2013 (10) TMI 137 - HC - Central Excise

Undervaluation of AC Parts Whether the CESTAT was justified in confirming the duty demand by holding that the proceedings before the Settlement Commission, Customs & Central Excise as provided in Chapter V of the Central Excise Act, 1944 were not judicial proceedings and any admission made before that Commission would not be judicial admission Held that - It was just and proper for the Revenue to demonstrate as to how the admissions made before the Settlement Commission were erroneous and it was just and proper for the CESTAT to record a finding as to why the admissions made by the Revenue before the Settlement Commission were not binding on the Revenue - In the absence of any such finding recorded by the Tribunal, it would be proper to remand the matter to the file of the Tribunal - the decision of the CESTAT was extended to the extent it confirmed the duty demand and restore the issue for fresh consideration in accordance with law.

Summary

Issues:
1. Whether the CESTAT was justified in confirming duty demand due to alleged undervaluation of AC parts based on proceedings before the Settlement Commission not being considered judicial proceedings.

Analysis:
The case involved a dispute regarding the confirmation of duty demand amounting to Rs. 7,19,997/- related to the undervaluation of AC parts. The appellant initially appealed to the CESTAT but later withdrew the appeal and approached the Settlement Commission. The Settlement Commission rejected the application and remanded the matter back to the CESTAT. The CESTAT, in its order, upheld the duty demand, prompting the appellant to challenge this decision. The main contention was whether the admissions made before the Settlement Commission should be considered binding on the Revenue. The CESTAT ruled that the proceedings before the Settlement Commission were not judicial proceedings, leading to the present appeal.

The Court referred to Section 32P of the Central Excise Act, 1944, which deems the proceedings before the Settlement Commission as judicial proceedings for specific purposes. While acknowledging that the Settlement Commission proceedings may not be judicial proceedings concerning the CESTAT, the Court emphasized that if the Revenue made admissions before the Settlement Commission, it was essential to explain why those admissions were not binding. Since the CESTAT failed to provide a reasoning for disregarding the Revenue's admissions, the Court decided to remand the matter back to the Tribunal for proper consideration.

Consequently, the Court set aside the CESTAT's decision confirming the duty demand and directed a fresh examination of the issue in accordance with the law. The appeal was disposed of without any order as to costs.