2018 (12) TMI 1728 - HC - Central Excise

Clandestine removal - unaccounted production - Imposition of penalty - non-granting of cum-duty excise benefit to the petitioner - application to Settlement Commission - Section 32F of the Central Excise Act 1944 - HELD THAT - The petitioner has accepted and voluntarily made the payment towards pass liability to conduct of suppression of production, escaping central excise duty and un accounted raw materials which has also been clandestinely removed to various byers which had escaped the excise duty. The petitioner cannot expect to grant the cum duty benefit while calculating the duty payable by him - Actually, no duty has been included while the petitioner was removing the MS Billets to various customers who purchase from him. In such cases, there cannot be any question of detection of duty where no duty has been actually included in the wholesale price, the Settlement Commission has ordered for rejection for grant of cum duty benefit cannot be interfered with. Section 32K empowers the Settlement Commission to grant immunity from prosecution and imposed penalty on the assessee who make application under Section 32E before the Settlement Commission for adjudication of the escape excise duty or evasion of excise duty - In the present case, the petitioner who are the manufacturers of MS Billets suppressed 680.987 Mts Billets found un accounted and in excess of the production records shall be lapped with penalty - The petitioner has clandestinely removed the Billets to various of his buyers thereby escaping from the excise duty. The Settlement Commission exercising its powers under Section 32K of Central Excise Act 1944, imposed the penalty of ₹ 14,00,000 as penalty while granting immunity over the said penalty amount to the petitioner to the gravity offense committed by the petitioner s company suppressing 680.987 Millets procurement of raw materials and removing the same to various buyers thereby escaping from the duty payable by the petitioner is a very serious offense and the Settlement Commission has imposed 10% of the settled duty as penalty against the petitioner. This Court do not find any infirmity in such levy of the penalty as against the petitioner and the petitioner cannot claim exemption from the penalty and the Settlement Commission has imposed penalty only after perusing the documents that were seized during the search operation conducted at the petitioner premises factory and sufficient materials and proof were established by the department before the Settlement Commission. Petition dismissed.

Summary

Issues:
Challenge to final order imposing penalty and non-granting of cum-duty excise benefit.

Analysis:
1. The petitioner, a manufacturer of Billets, faced show cause notices for confiscation of goods, duty evasion, and penalties. The petitioner approached the first respondent under Section 32E of the Central Excise Act, admitting a duty liability of &8377; 76,22,359 after extending cum-duty benefit.

2. The first respondent initially directed payment for 5192.01 Mts, later increased to 7316.75 Mts, settling the duty at &8377; 1,40,16,353. The petitioner sought extension of cum-duty benefit, which was declined based on evidence of clandestine removal of goods and suppression of production.

3. The petitioner challenged the duty liability and penalty imposition. The Settlement Commission rejected cum-duty benefit due to the offense of clandestine removal supported by seized documents. The petitioner's intention not to pay duty on goods sold was evident.

4. The Settlement Commission, under Section 32K, imposed a penalty of &8377; 14,00,000, granting immunity over the penalty amount. The penalty was justified for the serious offense of duty evasion and suppression of production.

5. The court upheld the penalty imposition, noting the gravity of the offense and evidence presented. The impugned order was deemed valid, and the writ petition was dismissed without costs.

6. The decision highlights the importance of compliance with excise duty regulations and the consequences of evasion and suppression. The Settlement Commission's authority to impose penalties and grant immunity was exercised appropriately in this case.