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2019 (1) TMI 1032 - HC - Central ExciseRejection of Settlement Application - rejection on the ground that petitioner not making full disclosure - Section 32E of the Central Excise Act, 1944 - clandestine removal - suppression of true quantity and under valuation of the goods - petitioner contends that given the mandate of Section 32L(1), the Commission was bound to consider the application and record its reasons for its order, and could not reject the application in the manner it did i.e. to remit the matter to the Adjudicating Authority. Held that - This Court is of the opinion, that the petitioner s submissions with respect to the lack of jurisdiction or authority of the Commission to reject the application after entertaining it under Section 32E are insubstantial. The rejection of an application is possible at both stages either at the stage of admission Section 32E or later, at the stage of hearing Section 32K - In the present case, the Commission had entertained the petitioner s application expressly subject to the condition that the applicant show at the time of final hearing that they fulfill the conditions of section 32 E of the Central Excise Act, 1944 . Parties had proceeded on this basis. This Court is fortified in the view that is expressed by the judgment in Union of India v. Dharampal Satyapal 2013 (10) TMI 238 - DELHI HIGH COURT where it was held that It is true that on and after 01.06.2007 the Settlement Commission need not call for a report from the Commissioner before the settlement application is allowed to be proceeded with. However, the requirement that the settlement application shall contain a full and true disclosure continues to remain in the statue and it is, therefore, the duty of the Settlement Commission to examine this aspect by itself on the basis of explanation provided by the applicant. In the present case, the reasons furnished by the Commission for rejecting the petitioner s application i.e., the petitioner not making full disclosure, but rather persisting in its contention that the original value of clearances and the quantum that was cleared was the true and correct value, fully justified the decision that it took - petition dismissed.
Issues Involved:
1. Rejection of Settlement Application under Section 32E of the Central Excise Act, 1944. 2. Allegations of clandestine removal, suppression of true quantity, and under-valuation of goods. 3. Evaluation of full and true disclosure by the petitioner. 4. Jurisdiction and authority of the Settlement Commission to reject the application. 5. Applicability of previous legal precedents. Issue-wise Detailed Analysis: 1. Rejection of Settlement Application under Section 32E of the Central Excise Act, 1944: The petitioner’s grievance was the rejection of its Settlement Application under Section 32E of the Central Excise Act, 1944. The application was initially admitted for hearing by the Settlement Commission, which directed that the petitioner must demonstrate compliance with Section 32E at the final hearing. 2. Allegations of clandestine removal, suppression of true quantity, and under-valuation of goods: The petitioner faced allegations of clandestine removal and suppression of the true quantity of goods, along with under-valuation. The Show Cause Notice issued to the petitioner demanded a duty amount of ?80,52,971/-, while the petitioner admitted a duty liability of ?32,39,687/-. The Commission noted that the petitioner accepted liability for sales to a related person but contested the duty on mis-declared weights, arguing that the goods were sold on a piece basis, making weight mis-declaration irrelevant. 3. Evaluation of full and true disclosure by the petitioner: The Commission found the petitioner’s arguments illogical, noting that invoices showed value on a kg basis, not a piece basis, and that mis-declaration of weight was significant. The Commission also found that the petitioner’s calculation of cum-duty price benefit was incorrect and misleading. The Commission concluded that the petitioner had not made a full and true disclosure of its duty liability, as it accepted only 40% of the total duty demand and contested the evidence presented by the Revenue. 4. Jurisdiction and authority of the Settlement Commission to reject the application: The petitioner argued that under Section 32L(1), the Commission was bound to consider the application and record reasons for its order, and could not remit the matter to the Adjudicating Authority. The Court, however, held that the Commission had the authority to reject the application at both the admission stage (Section 32E) and the hearing stage (Section 32K), provided it was satisfied that the applicant had not made a full and true disclosure or had not cooperated with the proceedings. 5. Applicability of previous legal precedents: The petitioner relied on the Division Bench ruling in H.H. Interior & Auto Component Ltd. v. Commissioner of Central Excise, which outlined that the Settlement Commission could only reject an application if the applicant had not made a full and true disclosure or had not cooperated. The Court distinguished this case, stating that the Commission's rejection was justified due to the petitioner’s failure to meet the disclosure requirements. The Court also referenced Union of India v. Dharampal Satyapal, emphasizing that full and true disclosure is a continuous requirement and that settlement is not a substitute for adjudication when complex issues are involved. The Allahabad High Court’s ruling in Vinay Wires Product Pvt. Ltd. further supported the Commission’s discretion in rejecting applications where full disclosure was not made, and complex factual issues required adjudication. Conclusion: The Court found no merit in the petitioner’s submissions and upheld the Settlement Commission’s decision to reject the application due to the petitioner’s failure to make a full and true disclosure. The writ petition was accordingly dismissed.
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