2004 (2) TMI 639 - Commission - Central Excise

Summary

Issues:
1. Settlement application filed by a company regarding under-valuation of woollen yarn.
2. Allegations of evasion of central excise duty and penalties.
3. Request for immunity from interest and penalty under the Central Excise Act.
4. Adjudication pending before the Joint Commissioner, Central Excise, Ludhiana.
5. Consideration of settlement application by the Settlement Commission.
6. Decision on eligibility for immunities and settlement terms.

Issue 1: Settlement Application:
The settlement application (SA) was filed by a company regarding the under-valuation of woollen yarn, which involved evasion of central excise duty. The company, engaged in manufacturing woollen yarn, had cleared a significant quantity of 100% woollen yarn as blended yarn, resulting in under-valuation amounting to Rs. 78,76,754 involving central excise duty of Rs. 7,23,741.

Issue 2: Allegations and Penalties:
The company faced a Show Cause Notice (SCN) for under-valuation, and the Commissioner of Central Excise, Ludhiana, emphasized the evasion of duty through under-valuation. The Commissioner recommended the levy of interest and penalties under the Central Excise Act due to established mens rea for duty evasion. The company admitted the allegations and paid the demanded duty before the SCN was issued.

Issue 3: Immunity Request:
The company sought immunity from interest, penalty, and prosecution under the Act, citing full payment of the demanded duty and admission of charges. The Settlement Commission considered the eligibility conditions under Section 32E of the Act and allowed the application to proceed under Section 32F.

Issue 4: Adjudication Pending:
While the SCN was pending adjudication before the Joint Commissioner, Central Excise, Ludhiana, the settlement application was filed before the Commission. The company accepted the allegations in the SCN and requested final orders, as they had paid the duty in full before the issue of the SCN.

Issue 5: Settlement Commission Decision:
The Settlement Commission, after considering submissions from both the company and the revenue, found the application eligible under Section 32E of the Act. The Commission granted immunities under Section 32K, settling the total duty liability at Rs. 7,23,741, which the company had already deposited. The company was directed to pay simple interest and granted immunity from penalty and prosecution.

In conclusion, the Settlement Commission granted immunities to the company based on full payment of the demanded duty, subject to conditions outlined in the Act. The Commission warned of withdrawal of immunities if fraudulent means were detected and highlighted the consequences of non-compliance with the settlement terms.