2005 (3) TMI 719 - Commission - Central Excise

Summary

Issues Involved:
1. Allegations of clandestine clearances and undervaluation by a 100% Export Oriented Unit (EOU).
2. Determination of duty type and rate applicable to goods cleared without permission.
3. Eligibility for concession under Notification 2/95-C.E.
4. Full and true disclosure requirement for settlement applications.

Detailed Analysis:

1. Allegations of Clandestine Clearances and Undervaluation:
The applicant, a 100% EOU, was alleged to have clandestinely cleared manufactured goods for sale in India without appropriate authority's permission. The Show Cause Notice (SCN) demanded a total duty of Rs. 1,82,08,410, comprising Rs. 1,00,88,536 for clandestine clearances and the balance for undervaluation. The SCN was adjudicated by the Commissioner, but the order was set aside by CEGAT and remanded for de novo proceedings.

2. Determination of Duty Type and Rate:
The applicant contended that up to 15-9-1999, only basic Customs duty should be charged on clearances for sale in India, as per Section 3 of the Central Excise Act, 1944, read with Section 12 of the Customs Act, 1962. For the period from 16-9-1999 to 6-2-2001, they argued that only normal excise duty should apply, not the aggregate of Customs duties. The applicant admitted partial liability but contested the extent of clandestine removal and undervaluation.

3. Eligibility for Concession under Notification 2/95-C.E.:
The applicant claimed eligibility for a 50% concession on the otherwise effective basic Customs duty under Notification 2/95 dated 4-1-95. However, the department argued that the applicant was not eligible for this concession due to the clandestine nature of the clearances and the lack of due permission. They cited the decision of the Larger Bench of CEGAT in the case of M/s. Himalaya International v. CCE, Chandigarh, to support their stance.

4. Full and True Disclosure Requirement for Settlement Applications:
The Bench observed that the applicant had not been consistent in their plea and failed to make a full and true disclosure of their duty liability. The applicant's approach was seen as an attempt to minimize liability through legal interpretations rather than a bona fide intention to correct their mistake. The Bench referenced the Wanchoo Committee's recommendations and various judicial observations, emphasizing that the Settlement Commission is not meant for those who continue dishonest conduct without full disclosure.

Conclusion:
The Bench concluded that the application did not merit admission due to the lack of full and true disclosure. Consequently, all applications of the seven applicants were rejected and not allowed to proceed, in terms of sub-section (1) of Section 32F of the Central Excise Act, 1944.