2005 (8) TMI 608 - Commission - Central Excise

Summary

Issues involved: Application for settlement of de novo proceedings pending before the Commissioner of Central Excise, Chennai-II; Misrepresentation of the duty amount by the applicant; Eligibility of the application for settlement under Chapter V of the Central Excise Act, 1944; Admissibility of the application for settlement based on the disclosed duty liability.

Analysis:

1. Application for Settlement of De Novo Proceedings: The case involves an application for settlement of proceedings pending before the Commissioner of Central Excise, Chennai-II by M/s. Jaibhavani Steel Enterprises Ltd. The applicant had not paid the required duty amount from April 1998 to March 2000, totaling Rs. 1,41,66,781/-. The department issued show cause notices re-determining the furnace capacity and demanding differential duty. The total duty demanded was Rs. 1,62,96,743/ along with penalties and interest. The order was remanded by CESTAT, Chennai, and during this stage, the applicant sought settlement. However, the Settlement Commission found that the application was for settlement of part of the pending proceedings, not covered under the settlement provisions of the Act, and thus rejected the application.

2. Misrepresentation of Duty Amount: The applicant misrepresented the duty amount in the application as Rs. 1,17,50,066/- instead of the actual amount of Rs. 1,62,96,743/-. This misrepresentation raised concerns about the accuracy and completeness of the disclosure made by the applicant, which is a crucial factor for the admissibility of an application for settlement under Section 32E(1) of the Central Excise Act, 1944. The Commission noted that the duty liability was in a state of flux due to the applicant's disagreement with the re-determination of furnace capacity and subsequent duty liability, making it challenging to ascertain if the disclosed duty liability was a full and true disclosure, a prerequisite for admission.

3. Eligibility for Settlement under Chapter V: The Commission scrutinized the nature of the pending proceedings and the applicant's request for settlement of only a portion of the demands while contesting the rest before the Commissioner. It was observed that the situation did not fall within the purview of settlement provisions under Chapter V of the Central Excise Act, 1944. The Commission emphasized that the application sought a selective settlement, which was not permissible under the Act. Additionally, the Commission highlighted that the unsettled duty liability and the applicant's refusal to accept the re-determined duty amount further undermined the application's eligibility for settlement.

In conclusion, the Settlement Commission rejected the application for settlement of the de novo proceedings, citing the applicant's misrepresentation of the duty amount, the selective nature of the settlement request, and the fluidity of the duty liability as reasons for ineligibility under the Central Excise Act, 1944. The Commission emphasized the importance of full and accurate disclosure of duty liability for an application to be considered for settlement, maintaining the integrity and compliance with the statutory provisions governing settlement procedures.