2016 (2) TMI 1225 - HC - Central Excise

Application for Settlement Application - Bar on subsequent application for settlement in certain cases - Whether with the introduction of the Explanation to Section 32-O(1)(i) there was a change in law with regard to the one time-bar under the said section? - Held that - Under Section 32E(1) an application for settlement can be filed before the Commission where there is non-disclosure of duty liability before the Central Excise Officer. Under Section 32-O(1)(i) a person is barred from filing a subsequent application for settlement where he has suffered an order passed under Section 32F(5) and therein the Explanation has been introduced that the concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer . Thus, Explanation in 32-O(1)(i) is consistent with the statutory intent in Section 32E(1). As seen Explanation introduced is a reiteration of the statutory provisions in Section 32E(1). Hence, the Explanation is clarificatory in nature - Therefore, as the bar under Section 32-O(1)(i) was always in vogue, the submission in this regard on behalf of the respondent is unacceptable. Whether with the introduction of sub-section (2) to Section 32-O with effect from 1st June, 2007, subsequently omitted on 8th May, 2010, the concept of one time approach under Section 32-O was removed? - Held that - The Commission had disposed of the earlier application of settlement by order dated 26th November, 2010 by directing the respondents to pay duty of Central Excise. Therefore, as and when the Commission took up the application for settlement for hearing, no earlier application on the identical issue was pending before it. Hence, the Section 32-O(2) since deleted, does not come to the aid of the respondents herein, that is the writ petitioners. Whether in the earlier proceedings before the Settlement Commission penalty was imposed on the respondents, that is the writ petitioners, for concealment of particulars of their duty liability? - Held that - Under Section 32-O(1)(i) the bar to file subsequent application was always in vogue, in view of the clear finding in detail by the Commission that in the previous proceedings penalty was imposed for concealment of particulars of duty liability, the argument of the respondent on this issue cannot be accepted. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Interpretation of Section 32-O(1)(i) of the Central Excise Act.
2. Impact of the "Explanation" to Section 32-O(1)(i) introduced by the Finance (No. 2) Act, 2014.
3. Effect of sub-section (2) to Section 32-O introduced on 1st June 2007 and omitted on 8th May 2010.
4. Whether the penalty in the earlier proceedings was for concealment of duty liability.

Detailed Analysis:

1. Interpretation of Section 32-O(1)(i) of the Central Excise Act:
The appeal was filed against the judgment which directed the Settlement Commission to reconsider its order dated 28th March 2014. The Single Judge's decision was based on the interpretation that the penalty imposed on the respondent did not bar them from approaching the Settlement Commission again unless it was for concealment of duty liability in a Section 32E application. The court emphasized that Section 32E allows an assessee to make an application for settlement with a full and true disclosure of duty liability. If concealment in this application leads to a penalty, a second application is barred under Section 32-O(i). The Settlement Commission's order did not specify this, leading to the Single Judge's directive for reconsideration.

2. Impact of the "Explanation" to Section 32-O(1)(i):
The court clarified that the "Explanation" introduced in August 2014 was consistent with the statutory intent of Section 32E(1), which requires full disclosure of duty liability not previously disclosed to the Central Excise Officer. The "Explanation" was deemed clarificatory and in consonance with the existing law, thus the bar under Section 32-O(1)(i) was always applicable. The court rejected the respondent's argument that the bar was not applicable since the earlier show cause notice was issued before the "Explanation" was introduced.

3. Effect of Sub-section (2) to Section 32-O:
The court addressed the argument that the one-time approach was removed with the introduction of sub-section (2) to Section 32-O, which was later omitted. It was noted that the Commission had disposed of the earlier settlement application by directing the respondents to pay duty. Therefore, no "earlier application" on an "identical" issue was pending when the subsequent application was filed. The court held that the deletion of sub-section (2) did not aid the respondents as there was no pending identical issue before the Commission.

4. Penalty for Concealment of Duty Liability:
The court examined the Settlement Commission's detailed findings in its order dated 28th March 2014, which indicated that the respondents were previously penalized for concealment of duty particulars. The Single Judge's judgment overlooked these findings. The court emphasized that the earlier order under Section 32M was conclusive and binding. The respondents had accepted the earlier penalty for concealment, making the bar under Section 32-O(1)(i) applicable. The court concluded that the Single Judge erred in not considering these findings and thus set aside the judgment.

Conclusion:
The court allowed the appeal, set aside the Single Judge's judgment, and quashed the order dated 26th August 2014. The court upheld that the bar under Section 32-O(1)(i) was applicable due to the respondents' previous penalty for concealment of duty particulars. The decision aligns with the statutory provisions and clarifications provided by the "Explanation" to Section 32-O(1)(i).