2006 (9) TMI 390 - Commission - Central Excise

Issues Involved:

1. Illicit manufacture and clandestine removal of goods.
2. Undervaluation of excisable goods.
3. Settlement of duty liability.
4. Jurisdiction of the Settlement Commission.
5. Admission of the case for settlement.
6. True and full disclosure of duty liability.
7. Imposition of interest and penalties.
8. Granting of immunity from prosecution.

Issue-wise Detailed Analysis:

1. Illicit Manufacture and Clandestine Removal of Goods:
The applicant, holding Central Excise registration, was engaged in the manufacture of Ceramic Glaze Fritz. Based on information, the Directorate General of Central Excise Intelligence (DGCEI) conducted searches on 8-7-2002, revealing that the applicant procured raw materials without proper documentation, engaged in unaccounted production, and removed goods clandestinely without paying duties. Fake invoices were used to cover transportation, and payments were controlled from the Mumbai office.

2. Undervaluation of Excisable Goods:
Investigations revealed that the applicant undervalued its finished goods. The applicant was accused of collecting payments in cash over and above the invoice amounts, leading to a significant demand for duty evasion. The applicant contested the undervaluation allegations, claiming no documentary evidence supported the demands apart from some statements.

3. Settlement of Duty Liability:
The applicant filed for settlement on 6-10-2005, admitting a duty liability of Rs. 20,65,680/-. The Show Cause Notice demanded Rs. 90,50,293/-. The applicant revised its admitted duty liability multiple times, finally settling at Rs. 31,11,020/-.

4. Jurisdiction of the Settlement Commission:
Revenue objected to the Commission's jurisdiction, citing ongoing prosecution against the applicant and its director. The Commission referenced a previous decision (RE: Shri Agrawal Trading Co.) to dismiss this objection, allowing the case to proceed.

5. Admission of the Case for Settlement:
The Commission, in its Admission Order dated 8-5-2006, found that the applicant met the conditions under Section 32E of the Act and allowed the applications to proceed. The applicant was directed to deposit the balance admitted duty liability within 30 days.

6. True and Full Disclosure of Duty Liability:
The applicant's multiple revisions of admitted duty liability indicated a lack of full and true disclosure. The Commission noted that the applicant's strategy was to attack the Revenue's evidence rather than make a complete disclosure. The applicant's conduct during hearings and requests for documents further delayed proceedings, suggesting an intent to protract the matter.

7. Imposition of Interest and Penalties:
The Commission settled the duty amount at Rs. 89,63,253/- and directed the applicant to pay the balance within 30 days. Interest was to be calculated by the Revenue and paid within 15 days of notification. Penalties of Rs. 10,00,000/- each were imposed on the applicant and its director, Shri Vivek Maheshwari, for not making a full and true disclosure.

8. Granting of Immunity from Prosecution:
The Commission denied immunity from prosecution to the applicant and Shri Vivek Maheshwari, as prosecution had already been launched before the settlement application was filed. Immunity from penalty and prosecution was granted to the other co-applicants.

Conclusion:
The Commission concluded that the applicant and its director had not made a full and true disclosure of their duty liability. The demand of Rs. 90,50,293/- was largely upheld, with a slight adjustment for a specific transaction. The applicant was directed to pay the settled duty amount, interest, and penalties. Immunity from prosecution was denied to the applicant and its director but granted to the other co-applicants.

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