2013 (5) TMI 482 - HC - Central Excise

Maintainability of settlement application u/s 32E As per department that an order of adjudication is made on the date on which the adjudicating authority dispatched it to the assessee and since the date of dispatch was after the filing of the settlement application, the application was maintainable - Held that - The object of Section 32E is to enable an assessee to come before the Settlement Commission with a clean, complete and candid disclosure and with a payment of the excise duty with interest. A literal construction of the words before adjudication would defeat the purpose and intent of Parliament. As this case itself shows, the Commissioner proceeded in undue haste, without waiting for the supply of documents to the assessee and even after being informed that the assessee was in all probably moving the Settlement Commission during the course of the week. The majority of the Settlement Commission was of the view that there was no reason for the assessee not to have filed a settlement application before 13 January 2011. What this view clearly misses is that proceedings before the adjudicating officer were pending. Assessee was still to obtain copies of the documents which were relied upon in the show cause notice. Despite the assessee informing the Commissioner, that it had paid the filing fee and would file the settlement application within a week, the Commissioner proceeded to pass an order in utter haste. Therefore the settlement application which was filed by the assessee before the date of the dispatch of the order of adjudication is maintainable before the Settlement Commission. The settlement application shall accordingly stand restored to the file of the Settlement Commission for further disposal in accordance with law. Thus, the petition is allowed.

Issues Involved:
1. Maintainability of the settlement application under Section 32E of the Central Excise Act, 1944.
2. Interpretation of the term "before adjudication" under Section 32E.
3. The effect of the adjudicating authority's actions on the settlement application process.

Issue-wise Detailed Analysis:

1. Maintainability of the Settlement Application:
The Petitioner challenged the Settlement Commission's order dismissing their application under Section 32E of the Central Excise Act, 1944. The application was dismissed on the grounds of being filed after the adjudication order dated 13 January 2011. The Settlement Commission's majority held that since the application was filed on 14 January 2011, it was not maintainable. However, the dissenting member, referencing the Delhi High Court's judgment in Qualimax Electronics Private Limited vs. Union of India, argued that adjudication is complete only when the order is dispatched to the assessee, which in this case, was after the filing of the settlement application.

2. Interpretation of "Before Adjudication":
Section 32E allows an assessee to apply for settlement before adjudication. The term "before adjudication" was scrutinized to determine whether it refers to the date the order is signed or when it is dispatched. The Supreme Court's precedents in similar contexts suggest that an order is considered made when it is communicated or dispatched, not merely when signed. Thus, the interpretation of "before adjudication" was pivotal, with the court concluding that adjudication is not complete upon signing but upon dispatching the order to the assessee.

3. Actions of the Adjudicating Authority:
The Petitioner had repeatedly requested documents relied upon in the show cause notice, which were not provided timely. Despite being informed of the Petitioner's intention to file a settlement application, the Commissioner hastily passed the adjudication order on 13 January 2011, which was dispatched only on 19 January 2011. The court noted that the Commissioner acted in undue haste and without waiting for the necessary documents, thus undermining the Petitioner's ability to file a settlement application effectively.

Conclusion:
The court held that the settlement application filed on 14 January 2011 was maintainable as it was submitted before the adjudication order was dispatched. The majority view of the Settlement Commission was found to be erroneous. The court emphasized a purposive interpretation of "before adjudication" to prevent abuses of power and ensure the legislative intent of Section 32E is upheld. Consequently, the Settlement Commission's order was set aside, and the settlement application was restored for further disposal. Additionally, the adjudication order dated 13 January 2011 was also set aside to prevent parallel proceedings.

Final Orders:
The petition was allowed, the Settlement Commission's order dated 18 January 2012 was set aside, and the settlement application was restored for further disposal. The adjudication order dated 13 January 2011 was also set aside to avoid parallel proceedings, ensuring the legislative intent of Section 32E was maintained. The rule was made absolute with no order as to costs.

← Previous Next →