2015 (11) TMI 601 - HC - Central Excise

Validity of order of settlement commission - Imposition of penalty - Suppression of facts - whether the Central Excise Settlement Commission erred in imposing penalty without quantifying the penalty and fine in full - Held that - Appellants admittedly short paid duty by suppressing facts. Applications were filed disclosing fully and truly the duty liability. Section 32K, inter alia, speaks of immunity wholly or in part from the imposition of any penalty and fine under this Act . Section 32K does not contain separate provision for calculation of total penalty and fine. Therefore, for calculation of penalty and fine, section 11AC of this Act , that is, Central Excise Act, 1944, is applicable. Keeping the statutory provisions in mind, under section 11AC, in a regular adjudication, the appellants would have been subjected to payment of penalty equal to duty found to have been evaded. In the instant case the appellants disclosed that the whole amount of duty evaded was ₹ 1,09,92,429/-. Hence, the appellants were liable to pay an equal amount of penalty, that is ₹ 1,09,92,429/-. As section 32 K empowers the Settlement Commission to reduce penalty and fine and to grant immunity from prosecution, a power a central excise officer does not possess under regular adjudication, the Commission had passed the order imposing a total penalty of ₹ 52 lakhs, being a part of the total penalty, and waving the balance and granting immunity from prosecution with respect to the case covered by the settlement. Thus, we find there is no infirmity in the order passed by the Commission. - since settlement under the Act is in the nature of a package, as rightly contended by Mr. Bhardwaj, the appellants having accepted immunity from prosecution, cannot challenge the quantum of penalty imposed as harsh. - Decided against assessee.

Summary

Issues:
1. Imposition of penalty without quantifying the penalty and fine in full.

Analysis:
The judgment involved an appeal against a decision by the Central Excise Settlement Commission imposing penalties on a company and its directors while granting immunity from prosecution under the Central Excise Act, 1944. The petitioners argued that the imposition of penalty without quantifying it fully was unjust and illegal, as they had made full and true disclosures of duty liability under section 32E of the Act. The petitioners contended that the penalty imposed was arbitrary, especially considering the substantial amounts already paid towards duty and interest. They also highlighted non-consideration of crucial aspects by the trial judge, leading to manifest injustice. The petitioners relied on the judgment in Ashwini Tobacco Co. Pvt. Ltd. vs. Union of India for their submissions.

The respondent, representing the Additional Director General Directorate General of Central Excise Intelligence, argued that since the petitioners had cooperated and made full disclosures during the settlement proceedings, they were bound by the penalty imposed. It was emphasized that the Settlement Commission had the authority to grant immunity from prosecution and waiver of penalties, which regular excise authorities did not possess. The penalty imposed on the company and directors was seen as part of the total penalty, with the balance waived, in line with the statutory provisions and previous judgments like Indorama Synthetics (India) Ltd. vs. Union of India.

The Commissioner of Central Excise, Bolpur Commissionerate, supported the respondent's arguments, stating that the settlement order under section 32K of the Act was conclusive, and the petitioners, by admitting duty liability and paying amounts accordingly, could not opt out from the settlement scheme. The Commissioner reiterated that the penalty was justified based on the disclosures made by the petitioners and the provisions of the Act.

The Court examined the relevant sections 32E and 32K of the Act, which outlined the application for settlement and the power of the Settlement Commission to grant immunity from prosecution and penalties. The Court noted that the petitioners had admitted to evading duty and had fully disclosed their duty liability, making them liable for penalties under section 11AC of the Act. As section 32K allowed for reduction of penalties and immunity from prosecution, the Commission's decision to impose a portion of the total penalty and grant immunity was deemed appropriate. The Court upheld the Commission's order, stating that the settlement under the Act was a package deal, and the petitioners could not challenge the penalty after accepting immunity from prosecution. The appeal was dismissed, and no costs were awarded.

In conclusion, the judgment addressed the issue of penalty imposition without full quantification, analyzing the statutory provisions, disclosures made by the petitioners, and the authority of the Settlement Commission to grant immunity and reduce penalties. The decision reaffirmed the Commission's order, emphasizing the binding nature of settlements and the inability to challenge penalties after accepting immunity from prosecution.