2017 (1) TMI 24 - HC - Central Excise

Clandestine removal - Penalty - Rule 25 of the CER 2002 - Principles of natural justice - Held that - It is undeniable that the petitioner did not pay duty in Delhi where the goods were actually manufactured. It is not as if duty was not paid only in respect of Kathua unit for which benefits and credits were sought from Kathua. In fact there were 411 DG sets working out to over 20% of the quantity produced. What is more to compound the non-payment of duty the petitioner committed a further violation in claiming that the goods were cleared from Kathua when they were not and proceeded to draw the revenues and then also sought CENVAT credit - It is an attempt to supplement the concession as it were during the course of the proceedings - an indication that it somehow sought to tide-over and close the dispute even though there is no common moot point or the possibility of a moot point with the revenue - Petition dismissed.

Summary

Issues:
1. Violation of natural justice in the impugned order
2. Dispute regarding duty payment and manufactured goods reconciliation before the Settlement Commission

Issue 1: Violation of natural justice in the impugned order
The petitioner contended that the impugned order violated principles of natural justice as a clarificatory report regarding discrepancies in DG sets was not made available to them. The petitioner argued that this serious flaw tainted the order. Additionally, it was emphasized that the tabular chart provided by the petitioner clearly indicated no substantial dispute requiring adjudication by the revenue, falling outside the Settlement Commission's jurisdiction. The petitioner offered to repay refund amounts and bear applicable penalties, asserting no real dispute existed necessitating adjudication.

Issue 2: Dispute regarding duty payment and manufactured goods reconciliation before the Settlement Commission
The Settlement Commission declined relief after considering submissions and materials, stating the petitioner denied 82% of its duty liability. The Commission observed discrepancies in the petitioner's claims and rejected their explanation for the difference in DG sets. The Commission highlighted that the petitioner's attempt to reconcile accounts was to evade liabilities, emphasizing serious violations in non-payment of duty for manufactured goods. The Commission noted the lack of cooperation between the parties and the absence of fundamental factual agreement required for settlement. The Court dismissed the petitioner's argument, stating the reconciliation exercise was an attempt to resolve the matter through a "sanitation exercise," lacking common ground for agreement. The Court found no merit in the writ petition, emphasizing the petitioner's lack of cooperation and the absence of a common moot point with the revenue. The judgment was accordingly dismissed.

This comprehensive analysis covers the violation of natural justice and the dispute over duty payment and manufactured goods reconciliation before the Settlement Commission, providing a detailed overview of the legal judgment.