2013 (8) TMI 1036 - HC - Central Excise

Abatement of the proceedings in case the Settlement Commission - time limitation - Section 32F(6) of the Central Excise Act, 1944

Issues Involved:
1. Constitutionality of Section 32F(6) of the Central Excise Act, 1944.
2. Interpretation and application of Section 32F(6) regarding the abatement of settlement proceedings.
3. Petitioners' claim of non-cooperation by the revenue authorities.
4. Petitioners' argument on the violation of Article 14 of the Constitution of India.
5. Comparison with similar provisions in the Income Tax Act.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 32F(6) of the Central Excise Act, 1944:
The petitioners challenged the constitutionality of Section 32F(6) of the Central Excise Act, 1944, arguing that it was ultra vires the Constitution and violative of Article 14. The provision mandates that the Settlement Commission must pass a final order within nine months (extendable by three months) from the date of the application, failing which the proceedings shall abate. The petitioners contended that this penalizes applicants for delays not attributable to them, thus violating their rights under Article 14.

2. Interpretation and Application of Section 32F(6):
The court examined the legislative intent behind Section 32F(6), noting that the provision aims to expedite the settlement process and ensure timely recovery of duties. The court highlighted that the Settlement Commission is empowered to proceed without the report of the Commissioner if it is not furnished within the stipulated time. This mechanism is designed to prevent delays and ensure that the settlement process is not indefinitely prolonged.

3. Petitioners' Claim of Non-Cooperation by the Revenue Authorities:
The petitioners argued that the delay in passing the final order was due to non-cooperation by the revenue authorities. They claimed that the Settlement Commission was handicapped in passing the final order within the stipulated time due to this non-cooperation. The court noted that the Settlement Commission had the authority to proceed without the report of the Commissioner if it was not furnished within the stipulated time, thus addressing the issue of non-cooperation.

4. Petitioners' Argument on the Violation of Article 14:
The petitioners argued that Section 32F(6) violates Article 14 of the Constitution as it penalizes applicants for delays not attributable to them. The court held that the provision is neither arbitrary nor unreasonable. It emphasized that the prescribed time limits are reasonable and necessary to achieve the objective of expeditious settlement of disputes. The court also noted that the provision includes safeguards to ensure that the Settlement Commission can proceed even in the absence of reports from the Commissioner.

5. Comparison with Similar Provisions in the Income Tax Act:
The petitioners relied on the decision of the Bombay High Court in the case of Star Television News Ltd. vs. Union of India, where a similar provision in the Income Tax Act was read down to mean that abatement would occur only if the delay was attributable to the applicant. The court distinguished this case, noting that the facts and circumstances were different. The court emphasized that Section 32F(6) of the Central Excise Act is a complete code with necessary safeguards and does not require further reading down.

Conclusion:
The court upheld the constitutionality of Section 32F(6) of the Central Excise Act, 1944, and dismissed the petition. It held that the provision is neither arbitrary nor violative of Article 14 of the Constitution. The court emphasized that the time limits prescribed in the provision are reasonable and necessary to achieve the objective of expeditious settlement of disputes. The court also noted that the provision includes safeguards to ensure that the Settlement Commission can proceed even in the absence of reports from the Commissioner.

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