2006 (8) TMI 510 - AT - Central Excise

Summary

Issues:
1. Department's appeal against the order of the Commissioner of Central Excise regarding duty demand and penalty imposition.
2. Settlement of dispute between the department and the assessee under the Kar Vivad Samadhan Scheme.
3. Maintaining the appeal by the department post-settlement of the dispute.

Analysis:

1. The department filed an appeal against the order of the Commissioner of Central Excise regarding a duty demand and penalty imposition on the respondents for alleged clandestine production of excisable goods. The main allegation was that the respondents received raw materials above accounted quantity, manufactured excisable products, and removed them clandestinely without proper documentation or duty payment. The Commissioner found discrepancies between the entries in the RG 1 Register and private documents recovered from the respondents, leading to a reduced duty demand and penalty imposition. The department contended that the entire duty demand should have been confirmed, including finished excisable goods not matching the RG 1 entries. Additionally, the department argued for the imposition of penalties under Section 11AC due to the alleged suppression of production to evade duty payment.

2. The settlement of the dispute between the department and the assessee under the Kar Vivad Samadhan Scheme was a crucial aspect. The respondents had filed a declaration with the designated authority under Section 88 of the Finance Act, 1998, settling the tax arrears amount and penalty demanded in the impugned order. The designated authority issued a certificate after payment by the respondents, finalizing the dispute. The respondents argued that the appeal was not maintainable post-settlement, citing the provisions of the Kar Vivad Samadhan Scheme, 1998. The department, however, contended that since the Board reviewed the order before the settlement, the appeal was maintainable.

3. The appellate tribunal considered the provisions of Section 92 of the Finance Act, 1998, which restricts appellate authorities from deciding issues related to disputed tax arrears post-settlement under the designated authority. The tribunal noted that the dispute settlement between the department and the assessee on 9-3-99 rendered the appeal non-maintainable. The tribunal emphasized that the issue of clandestine production of excisable goods was part of the settled tax arrears, making the appeal invalid. The tribunal dismissed the department's appeal, stating that the Board's review order was no longer effective post-settlement under the Kar Vivad Samadhan Scheme, 1998.

In conclusion, the appellate tribunal dismissed the department's appeal against the duty demand and penalty imposition due to the settlement of the dispute under the Kar Vivad Samadhan Scheme, 1998, rendering the appeal non-maintainable post-settlement.