2004 (7) TMI 559 - Commission - Central Excise

Summary

Issues: Settlement of duty liability, Immunity from interest, Fine, Penalty, and Prosecution

Settlement of Duty Liability:
The judgment pertains to applications filed by a manufacturing company under Section 32E of the Central Excise Act, 1944, seeking settlement of a Show Cause Notice alleging non-use of inputs on which Modvat credit was availed. The company admitted duty liability of the demanded sum and paid a significant portion before the issuance of the Show Cause Notice. The Settlement Commission allowed the case to proceed based on the admission of duty liability and fulfillment of parameters. The final settlement required the company to pay the remaining balance within 30 days, which was duly paid. The Commission found that the company made a true and full disclosure, accepted duty liability, and paid the demanded amount, leading to the settlement of the case without any further duty payment.

Immunity from Interest:
Regarding interest, the Commission noted that a major portion of the duty was paid before the Show Cause Notice was issued. The demand primarily arose due to imperfect accounting of modvatable inputs, necessitated by the handling of a large number of components. The company's imperfect accounting was rectified through periodic stock-taking, which revealed shortages and excesses. Considering the circumstances and the company's contention that the duty may not be payable at all, the Commission granted total immunity from interest, acknowledging the company's cooperation and the absence of clandestine removal of inputs.

Fine, Penalty, and Prosecution:
In terms of fine, penalty, and prosecution, the company sought immunity, emphasizing that the shortages were unintentional and occurred due to the handling of a vast inventory without any malicious intent. The Revenue contended that the company was uncooperative during investigations and made duty deposits under compulsion. However, the Commission found that the company's disclosure was full and true, leading to the grant of immunities from penalty and prosecution under Section 32K of the Central Excise Act, 1944. As there was no seizure or confiscation involved, the Commission deemed immunity from fine unnecessary.

Conclusion:
The Settlement Commission settled the case based on the company's admission of duty liability, payment of the demanded amount, and a true and full disclosure of facts. Immunity was granted from interest due to the circumstances surrounding the duty demand. Additionally, the company was granted immunities from penalty and prosecution, considering their cooperation and the absence of malicious intent. The order specified that it would be void if obtained through fraud or misrepresentation, ensuring transparency and compliance. All concerned parties were directed to be informed accordingly, concluding the settlement proceedings.