2016 (10) TMI 741 - HC - Central Excise

SSI exemption - clubbing of clearances - whether settlement commission was justified in holding that M/s.Hides, which is one of the two units, does not have any machinery, manpower and money to function as an independent entity for the purpose of availing the benefit of SSI exemption and the clearances of M/s.Hides should be clubbed along with the petitioner/applicant? - Held that - the Settlement Commission has not rendered any finding, accepting the stand of the petitioner that activity done by it, does not amount to manufacture. In fact, it was on an assumption that assuming the activity is not manufacture, what would be the duty liability. Therefore, the direction issued to the Revenue by the Settlement Commission at best could be considered, as an information, the Commission wanted to know with regard to the impact of duty assuming that the activity done by the petitioner, did not amount to manufacture. The decision in the case of Singhvi Reconditioners Pvt., Ltd., vs. UOI 2010 (2) TMI 6 - SUPREME COURT followed where it was held that the assessee having opted to get their customs duty liability settled by the Settlement Commission cannot be permitted to dissect the Settlement Commission s order with a view to accept what is favourable to them and reject what is not. This is what the petitioner precisely wants to do, accept the immunities granted to the petitioner, exercise the option of redemption and also willing to settle the penalty. Order of settlement commission do not need interference - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to order passed by Customs and Central Excise Settlement Commission.

Analysis:
The petitioners challenged the order passed by the Customs and Central Excise Settlement Commission, Additional Bench, Chennai, regarding the settlement of their case arising from a show cause notice issued to them. The petitioners, who are manufacturers of leather goods, were accused of manufacturing and removing goods without payment of duty, availing SSI exemption, and manipulating records. The show cause notice demanded duty payment of ?5,16,08,561. The petitioners admitted additional duty of ?1,42,95,172 in their application before the Settlement Commission, along with seeking immunities.

During the proceedings, the petitioners' counsel argued that one of the units did not have the resources to function independently for availing SSI exemption, and thus, its clearances should be clubbed with the petitioner. The Revenue opposed the admission of the application, claiming that most activities were carried out by the petitioners and that there was no true and full disclosure. The Settlement Commission settled the case after considering all aspects.

The petitioners contended that the Settlement Commission did not render any finding accepting their argument that their activities did not amount to manufacture. The Revenue maintained its stance that the petitioners were not entitled to any indulgence. The Settlement Commission directed the petitioners to pay the entire Central Excise duty, imposed a penalty, and granted immunities from prosecution.

The High Court cited various legal precedents, emphasizing that the Settlement Commission's order is final and conclusive, and interference is only allowed if the order is contrary to statutory provisions. The Court rejected the petitioners' attempt to dissect the Settlement Commission's order to accept favorable aspects while rejecting others. Ultimately, the Court dismissed the writ petitions challenging the Settlement Commission's order and directed the petitioners to file their reply to the show cause notices and participate in the adjudication proceedings.

In conclusion, the High Court upheld the Settlement Commission's order, emphasizing that the petitioners failed to establish grounds for interference. The legal precedents cited reinforced the finality of the Settlement Commission's order and the limited scope for challenging it based on statutory provisions. The Court's decision to dismiss the writ petitions and direct the petitioners to engage in the adjudication proceedings signifies the adherence to legal principles and due process in resolving the dispute.