2016 (8) TMI 784 - HC - Central Excise

Whether in the earlier proceedings penalty was imposed on the appellants for concealment of particulars of their duty liability - clandestine despatch of finished goods without payment of duty - habitual in committing offence - Held that - it is clear from the admission of the appellant no.2 in 2010 proceedings that there was concealment of particulars of duty liability which, by order dated 4th January, 2011 passed under section 32F(5), led to the imposition of penalty for concealment of duty liability of the order dated 27th August, 2014. Since it is evident from the order dated 4th January, 2011 that penalty was imposed on the appellants for concealment of particulars of their duty liability which had been taken note of and discussed exhaustively in the order dated 27th August, 2014 passed by the Commission, we are of the view that the learned Single Judge was justified in holding that An element of mens rea was fastened to this petitioner company upon the order of the Settlement Commission being passed on January, 4, 2011. In this regard it is noteworthy that the Explanation to section 32-O(1)(i), inserted by Finance (No.2) Act, 2014, laying down that concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer is in aid to and is evidently in consonance with the provisions contained in section 32-E(1) which provides An assessee may, in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled, in such form and in such manner as may be prescribed and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, . Whether in view of the order dated 27th August, 2014, rejecting the application for settlement, the settlement proceedings stood abated under section 32F(1) and if so, whether the appellants are entitled to have their case adjudicated before the appropriate authority - Held that - it is evident that by order dated 27th August, 2014 the Commission had rejected that application for settlement for lack of jurisdiction. Hence, on 27th August, 2014, under Section 32F(1) the proceedings stood abated. Since the appellants cannot be without a remedy, the show cause notice dated 6th February, 2014 has to be adjudicated under the Act. Hence, the appeal is dismissed. The judgement of the learned Single Judge is hereby affirmed. Accordingly, no order is passed on the application and the same is disposed of. However, since the proceedings before the Commission have abated, as submitted on behalf of the appellants, they are at liberty to pursue the adjudication proceedings before the appropriate authority by filing reply to the show cause notice dated 6th February, 2014. If reply is filed, the adjudicatory authority shall proceed expeditiously in accordance with law after complying with the principles of natural justice. - Decided against the appellant

Summary

Issues Involved:

1. Whether in the earlier proceedings penalty was imposed on the appellants for concealment of particulars of their duty liability.
2. Whether in view of the order dated 27th August, 2014, rejecting the application for settlement, the settlement proceedings stood abated under section 32F(1).
3. If so, whether the appellants are entitled to have their case adjudicated before the appropriate authority.

Detailed Analysis:

1. Imposition of Penalty for Concealment of Duty Liability:

The primary issue was whether the appellants were penalized for concealment of particulars of their duty liability in earlier proceedings. The Commission had previously dismissed the application for settlement under Section 32F, citing Section 32-O(1)(i) of the Central Excise Act, 1944, which bars subsequent applications for settlement if a penalty was imposed on the ground of concealment of duty liability. The appellants argued that the penalty in the earlier proceedings was not for concealment of duty liability. However, the court noted that in the 2010 proceedings, the appellant admitted to clearances of goods without payment of duty, which led to the imposition of penalties. The court emphasized that the "Explanation" to Section 32-O(1)(i) clarifies that concealment refers to concealment from the Central Excise Officer. Thus, the court upheld the Commission's decision, affirming that the penalty in the earlier order dated 4th January 2011 was indeed for concealment of duty liability.

2. Abatement of Settlement Proceedings:

The second issue was whether the settlement proceedings stood abated under Section 32F(1) following the rejection of the application for settlement on 27th August 2014. The court confirmed that the rejection of the application for lack of jurisdiction resulted in the abatement of the proceedings. As per Section 32F(1), once the application for settlement is rejected, the proceedings abate. Therefore, the appellants' argument that the proceedings should continue was dismissed.

3. Entitlement to Adjudication Before Appropriate Authority:

The third issue considered whether the appellants were entitled to have their case adjudicated before the appropriate authority following the abatement of settlement proceedings. The court concluded that since the proceedings before the Commission had abated, the appellants could pursue adjudication proceedings before the appropriate authority. The court directed that the show cause notice dated 6th February 2014 should be adjudicated under the Act, allowing the appellants to file a reply and ensuring that the adjudicatory authority proceeds expeditiously in accordance with the law and principles of natural justice.

Conclusion:

The appeal was dismissed, affirming the judgment of the learned Single Judge. The court held that the appellants could pursue the adjudication proceedings before the appropriate authority by filing a reply to the show cause notice dated 6th February 2014. The respondent was awarded costs of Rs. 10,200/-. The judgment emphasized that the court had not gone into the merits of the show cause notice dated 6th February 2014.