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TaxTMI 
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2025 (9) TMI 1155
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....ng the Petitioner's Bank Guarantee Bank Guarantee No. 0505108BG0002145 dated 16th June, 2008. 3. This petition is a part of the batch of petitions wherein the short 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 petition is that initially, an Order-in-Original No. 15/2009 had been passed against the Petitioner on 20th November, 2009 (hereinafter, 'the OIO dated 20th November, 2009') which was challenged by the Petitioner before Customs, Excise and Service Tax Appellate Tribunal (hereinafter, 'CESTAT'). Vide final order dated 6th August, 2015, the said OIO dated 20th November, 2009 was set aside and the matter was remanded by the CESTAT to the original authority for fresh adjudication, after providing an opportunity of cross-examination. 5. After the said remand, the Order-in-Original dated 28th June, 2019 (hereinafter, 'the OIO dated 28th June, 2019') was passed in terms of which, the following amoun....
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....nvat Credit wrongly availed till the date of payment made on 31.03.08. iii) The amount of Rs, 4,40,00,000/- (Rs. Four Crores Forty Lacs only) deposited voluntarily by M/s. JVIPL vide TR-6 Challan dated 31.03.2008 is appropriated. (i) iv) Penalty of Rs. 4,37,55,7331- (Rs. Four Crore Thirty-Seven Lakhs Fifty-Five Thousand Seven Hundred and Thirty-Three only) is also imposed on M/s JV under the provisions of Rule 15 of the Cenvat Credit Rules 2004, Rule 25 of the Central Excise Rules 2002 and Section 11 AC of the Central Excise Act 1944. However, if they pay the entire amount of cenvat confirmed along with interest above, within 30 days of the receipt of this order, they shall be eligible to pay penalty @25% provided the said penalty of 25% is also paid within 30 days of the receipt of this order in terms of proviso to Section 11 AC ibid...." 6. As can be seen from the above, the following amounts were demanded from the Petitioner: Total demand (including redemption fine) Rs. 4,69,27,211 [Rs. 4,51,15,211 + Rs. 18,12,000] Amount to be deposited under SVLDRS Scheme (if redemption fine is considered as 'arrears') Rs. 2,81,56,327 [60% of Rs. 4,69,27,211] ....
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....MPTION FINE HAS TO BE DEPOSITED BEFORE ISSUING OF SVLDRS-4." 14. The Petitioner continued to dispute the liability to deposit the Redemption Fine. Accordingly, after the issuance of SVLDRS Form -III, a rectification application was filed by the Petitioner under Section 128 of the SVLDR Scheme and simultaneously, the Petitioner deposited Rs. 4,46,084/- in terms of SVLDRS Form -II. 15. The Petitioner also filed an application for withdrawal of the appeal before the CESTAT and the appeal was accordingly withdrawn. 16. In continuation with the rectification application, subsequent letters were also written by the Petitioner to Respondent No. 3 requesting for rectification of SVLDRS Form -III with respect to the redemption fine. 17. In the meantime, the Petitioner also came to know that a bank guarantee of a sum of Rs. 90,00,000/-, which was furnished by them to the Respondent No. 5- Department on 16th June, 2008, was encashed by the Department to the extent of Rs. 18,12,000/-. 18. In view of this action of the Respondent No. 5- Department, the Petitioner has filed the present petition seeking a fresh discharge certificate in SVLDRS Form-IV in respect of the SVLDRS-I file....
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....Scheme. 21. Reliance is placed by the ld. Counsel for the Petitioner upon various provisions of the SVLDR Scheme. Ld. Counsel also relies upon the FAQs and the flyer published by the Central Board of Indirect Tax & Customs (hereinafter, 'CBIC') itself, which clearly uses the words 'total waiver of interest, penalty and fine', while describing the benefits of the SVLDR Scheme. 22. In addition to that, the following judgments passed by various courts are relied upon by the ld. Counsel for Petitioner: i. M/s Jay Shree Industries v. Union of India, Writ Tax No. 832 of 2020- High Court of Allahabad ii. Synpol Products Pvt. Ltd. v. Union of India, 2020 (374) E.L.T. 851 - Gujarat High Court iii. M/s Shoe Sales Corporation & Kapoor International v. Union of India& Ors., CWP-1493-2021 & CWP-1496-2021- Punjab & Haryana High Court. iv. Messers Espee Electrotech LLP v. Union of India & Ors., Writ Petition No. 7653 OF 2021- Bombay High Court v. Juice Electricals Ltd. v. Union of India & Ors.- Writ Petition No. 12845 of 2023 -Bombay High Court vi. Plane Networks Pvt. Ltd. vs. Union of India, 2020 (41) G.S.T.L. 165 (Del.)- High Court of ....
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....nless the context otherwise requires,- xxx (c) "amount in arrears" means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of- (i) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing 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....
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....on (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant: Provided that if the amount 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 th....
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....the tax payer has deposited any amounts as pre-deposit at the appellate stage, it would be deducted from the amount payable. However, the tax payer would not be entitled for any refund of such amount. 32. The terminology that Section 121(1)(a) of the SVLDR Scheme uses is that duty, interest and penalty would stand waived under the Scheme. The question that then arises for consideration is whether redemption fine would constitute duty, interest or penalty. 33. 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. 34. 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.....
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....le under the provisions of this Act or under any other law.]" 37. A perusal of the above provisions of the Central Excise Act, 1944 would show that whenever there is confiscation due to non-payment of excise duty, seizure of relevant material can be done under Section 12F and a fine would have to be paid by 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. 38. Under the SVLDR Scheme, Section 124 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. 39. 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 rendered by the Allahabad High Court in M/s Jay Shree Industries ....
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....s 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 section of the public, imposes a duty of a positive kind, the pe....
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.... 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 rule for interpreting a statute by reference to the ....
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.... 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 and it is 4....
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....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. 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." 42. In Messers Espee Electrotech LLP (supra), the Bombay High Court has also categorically held that redemption fine is nothing bu....
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....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" 43. In Juice Electricals Ltd. (supra) 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....
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....r 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 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 observ....
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....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 fine pending. Seizure cases are also no exception to this. 51. This Court concurs with the view of various other High Courts discussed above that redemption fine would be waived, once a tax payer has availed of the benefits of the SVLDR Scheme and has paid the amount in terms thereof. Once the payment is made, benefits of the Scheme would also extend to Seizure/Confiscation cases. 52. Thus, the amount of redemption fine which was encashed by Respondent No. 5-Department by way of the bank guarantee would not be sustainable. The Department is, therefore, liable to refund the amount of Rs. 18,12,000/- to the Petitioner along with the statutory interest within a period of two months. 53. The Department shall also issue to the Petitioner, the discharge certificate in terms of Section 129 of the SVLDR Scheme in respect of Petitioner's declaration in Form SVLDRS-1 bearing Declaration No. LD2812190007295, within a period of two months. ....