AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 92
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....cise, Delhi-I [the Additional Commissioner] adjudicating two show cause notices dated 07.11.2014 and 18.09.2017. 2. The first show cause notice dated 07.11.2014 was issued for confiscation of the goods seized under rule 25 of the Central Excise Rules, 2002 [the Central Excise Rules] and for imposition of penalty upon the appellant and the Director under rule 26 of the Central Excise Rules. 3. The second show cause notice dated 18.09.2017 was issued proposing demand of central excise duty under section 11A of the Central Excise Act, 1944 [the Central Excise Act] with interest under section 11AA and imposition of penalty upon the appellant under section 11AC of the Central Excise Act read with rule 25 of the Central Excise Rules as also for imposition of penalty upon the Director under rule 26 of the Central Excise Rules. 4. The Additional Commissioner passed a common order dated 16.05.2023. While adjudicating the first show cause notice dated 07.11.2014, the Additional Commissioner confiscated the goods but gave an option to the appellant to redeem the goods on payment of redemption fine and imposed penalties upon the appellant and the Director. While adjudicating the secon....
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....Commissioner confirmed the demand against the appellant by order dated 16.05.2023, which order was challenged by the appellant and the Director before the Commissioner (Appeals) contending that as the Discharge Certificate had been issued, the demand could not have been confirmed. The Commissioner (Appeals) dismissed the appeal against which the present appeals have been filed. 12. It is this issue relating to the second show cause notice that was decided by the Division Bench of the Tribunal in the order dated 08.05.2025. It was held that once the Discharge Certificate had been issued, the matter stood concluded and the appellant was not liable to pay any duty, interest or penalty. The relevant portion of the order passed by the Division Bench is as follows: "12. In view of this, we hold that as discharge certificate has been issued to the appellant, therefore, the demand confirmed in the impugned order amounting to Rs. 84,46,631/- alongwith interest and penalty under Section 11AC of the Act are not sustainable. Accordingly, the same are set aside." 13. Shri Vipin Jain, learned counsel for the appellant assisted by Ms. Tuhina and Shri Rishabh Chadak submitted that o....
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....ommittee verifies the correctness of the declaration made under section 125. 22. Under sub-section (1) of section 127, the designated committee issues in electronic form, a statement, indicating the amount payable by declarant. Sub-section (5) provides that the declarant shall pay electronically the amount payable indicated in the statement issued by the designated committee within a period of 30 days from the date of issue of such a statement. Sub-section (8) provides that on payment of the amount indicated in the statement of the designated committee, the designated committee shall issue a Discharge Certificate in electronic form. 23. Section 129 provides that issue of Discharge Certificate is conclusive as to the matter and the time period stated therein and it is reproduced below: "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 no....
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.... and time period stated therein and the declarant shall neither be liable to pay any further duty, interest, or penalty with respect to the matter and time period covered in the declaration, nor the declarant shall be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration. 30. In the present case, the Discharge Certificate in Form SVLDRS-4 was issued to the appellant on 03.02.2020 for the period from 01.04.2013 upto 31.12.2016. The amount payable has been determined as 2,99,978.50/- and this amount has also been paid by the appellant. 31. A perusal of sections 12F of the Central Excise Act would show that where the officer has reason to believe that any goods are liable to confiscation, he may seize the goods. Under section 34 of the Central Excise Act, wherever confiscation is adjudicated, the officer shall give the owner of goods an option to pay in lieu of confiscation such fine as the officer thinks fit. This fine is commonly known as redemption fine. 32. In Jay Shree Industries, the Allahabad High Court observed that 'confiscation' is a penalty in rem and upon any confiscation made, the option to ....
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....ption 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 121 (u) of the Scheme. *****" (emphasis supplied) 33. Similar view was taken by the Bombay High Court in Esbee Electrotech and the aforesaid judgment of the Allahabad High Court in Jay Shree Industries was relied upon. The relevant observations are reproduced below: "3.3 It is the contention of Petitioner that the issue of waiver of redemption fine is covered by SVLDR Scheme or not is no more res integra in the light of the decision of (i) the Gujarat H....
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.... aforesaid judgment of the Allahabad High Court in Jay Shree Industries and the Bombay High Court in Esbee Electrotech, that the Delhi High Court in JV Industries held: "27. The Court has considered the matter. The SVLDR Scheme is a scheme which was meant to provide some relief to tax payers whose dues may have been pending for a very long time or where there are disputes in respect of payment of Excise dues. One of the purposes of the SVLDR Scheme is to resolve the litigations and cases which were pending and were also burdensossme, both to the taxpayers and to the Department. ***** ***** 35. The issue that has arisen for consideration in the batch of cases, which the present petitions are a part of, is whether where cases where goods are liable for confiscation or any seizure is effected, such cases would be covered under the benefits in 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 Clause 124 of the SVLDR Scheme, a discharge certificate would be liable to be issued. ***** 37. A p....
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....and such Schemes. Hence, responsibility has to be borne by the Department to such FAQs which are followed as guidance by the tax payers and arguments to the contrary would not be tenable. 50. 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 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." (emphasis supplied) 35. The Bombay High Court in Esbee Electrotech held that the 2019 Scheme grants i....