2008 (7) TMI 985 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the Settlement Commission's rejection of the application.
2. Definition and interpretation of "case" u/s 31(c) of the Central Excise Act, 1944.
3. Whether the collection of penalty and interest constitutes a pending "case."

Summary:

1. Legality of the Settlement Commission's rejection of the application:
The petitioners, a company, were subjected to proceedings under the Central Excise Act, 1944 for wrongly availing Modvat credit. After an unsuccessful appeal, they applied to the Customs and Central Excise Settlement Commission for settlement of duty, waiver of interest, and immunity from penalty. The Commission rejected the application on the grounds that no case was pending on the date of the application, as the appellate order had already been passed.

2. Definition and interpretation of "case" u/s 31(c) of the Central Excise Act, 1944:
The core issue was whether a "case" was pending when the application for settlement was made. Section 31(c) defines "case" as any proceeding for the levy, assessment, and collection of excise duty pending before a Central Excise Officer or the Central Government. The petitioners argued that since the penalty and interest were yet to be collected, the case was still pending. The revenue authorities contended that the case was not pending as the duty had been appropriated.

3. Whether the collection of penalty and interest constitutes a pending "case":
The court examined the definitions and concluded that the terms "levy," "assessment," and "collection" have independent connotations. The court found that the process of appropriation was complete, but the collection of penalty and interest was still pending. The court held that the case continued until the entire collection, including penalty and interest, was made. The court disagreed with the revenue authorities' technical approach that no proceeding was pending for the collection of penalty and interest. The court concluded that the original case could not be said to have been concluded until the sums stipulated as penalty and interest were realized.

Conclusion:
The court set aside the impugned order and directed the Settlement Commission to reconsider the petitioner's application in light of the observations made. The writ petition was allowed, and no order as to costs was made.