2018 (9) TMI 1825 - HC - Central Excise

Scope of review - application for Settlement Commission - Section 32-F(5) of CEA, 1944 - Clandestine removal - HELD THAT - Scope for interference against the orders passed by the second respondent is very limited particularly under Art. 226 of the Constitution of India. An order of a Settlement Commission can be interfered only if it is passed contrary to the provisions of the Act. Section 32-F deals with Procedure on Receipt of an Application under Section 32E by a Settlement Commission. Under Sub-clause (5) of the Settlement Commission is expected to pass such orders as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application. The report of the Principal Commissioner of Central Excise or Commissioner of Central Excise and Commissioner (Investigation) under subsection (3) or sub-section (4) is one of the document to be relied by the 2nd respondent while passing order under Section 32 F(S) of the CEA, 1944 - Though Section 32F if CEA, 1944 is not pari-material with Section 245 D of the Income Tax Act, 1961, nevertheless makes it clear that the order has to be passed after examination of the records and the report of the Principal Commissioner of Central Excise or Commissioner of Central Excise received under sub-section (3), and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (4). As there is no discussion in the impugned order regarding the report of the Commissioner (Investigation), it is liable to be set aside as having passed contrary to Section 32-F(5) of the CEA, 1944 - the case is remanded back to the 2nd Respondent for passing a fresh order on merits - petition allowed by way of remand.

Summary

Issues:
1. Quashing of Final Order No. 11/2008 passed by the second respondent
2. Demand of duty evasion and denial of SSI exemption
3. Adjustment of the amount already paid by the petitioner
4. Settlement of disputes under Section 32E of the Central Excise Act, 1944
5. Admittance of the case under Section 32F by the 2nd respondent
6. Referral of case to the Commissioner (Investigation) for a report
7. Ignoring the report of the Commissioner (Investigation) in the impugned order
8. Scope of review against an order of the settlement commission
9. Interpretation of Section 32-F of the Central Excise Act, 1944

Analysis:
1. The petitioner sought to quash Final Order No. 11/2008 passed by the second respondent and requested a fresh order after a personal hearing. The petitioner was issued a Show Cause Notice for duty evasion and denial of SSI exemption, with a demand for payment. The petitioner approached the 2nd respondent for dispute settlement under Section 32E.

2. The 2nd respondent directed the petitioner to pay the admitted duty amount within 30 days. A joint sitting was held, and the case was admitted under Section 32F. The case was referred to the Commissioner (Investigation) for a report due to conflicting views between the petitioner and the department.

3. The impugned order did not discuss the report of the Commissioner (Investigation), leading to the petitioner filing a writ petition. The court noted the limited scope of review under Art. 226 and cited precedents emphasizing adherence to statutory provisions in settlement commission orders.

4. Section 32-F mandates the Settlement Commission to pass orders on covered matters and related issues, including those not in the application but referred in reports. The court referenced a Supreme Court judgment on the Settlement Commission's powers and the importance of full disclosure in applications.

5. The court highlighted the significance of reports from authorities in reaching settlement decisions. The absence of discussion on the Commissioner (Investigation) report rendered the impugned order contrary to Section 32-F, leading to its setting aside and remand for a fresh order considering the report.

6. The judgment emphasized the necessity of considering all relevant reports and documents in settlement proceedings to ensure a fair and lawful decision-making process. The court's decision to remand the case back to the 2nd respondent underscored the importance of proper consideration of all pertinent information for a just resolution.