2015 (6) TMI 1006 - AT - Central Excise

Chance to approach the Settlement Commission - grievance of the appellant is that the impugned order was passed ex parte and also that the adjudicating authority failed to consider his request to allow time to file an application before the Settlement Commission - Held that - The appellant had promptly responded to all notices of personal hearing by filing a request for adjournment and also has intimated his intention to move the Settlement Commission for settlement of his case. The authority below has remained in a peaceful slumber for more than two and half years to issue the show cause notice pertaining to these appeals, after search and resumption of documents and then also for more than a year, to return the laptop. On such factual backdrop the time allowed to the appellant for submitting a reply and defending the case appears to be very less. The adjudicating authority has completed the proceedings hastily and passed the order in a hurried manner, for reasons which we do not know. The impugned order suffers the infirmity of an order being passed violating the principles of natural justice. We, therefore, have no hesitation to hold that the impugned order has to be set aside and the matter has to be remanded to the adjudicating authority for de novo adjudication after giving the appellant time to file reply and opportunity of personal hearing. The objectives of setting up of the Settlement Commission are to provide an alternative channel for dispute resolution for the assessee and to expedite payment of Customs, Central Excise, and Service Tax, involved in disputes by avoiding costly and time-consuming litigation process. It also provides an opportunity to taxpayers to come clean who may have evaded payments of duty. The scheme encourages quick settlement of disputes and saves the worries of prosecution in certain situations. As such the scheme is an alternative dispute resolution scheme which augments tax collection preventing the revenue being held up in litigation process. The adjudicating authority has failed to appreciate the law contained in Chapter V of the Central Excise Act, 1944 in the correct perspective. However, the plea of the ld. counsel for appellant to pass an order referring the present case to Settlement Commission cannot be granted The national litigation policy is to reduce litigations by promoting alternate dispute resolution mechanism by settlement of cases. It is unfortunate that the appellant was denied such an opportunity to settle the case by not allowing reasonable time even after repeated requests. For the above reasons, we are not able to accept the contention of the appellant that this Tribunal ought to allow the appellant a chance to approach the Settlement Commission after setting aside the impugned order.

Summary

Issues Involved:
1. Whether the impugned order was passed ex parte.
2. Whether the adjudicating authority failed to provide sufficient time for the appellant to file an application before the Settlement Commission.
3. Whether the Tribunal has the power to refer the case to the Settlement Commission.

Issue-wise Detailed Analysis:

1. Whether the impugned order was passed ex parte:
The appellant contended that the impugned order was passed ex parte and without considering their request for more time to file an application before the Settlement Commission. The appellant, a partnership firm engaged in the manufacture of plastic cases/boxes for batteries and various motor vehicle parts, was subjected to a search by Excise Intelligence on 6-11-2009. A show cause notice dated 9-7-2012 alleged evasion of excise duty by under-valuation and suppression of actual value. The appellant requested the return of documents/laptop seized during the search to prepare their reply. Despite multiple requests and letters, the documents were returned only on 3-9-2013. The adjudicating authority scheduled personal hearings on various dates, but the appellant requested adjournments and time to approach the Settlement Commission. The impugned order was passed on 28-2-2014, without granting the appellant sufficient time to file a reply or appear for a personal hearing. The Tribunal found that the order was indeed ex parte and violated the principles of natural justice, thus setting aside the impugned order and remanding the matter for de novo adjudication.

2. Whether the adjudicating authority failed to provide sufficient time for the appellant to file an application before the Settlement Commission:
The appellant argued that the adjudicating authority hastily passed the order, depriving them of the opportunity to file an application before the Settlement Commission. The appellant had informed the authority of their intention to approach the Settlement Commission and requested to keep the adjudication proceedings in abeyance. The Tribunal noted that the appellant had deposited a significant portion of the duty demand, reflecting the genuineness of their request. The adjudicating authority should have examined the request's genuineness and granted reasonable time for the appellant to prepare and file the application before the Settlement Commission. The Tribunal emphasized that denying reasonable time to the appellant, especially given the delay in returning the documents and the complex nature of the case, was unwarranted.

3. Whether the Tribunal has the power to refer the case to the Settlement Commission:
The appellant requested the Tribunal to refer the case to the Settlement Commission. However, the Tribunal clarified that Section 35C of the Central Excise Act, 1944, does not grant it the power to refer a case to the Settlement Commission. The Tribunal can only confirm, modify, annul, or refer the case back to the adjudicating authority for fresh adjudication. The Tribunal acknowledged the appellant's difficult situation due to the denial of natural justice but stated that it could not grant the request to refer the case to the Settlement Commission. The Tribunal also noted that the decision of the Hon'ble High Court of Madras in a similar case could not be applied here, as the High Court was exercising its writ jurisdiction, which the Tribunal does not possess.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for de novo adjudication, directing the authority to provide the appellant with time to file a reply and an opportunity for a personal hearing. The appeal was disposed of accordingly.