2011 (1) TMI 387 - HC - Central Excise

Demand - Stay applications - Seizure - Confiscation - On verification, it was found that the finished goods, i.e. Kraft papers available at the manufacturing premises were having excess stock of 22.16 MTs valued at ₹ 2.66 lakhs - Settlement Commission by its final order, dated 28.2.2008 settled the case on condition that duty liability for an unaccounted clearance was settled at ₹ 21,13,836/- against which the petitioner had already paid ₹ 21,27,803 - It held that imposing penalty on both petitioners was set aside and the matter was remitted to the first respondent for re-consideration - Since the entire duty amount has been paid before passing of the impugned order, the first respondent should have considered the same - Commission recorded that it is the case of violation of law and evasion of duty by suppression of production and clandestine removal of unaccounted goods by using parallel set of invoices and realization of sale proceeds by cash which were willfully and systematically organized by the petitioner - the very maintainability of the writ petitions is doubtful since the petitioners had already availed the remedy before the Settlement Commission - Hence both writ petitions will stand dismissed

Summary

Issues:
1. Challenge to order of levy of penalty by Customs and Central Excise Settlement Commission.
2. Compliance with interim stay orders granted by the court.
3. Allegations of excess stock and duty evasion by the petitioner company.
4. Proceedings before the Settlement Commission and admission of liability.
5. Contention against levy of penalty and interest by the Settlement Commission.
6. Legal arguments regarding Settlement Commission's power to impose penalty and grant immunity.
7. Interpretation of full and true disclosure requirement in settlement proceedings.
8. Comparison with relevant legal judgments on settlement proceedings.

Issue 1:
The petitioner challenged an order by the Customs and Central Excise Settlement Commission regarding the conditional levy of penalties amounting to Rs.2,20,000 and Rs.1 lakh, seeking to set them aside.

Issue 2:
The court granted interim stays in the writ petitions, with conditions for the petitioner to deposit Rs.1 lakh and Rs.50,000 to the credit of the Commissioner of Central Excise, which were duly complied with.

Issue 3:
Allegations against the petitioner company included excess stock of Kraft papers, duty evasion, and a pre-deposit of duty pending investigation following a search operation at their factory premises.

Issue 4:
The petitioner company admitted liability before the Settlement Commission, paid the re-quantified duty amount, and sought waiver of penalties and prosecution proceedings, ultimately paying the entire duty amount.

Issue 5:
Challenges were raised against the penalty and interest levied by the Settlement Commission, arguing that the penalty was contrary to legal procedures and the power granted under the Central Excise Act.

Issue 6:
Contentions were made regarding the Settlement Commission's power to impose penalties and grant immunity, with arguments for immunity from penalties once immunity against prosecution was granted.

Issue 7:
The requirement of full and true disclosure in settlement proceedings was analyzed, with the respondents claiming that the petitioner did not make full disclosure at the earliest opportunity, disqualifying them from benefits.

Issue 8:
Legal arguments were presented, citing relevant judgments, including the Settlement Commission's power to impose penalties, the continuing requirement of full and true disclosure, and the consequences of opting for settlement proceedings.

In conclusion, the court dismissed both writ petitions challenging the penalty imposed by the Settlement Commission, citing the petitioner's prior remedy availed before the Commission and the lack of a case made out for interference. The court highlighted the importance of abiding by the Settlement Commission's orders once opted for settlement proceedings.