : https://cbic-gst.gov.in/pdf/sabka- vishwas/Sabka-Vishwas-Scheme-English.pdf 26. The issue that has arisen for consideration in the batch of cases, which the present petit....
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....the tax payer for release of the goods which have been confiscated. Such a fine is called the redemption fine. Hence, the seizure and/or redemption fine is nothing but a consequence of non-payment of excise duty. The same cannot be considered as a separate category of penalty, insofar as the applicability of the SVLDR Scheme is concerned. 29. In light of the above, it is noted that the case of the Respondents that the SCN-I, which does not compute any redemption fine upon the Petitioners, cannot be given shelter under the SVLDR Scheme, is set up relying upon the clarification dated 20th December, 2019 of Ministry of Finance, CBIC. However, it is relevant to note that the said clarification issued by the CBIC has been held to be contrary to the intent and object of the SVLDR Scheme in Synpol Products Pvt. Ltd. v. Union of India 2020 (374) E.L.T. 851 (Guj.), wherein the Gujarat High Court has held as under: "9.10. With regard to the clarification issued by the respondent-Board in communication dated December 20, 2019 is also contrary to the intent and object of the Scheme which is discussed at length in paras 11 and 12 of the order dated December 24, 2019 passed by the Co....
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....ations involving redemption fine cannot be accepted. This court, however, is prima facie of the view that the stand of the Board that in case where redemption fine is imposed and quantified, discharge certificate can only be issued after settlement of redemption fine, is not in consonance with the Scheme which contemplates putting an end to the matter." 30. Hence, in light of the fact that the clarification relied upon by the Respondents has already been set aside by the Gujarat High Court and the SLP being SLP (C) No. 449/2021 against this decision has been dismissed, the same can no longer be a ground to deny the issuance of discharge certificate to the Petitioners. 31. In addition to that, a perusal of the SCN-I & SCN-II clearly shows that SCN-II had been issued in continuation to the proceedings emanating from SCN-I and the same is also clearly stipulated under SCN-I. Moreover, the appropriation of the amount of Rs. 15,00,000/- was also set out in SCN-1, which has been given adjustment qua SCN-II. Since the two SCNs arise from the same proceedings and the demands for penalty, excise duty raised in both SCNs are borne out of the same investigation constituting the search, ....
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....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. xxxx 35. As noted above, the Scheme being a piece of reformative legislation, 'redemption fine' that is a penalty in rem must dearly 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 121 (u) of the Scheme. Thus, we have reached the same conclusion on the point as ....
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....ents had issued show cause notice demanding excise duty together with confiscation of the goods in terms of Rule 25(a) and (d) of the Central Excise Rules, 2002 and redemption fine in lieu of confiscation under Rules 25 as goods were not available for confiscation, it is clear that by issuing the show cause notice, the respondent has invoked Rule 25 of the Central Excise Rules, 2002 for levy of redemption fine in lieu of confiscation as goods which were sought to be confiscated were not available for confiscation. Therefore, the levy of the redemption fine equivalent to demand of central excise duty under Rule 25 of the Central Excise Rules, 2002 would be an amount in arrears as defined in Section 121(c) of the Scheme along with the amount of duty which is recoverable as arrears of duty under indirect tax enactment. Therefore, the test which is required to be applied to ascertain what is the amount in arrears as per the Scheme, it would include both the amount of duty as well as amount of redemption fine which is required to be recovered from the taxpayers. The amount of redemption fine cannot be treated separately then the amount of the duty under the Scheme. Therefore, the interp....
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....LP (C) No. 449/2021 against this decision of the Gujarat High Court has been dismissed. Subsequently, this very view has been followed in respect of the SVLDR Scheme by the Punjab and Haryana High Court in M/s Shoe Sales Corporation CWP-1493-2021 & CWP-1496-2021 where the decision in Synpol Products Pvt. Ltd. (supra) and in M/s Jay Shree Industries (supra) have been followed in the following terms: "The petitioner-M/s Shoe Sales Corporation is seeking writ of certiorari for setting aside orders of the Designated Committee made under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as SVLDR Scheme) whereby the application of the petitioner has been rejected vide letter/order dated 23. 12 2010 (Annexure P-5) by observing as under- "The said application was filed with respect to your appeal filed before Hon'ble CESTAT vide appeal no. E/52743/2015 EX-(DB) which is in pending state. However, as per concerned O-I-O no. 02/TS/D-III/2014-15 dated 19.05.2014, the matter involves Redemption Fine. The amount of fine in lieu of confiscation of goods has not been proposed for relief in the Sabka Vishwas Scheme as the scheme encompass....
