TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1159
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....ittee, 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 confiscation of the above....
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....en 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 Cause Notice." 6. Thereafter, another show cause notice dated 22nd July, 2014 (hereinafter, 'SCN-II') was issue....
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....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 саusе 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 th....
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....tificates 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'(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....
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....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, the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant; 124. (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this Scheme shall be calculated as follows:- (a) where the tax dues are relatable to a show c....
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....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 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; ....
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.... 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 petitions are a part of, is whether in cases where goods are liable for confiscation or any seizure is effected, such cases would be covered under the SVLDR Scheme. The further question is whether in cases where redemption fine is imposed for release of confiscated goods, the Scheme would apply or not and if the person deposits the duty in terms of Section 124 of the SVLDR Scheme, a discharge certificate would be liable to be issued. 27. Under the Central Excise Act, 1944, Section 12F and Section 34 provides as under: "12F. Power of search and seizure - (1) Where the Joint Commiss....
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....stry 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 Coordinate Bench of this court, and we therefore concur on such prima facie opinion. Paras 11 and 12 of the order dated December 24, 2019 read thus : "11. It may be further noted that in the communication dated December 20, 2019 of the Board, the contents whereof have been reproduced hereinabove, it has been stated that when a person gets immunity from prosecution, he also gets waiver of such fine for the offences under section 9 of the Central Excise Act, 1944. Thus, it is not the case of the Board that the Scheme does not provide for waiver of fine, but only that it does not provide for waiver of redemption fine. Tes....
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....harge 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, seizure and confiscation of the goods of the Petitioners, it would be incorrect to issue the discharge certificate with respect to only one SCN i.e. SCN-II. 32. Further, under the SVLDR Scheme, Section124 provides that only the part of the excise duty has to be paid, depending upon the amount of tax due. Hence, the same can be either 40%, 50%, 60% or 70% of the tax dues and there is no requirement to pay either the balance tax alongwith penalty or any interest. 33. In fact, the various judgments which have been cited by ld. Counsel for the Petitioner clearly cover this issue and the Court need not reinvent the wheel. In the decision r....
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....ovision 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 the Gujarat High Court, but for reasons of our own. 36. That being the law, the further objection of the revenue based on the rule of estoppel is devoid of any merit. In Commissioner of Income Tax (Central) v. B.N. Bhattacharjee & Anr., (1979) 4 SCC 121 = 2002-TIOL-2003-SC-IT, it was clearly opined that estoppel does not operate against a statute. The Supreme Court had laid down: "58. The soul of estoppel is equity, not facility for inequity. Nor is estoppel against statute permissible because public policy animating a statutory provision may then become the casualty. Halsbury has noted this sensible nicety: 'Where a statute, enacted for the benefit of a sec....
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....e 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 interpretation made by the Board in the communication dated 20-12-2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, 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. 11. The Supreme Court in the case of K.P. Varghese (supra) has laid down that the Rule of construction by reference to the principle of 'contemporanea expositio est optima et fortissima in lege' which is a well established rul....
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....ving 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 encompasses only the matters in which demand of Duty, Interest and Penalty are involved. Accordingly your SVLDRS-1 application having ARN LD1410190000014 dated 14.10.2019 has been rejected" The benefits under the SVLDR Scheme has been reflected in Annexure P-4, which are as under- ● 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 same relief for cases under investigation and audit where the duty involved is quantified on or before 30th June, 2019. ● In case of an amount in arrears, the relief offered is 60% of the confirmed duty amount if the same is Rs. 50 Lakh or less....
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....he 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. xxxxx Keeping in view the aforesaid judgment passed by Gujarat High Court, upheld by the Hon'ble Supreme Court after dismissal of Special Leave to Appeal (C) No. 449 of 2021 and the object of the SVLDR Scheme, writ petitions are allowed and the orders of the designated committee are being set aside. The matter is remanded back to designated committee to consider the case of the petitioner(s) as per the SVLDR Scheme and redetermine payable including redemption fee/fine under the SVLDR Scheme by passing fresh order. The designated committee will give six months' time after making assessment under the SVLDR Scheme so that the petitioner(s) can deposit the amount in time." 36. In Messers Espee Electrotech LLP Writ Petition No. 7653 of 2021, the Bombay High Court has also categorically held that redemption fine is nothing but a duty and the....
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....n 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 No. 12845 of 2023 the following view was expressed by the Court: "12. With respect to the above issue, the Co-ordinate Bench of this Court, to which one of us was a party (Jitendra Jain, J.) has passed a detailed judgment holding that the redemption fine is akin to penalty and once the petitioner's application under SVLDR Scheme accepting the payment of excise duty is accepted, the declarant is immune from imposition of any redemption fine and, therefore the benefit of the scheme gets extended to the redemption fine also. The relevant paragraphs 3.5, 3.6 & 3.8 of the decision in the case of M/s. Esbee Electrotech LLP (supra) read as under:- 3.5 The benefit of SVLDR Scheme is available, if the applicant pays "tax dues" as per Section 124 of SVLDR Scheme. Section 123 defines "tax dues" for the purpose of the scheme to mean the "amount of duty" which is being disputed i....
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....e 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 waiver of redemption fine is not covered is required to be rejected. 3.8 The reliance placed by Respondents on paragraph 10 of the decision of the Gujarat High Court in Synpol Products Pvt. Ltd. (supra) to justify their rejections is not acceptable since the issue before us is interpretation of Section 121 (d) which defines "amount of duty" which is the phrase used in Section 123 which defines "tax dues", whereas the observations made in paragraph 10 of the Gujarat High Court is in connection with the definition of the phrase "amount in arrears" defined by Section 121 (c). In the instant case, the provisions of Section 121 (c) is not applicable since Petitioner No.1-Firm has filed an appeal which has not attained finality and, therefore, none of the clauses of Section 121 (c) of the Scheme applies to Petitioner's case. Therefore, on facts the observations in paragraph 10 of the Gujarat H....