2014 (12) TMI 867 - HC - Central Excise

Validity of order of settlement Commission - refusal to grant any relief and requiring the petitioner to avail the remedies under the Act - Held that - The Commission, in the instant case, arrived at the conclusion that the petitioner is not extended the cooperation by undertaking comparison of the facts and figures mentioned in the application on the one hand, and those in the report submitted by the Commissioner, on the other. This could have been certainly appreciated if only the Commission furnished a copy of the report to the petitioner enabling it to offer its own remarks. When the investigation is into the affairs of the petitioner, the only party which is immediately affected is the petitioner itself. Whatever may be the entitlement of any other agency to receive copy of such report, an agency which is immediately affected cannot be denied a copy thereof. If the report is so inaccessible or confidential for that very reason, it should be kept outside the purview of the adjudication also. - order of the Commission suffers from a serious infirmity on account of non-furnishing of the report of the Commissioner to the petitioner - Matter remanded back - Decided in favour of assesse.

Summary

Issues:
- Challenge to refusal of relief by Settlement Commission
- Non-furnishing of report by Commissioner to petitioner

Challenge to refusal of relief by Settlement Commission:
The petitioner, engaged in steel re-rolling, received a show cause notice from respondent No.1 regarding the procurement of mild steel from third parties and the consequent excise duty payable. The petitioner admitted liability for a portion of the amount and sought relief from the Settlement Commission under the Central Excise Act, 1944. However, the Commission, after considering a report from the Commissioner (Investigation), refused to grant any relief and directed the petitioner to avail remedies under the Act. The petitioner contended that the show cause notice was baseless, and despite offering to pay a significant sum, relief was denied without providing an opportunity to explain the facts in the report. The respondent argued that the Commission has discretion in granting relief and the report was for guidance purposes only, not requiring disclosure to the petitioner.

Non-furnishing of report by Commissioner to petitioner:
The High Court emphasized the role of the Settlement Commission in providing finality to proceedings involving substantial stakes, aiming for conciliation between manufacturers and revenue interests. The Commission's power to refuse relief is contingent on the manufacturer's cooperation, which may include information disclosure. In this case, the Commission concluded that the petitioner lacked cooperation by not comparing details in the application with the Commissioner's report. The Court found fault with the Commission for not providing the report to the petitioner, which hindered the petitioner's ability to respond adequately. Stressing the petitioner's immediate interest in the report's contents, the Court held that denial of access to such crucial information was a serious flaw in the Commission's decision-making process. Consequently, the Court allowed the writ petition, set aside the Commission's order, and remanded the matter for fresh disposal after furnishing a copy of the report to the petitioner, with no costs imposed.