2011 (2) TMI 1380 - HC - Central Excise

Summary

Issues:
Challenge to orders imposing penalty by Settlement Commission under Central Excise Act, 1944.

Analysis:
1. The petitioners, a registered partnership firm engaged in the business of paints, challenged the orders passed by the Settlement Commission imposing a penalty of Rs. 15 lakhs each on both petitioners. The petitioners voluntarily made an application for settlement before the Commission under section 32E of the Central Excise Act, 1944, paying the entire duty amount of Rs. 51,76,676. The Commission, in its order dated 08th October, 2007, accepted the settlement application but imposed an additional penalty of Rs. 15 lakhs each on both petitioners. The petitioners approached the High Court, and the matter was remanded to the Settlement Commission for fresh consideration on the penalty aspect. Subsequently, the Commission confirmed its earlier view on penalty in the order dated 31st December, 2009.

2. The petitioners, dissatisfied with the Commission's decision, filed another petition before the High Court, seeking to withdraw it to approach the Settlement Commission again. The Commission, in the impugned order dated 16th September, 2010, dismissed the petitioners' application for amendment/modification, stating it lacked the power to overrule its earlier orders. The petitioners challenged this decision in the present petition.

3. The petitioners argued that the Commission's order dated 31st December, 2009, contained mistakes as it did not provide reasons for deviating from the normal practice of levying penalty. They contended that under section 11AC of the Act, the penalty should have been limited to 25% of the duty amount since they had paid the entire duty before the Commission's order. The petitioners claimed that the Commission erred in rejecting their rectification application.

4. The High Court noted that the Settlement Commission had adequately discussed and distinguished the decisions cited by the petitioners in its order dated 31st December, 2009. The Commission provided reasons for not reducing the penalty amount in paragraph 16 of the order. The Court held that even if the Commission's view was considered erroneous, it did not amount to an error apparent on the face of the record, and thus, there was no basis for rectification.

5. The Court also addressed the challenge to the earlier orders dated 08th October, 2007, and 31st December, 2009, stating that since these orders were already subject to challenge in the previous petition, a fresh petition on the same subject matter was not maintainable. The Court found no merit in the petitioners' arguments for interference with the Commission's orders.

6. Consequently, the High Court summarily dismissed the petition, upholding the Settlement Commission's decisions on the penalty imposed on the petitioners.