2018 (9) TMI 1941 - AT - Central Excise

Rejection of Compounding of offence - rejection on the ground that true and full disclosure not made - Rule 6 of Central Excise (Compounding of Offence) Rules, 2005 - HELD THAT - The fact is not under dispute that after proceeding initiated right from investigation up to issue of SCN and before adjudication process, the matter was taken up with the Settlement Commission even before the Settlement Commission there is a condition that the applicant should make true and correct disclosure of the fact which the appellant have made. The Settlement Commission after satisfying with the disclosure made by the appellant pass the order whereby the case has been settled on demand of dues as ordered by the Settlement Commission - With this proceeding, it cannot be said that the appellant have not made the true and correct disclosure in their application. Even if it is accepted that the appellant during investigation, at the time of filing of reply made some declaration which were not found correct that cannot amount to a disclosure of incorrect fact before the compounding authority. As per the compounding of offence provision, the only requirement is that the adjudged dues should be deposited before making an application which is not under dispute. Therefore, there is no reason why the application for compounding should not be accepted. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Compounding of offence under Rule 6 of Central Excise (Compounding of Offence) Rules, 2005.

Analysis:
The appeal was filed against the Chief Commissioner's order rejecting the compounding of offence under Rule 6 of Central Excise (Compounding of Offence) Rules, 2005. The appellant's counsel argued that the rejection was based on the alleged lack of full and true disclosure of facts, but contended that the application did include the entire sequence of the case, leading up to the Settlement Commission's acceptance after a full and true disclosure. The Settlement Commission's order had finality as there was no challenge by the department, indicating no wrong disclosure of facts. The appellant had paid all dues, a pre-condition for compounding. Legal judgments were cited to support the argument (Deepesh Mamodiya v. CC - 2014 (308) E.L.T. 34 (Del.), Girish B. Mishra v. CCE - 2012 (283) E.L.T. 579 (Tri. Amd.), UOI v. Anil Chanana - 2008 (222) E.L.T. 481 (S.C.)).

The Deputy Commissioner representing the Revenue reiterated the findings of the impugned order. However, upon careful consideration, the Member (J) found that the Chief Commissioner rejected the application based on the alleged lack of true and full disclosure, despite the appellant's disclosure to the Settlement Commission, which was satisfied with the facts presented. The Settlement Commission's order settling the case on the demanded dues indicated a proper disclosure. Any discrepancies in the appellant's declarations during investigation did not amount to incorrect disclosure before the compounding authority. The Settlement Commission's order had not been challenged, and all adjudged dues had been paid, meeting the compounding requirements. Consequently, the Member (J) set aside the impugned order and allowed the appeals.

This judgment highlights the importance of full and true disclosure of facts in applications for compounding of offences under Central Excise rules. It emphasizes the significance of settlement orders and the finality they bring when accepted without challenge. The case underscores the need to meet all requirements, including payment of dues, for successful compounding applications.