2017 (5) TMI 147 - HC - Central Excise

Scope of jurisdiction of Settlement Commission - clandestine removal - natural justice - Held that - Settlement Commission is not an adjudicating authority. The role of the Settlement Commission is to arrive at an amicable settlement of the dispute between the parties. If the Settlement Commission is also converted into an adjudicating body, then the very purpose of having a Commission will get lost. This is why certain pre-conditions are laid in Section 32E. The assessees who have excellent cases, may be entitled to fight out their cases in the normal channel of remedies available under the Act - The Settlement Commission in this case has recorded certain findings about clandestine removal of goods and thought fit to still accept the application for settlement, by imposing certain conditions. The scope of the jurisdiction to interfere with those conditions or to set aside the order on the ground of violation of natural justice, is extremely limited and we do not find the case on hand fit enough to undertake that exercise - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to Settlement Commission order under Section 32E of Central Excise Act, 1944 based on terms and conditions imposed.

Analysis:
The petitioners challenged an order passed by the Settlement Commission under Section 32E of the Central Excise Act, 1944, accepting their application for settlement subject to certain terms and conditions. The petitioners, a company engaged in the manufacture of sponge iron, faced a show cause notice proposing confiscation of goods. Instead of litigating, they applied to the Settlement Commission, which accepted the application with conditions. The conditions included settling additional Central Excise Duty, interest liability, and penalties. The petitioners contested the terms, alleging a violation of natural justice as they were not provided with a copy of the Jurisdictional Commissioner's report.

The High Court noted that the Settlement Commission's findings were not solely based on the Commissioner's report. It emphasized that the Settlement Commission's role is to facilitate an amicable settlement, not act as an adjudicating body. The Court highlighted the limited scope of interference in Settlement Commission orders compared to regular adjudication. Despite findings of clandestine removal of goods, the Settlement Commission accepted the settlement application with conditions, indicating a stringent standard for interference based on natural justice violations.

Ultimately, the Court dismissed the writ petition, emphasizing the limited jurisdiction under Article 226 of the Constitution to challenge Settlement Commission orders. It concluded that the case did not warrant intervention based on natural justice concerns. The decision upheld the Settlement Commission's order and closed any related pending petitions without imposing costs on the parties involved.