2011 (8) TMI 601 - HC - Central Excise

Application for Settlement Commission - Search reveled petitioner wrongly availing benefit of SSI exemption and were not registered and no returns were filed with excise authority - assessee seek consideration for referring case before Settlement Commission - Held That - Clause (a) clearly lays down that unless the applicant has filed returns showing production clearance and Central Excise duty paid in the prescribed manner no such application shall be entertained. Rule 12 of the Central Excise Rules 2002 provides for filing of monthly return in the form specified by every assessee about their production and removal of goods and other relevant particulars within ten days after the close of the month to which the return relates. In the case of small scale manufacturers the return has to be filed quarterly. The concept of return has to be understood in that context and that is what exactly the Special Bench has stated. The submission of Mr. Jain that they had accepted all the allegations and had paid the entire duty liability in the spirit of settling the matter does not stand to reasons. This does not satisfy mandatory requirement of clause (a) to Section 32E(1) of the Act. - Decided against assessee.

Summary

Issues:
1. Rejection of settlement application by the Settlement Commission.
2. Eligibility of the petitioner for benefit of SSI exemptions.
3. Compliance with the conditions under Section 32E(1)(a) of the Central Excise Act, 1944.

Analysis:

1. The petitioner filed a settlement application which was rejected by the Settlement Commission, leading to the writ petition under Articles 226 and 227 of the Constitution of India. The rejection order was based on investigations revealing that the petitioner wrongly availed SSI exemption, resulting in a demand of duty and interest. The petitioner contended that they had paid a significant amount before the notice and the remaining duty was deposited later. The Settlement Commission found the application did not meet the requirements under Section 32E(1) of the Act due to lack of registration and non-compliance with duty payment and registration norms.

2. The Settlement Commission determined that the petitioner, not being registered with the Central Excise Department, was ineligible for SSI exemptions related to goods under the brand name "Kalsi" owned by another entity. Despite the petitioner's claim of using brand names from the same family, the Commission held that non-registration and failure to pay duty as required disqualified them from the exemptions. Reference was made to relevant case law, emphasizing the necessity of fulfilling the conditions outlined in the Act for availing exemptions.

3. The crux of the issue revolved around the compliance with Section 32E(1)(a) of the Act, which mandates the filing of returns showing production, clearance, and duty payment in the prescribed manner. The petitioner's argument that accepting the allegations and paying the duty should suffice for settlement was dismissed. The judgment highlighted the significance of timely and accurate filing of returns as per the Central Excise Rules, reinforcing that mere payment of duty does not absolve the need for fulfilling statutory requirements. The court upheld the Settlement Commission's decision, emphasizing the importance of adherence to legal provisions for settlement applications.

In conclusion, the High Court upheld the rejection of the settlement application by the Settlement Commission, emphasizing the necessity of complying with statutory provisions for availing exemptions and settling excise duty liabilities. The judgment underscores the criticality of fulfilling registration, duty payment, and return filing requirements as mandated by the Central Excise Act, 1944, for seeking settlement under Section 32E(1) of the Act.