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....le under Section 9 of the Central Excise Act, 1944 and the fine mentioned in flyers, press release and FAQs is redemption fine only, As per Section 125 of the Scheme, a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. The declarant is required to include redemption fine as part of the duty demanded so as to calculate the amount in arrears as per Section 121 (c) of the Scheme. Leamed counsel for the petitioner has also stated that Special Leave to Appeal (C) No. 449 of 2021 against the aforesaid judgment has been dismissed on 03.03.2021 and the judgment has attained finality. He has referred another judgment of Allahabad High Court passed in Writ Tax No. 832 of 2020 M/s. Jay Shree Industries Vs. Union of India 838 of 2020, allowed on 06.08.2021 whereby the application under the SVLDR Scheme had been rejected by the designated committee on 17.11.2020 on the ground that there was an outstanding amount of Rs.30 lacs of redemption fine and the application could not be considered unless the petitioner paid that amount and in this backdrop, discharge certificate could not be issued under Section 129 of the Scheme. xxx....
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....o be made of the tax dues, it is certain percentage of central excise duty which entitles the applicant to waiver/immunity under Section 129 of the SVLDR Scheme. Therefore, payment has to be of basic excise duty and not redemption fine to avail benefit of SVLDR Scheme. Admittedly, "redemption fine" cannot be considered as "central excise duty". Section 129 (1) (a) which provides immunity/waiver states that the declarant shall not be liable to pay any further duty, interest or penalty. The phrase "further duty" by accepting the contention of respondents would cover redemption fine also. To put it simply, what is required to be paid for availing benefits of the scheme is the prescribed percentage of central excise duty which is payable as per Section 3 of the Central Excise Act and when Section 129(1)(a) which grants immunity/waiver refers to "any further duty", it would mean any payment other than central excise duty and, therefore, by accepting the contention of respondents, "redemption fine" would fall within the phrase "any further duty". Therefore even on this count, the rejection of the application by respondents is not justified" 37. In Juice Electricals Ltd. Writ Petition ....
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....is clarified that there would be no other liability of interest, fine or penalty if the dispute is resolved under the SVLDR Scheme. This issue had come up for consideration before the Allahabad High Court in M/s. Jay Shree Industries (supra) wherein on similar facts, the High Court clarified by analysing the meaning of duty, penalty and fine and came to a conclusion that redemption fine under Section 34 of the Central Excise Act is only a payment akin to penalty and, therefore, a declarant is entitled to the waiver of redemption fine under Section 129 of SVLDR Scheme. The very same issue also arose before the Gujarat High Court in Synpol Products Pvt. Ltd. (supra) and the High Court in paragraph 4.5 of the said decision recorded that the Revenue has accepted that waiver of fine is allowed under the Scheme although Section 129 (1) of the said Scheme does not refer to fine and the said stand of the Revenue is in line with the clarifications, press release and flyers issued by the Board. The Co- ordinate Bench of this Court in HP Adhesives Limited (supra) has also accepted the decisions Gujarat and Allahabad High Court mentioned above. Therefore, our view, the basis of rejection that ....
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....o the intention thereof. 42. The discharge certificate that is to be issued by the Department upon payment of duty in terms of the scheme is for waiver of entire duty, interest or penalty and redemption fine would be part of these three terminologies, as has been rightly interpreted by the CBIC itself in its flyer and FAQs. 43. Tax payers who may not understand complex terminologies in a taxing statute heavily rely upon the FAQs or publicity material published by the CBIC to understand such Schemes. Hence, responsibility has to be borne by the Department to such FAQs/Publicity material which are followed as guidance by the tax payers and arguments to the contrary would not be tenable. 44. Under such circumstances, this Court is of the opinion that when penalties and interest are being waived under the SVLDR Scheme but the redemption fine is not waived, as is being argued by the Respondents, such an interpretation would go contrary to the fundamental purpose and the raison d'être of the SVLDR Scheme itself. In the opinion of this Court, the purpose of the SVLDR Scheme is to give a finality to a particular dispute and not to keep the aspect relating to redemption f....