2004 (7) TMI 410 - Commission - Central Excise

Settlement - Settlement amount - Delay in payment - Penalty - Quantum of - Cenvat/Modvat - Additional Credit

Issues Involved:
1. Jurisdiction of the Commission over additional consignments.
2. Evidence of undervaluation for 71 bills of entry.
3. Relief of Modvat against the CV duty demanded.
4. Rectification of computational errors in duty calculation.
5. Quantum of penalty and interest applicable.

Detailed Analysis:

1. Jurisdiction of the Commission over Additional Consignments:
The applicant contended that since the initial application related only to 28 consignments, the Commission did not have jurisdiction over the other consignments covered in the three show cause notices. The Hon'ble High Court dismissed this contention, affirming that the Commission had the jurisdiction to deal with all the consignments mentioned.

2. Evidence of Undervaluation for 71 Bills of Entry:
The applicant argued that there was no evidence of undervaluation for 71 bills of entry. The Commission, however, found the approach adopted by the Directorate of Revenue Intelligence (DRI) reasonable and upheld the duty liability of Rs. 2,71,07,014 for these consignments. The High Court also dismissed this contention.

3. Relief of Modvat against the CV Duty Demanded:
The applicant claimed that the Commission failed to grant relief of Modvat against the additional customs duty demanded. The High Court directed the applicant to move an appropriate application before the Commission regarding this claim. The Commission, upon review, allowed Modvat credit for the period 1-1-97 to 28-2-97 amounting to Rs. 16,32,996. However, for the period 1-3-97 to 31-8-97, the Commission did not agree with the Revenue's contention and allowed the applicant to claim Rs. 25,44,224 as Modvat credit, subject to verification by the DRI.

4. Rectification of Computational Errors in Duty Calculation:
The applicant pointed out clerical mistakes in the computation of duty made by the DRI. The Commission directed the Commissioner (Investigation) to verify these claims. The total excess duty demanded due to computational errors was quantified as Rs. 93,82,531.44. Both the Revenue and the applicant agreed on this amount, reducing the correct duty liability to Rs. 2,97,78,353.56.

5. Quantum of Penalty and Interest Applicable:
The applicant requested a reduction in the penalty due to the revised duty liability. The Commission revised the penalty from Rs. 40 lakhs to Rs. 30 lakhs. Regarding interest, the Commission held that the interest liability under Section 127C(10) of the Customs Act would arise only prospectively from the date of the current order, not from the earlier order dated 7-8-2002.

Final Settlement Terms:
1. Duty Liability: Fixed at Rs. 2,97,78,353.56. The balance amount payable by the applicant is Rs. 1,77,24,482.56, to be paid within 30 days.
2. Penalty: Revised to Rs. 30 lakhs. The applicant has already paid Rs. 12,78,378, and the balance of Rs. 17,21,622 is to be paid within 30 days.
3. Modvat Credit:
- For the period 1-1-97 to 28-2-97, the applicant can take Rs. 16,32,996 as Modvat credit.
- For the period 1-3-97 to 31-8-97, the applicant's claim of Rs. 25,44,224 is subject to verification by the DRI.
4. Immunity: No change in immunity granted from prosecution and interest chargeable at 10%.

Legal Provisions:
- Section 127H of the Customs Act, 1962: Immunities granted.
- Section 127C(10) of the Customs Act, 1962: Interest on delayed payment of duty.
- Rule 57E of the Central Excise Rules, 1944: Modvat credit provisions.

This comprehensive analysis covers all relevant issues, preserving the legal terminology and significant phrases from the original text, ensuring a thorough understanding of the judgment.

← Previous Next →