2012 (4) TMI 707 - HC - Central Excise

Summary

Issues Involved:
1. Duty/Liability of Rs. 38,82,97,992/-
2. Immunity from Penalty of Rs. 40,00,00,000/-
3. Immunity from Interest Payable

Summary:

1. Duty/Liability of Rs. 38,82,97,992/-:
The petitioner, Loknath Prasad Gupta, a manufacturer of "Khaini" (chewing tobacco), filed a petition u/s 32E of the Central Excise Act, 1944, seeking settlement of a case involving alleged duty evasion of Rs. 105,37,71,452/- for the period 1-5-2001 to 31-3-2006. The CCESC determined the duty liability at Rs. 58,09,79,897/-, directing the petitioner to pay the balance duty of Rs. 38,82,97,992/- within 15 days of the receipt of the order.

2. Immunity from Penalty of Rs. 40,00,00,000/-:
The CCESC imposed a penalty of Rs. 40,00,00,000/- on the petitioner, granting immunity from penalty in excess of this amount. The petitioner argued that the full and true disclosure requirement does not necessarily mean declaring the entire duty mentioned in the show cause notice. The court upheld the CCESC's decision, noting that the petitioner had admitted to clandestine manufacture and removal of Khaini over a long period, and the difference between the admitted duty and the determined duty was substantial. The court found no fault in the decision-making process of the CCESC regarding the penalty.

3. Immunity from Interest Payable:
The petitioner contended that the CCESC had directed payment of interest at the rates applicable during the relevant period (24%, 18%, and 13%), whereas in several other cases, the CCESC had charged interest only at 10% per annum. The court found merit in this contention, noting that the uniform practice of the CCESC was to direct payment of interest at 10% for the entire period. The court directed that the petitioner should pay interest at the rate of 10% for the entire relevant period, amounting to Rs. 19.56 crores, and granted immunity for the balance interest over and above this amount.

Conclusion:
The writ petition was partly allowed, providing relief only with reference to the rate of interest payable by the petitioner. The petitioner was directed to pay the balance interest on the footing that interest payable would be at the rate of 10% for the entire relevant period. All interim orders were vacated, and no order as to costs was made.