2017 (8) TMI 1089 - HC - Central Excise

Receipt of application by Settlement Commission - subsection (5) of section 32F of the Act - the Settlement Commission did not grant hearing as envisaged under section 32F of the Central Excise Act, 1944 - it is also alleged that the Settlement Commission committed serious errors in law in not accepting the petitioners contentions regarding the invoices relied upon - Held that - Subsection (5) of section 32F undoubtedly provides for a personal hearing being granted to the applicant by the Settlement Commission. It was in this context that the Settlement Commission heard the representatives of both sides on 04.10.2016. Thereafter the Settlement Commission merely permitted both sides to exchange documents. The order dated 04.10.2016 does not envisage any further hearing, nor admittedly the petitioners in any of the further correspondences pleaded before the Settlement Commission that further personal hearing be granted. Subsection (6) of section 32F lays down the time limit for completion of the proceedings before the Settlement Commission and provides that failing completion of the proceedings within such time, the settlement proceedings shall abate and the adjudicating authority before whom the proceedings at the time of making application was pending, shall dispose of the case in accordance with the provisions of the Act as if no application for settlement was made. Subsection (6) of section 32F thus instils sense of urgency in disposal of settlement proceedings. When pending adjudication of proceedings under the Act, the declarant is given an opportunity to approach the Settlement Commission, upon which, such proceedings would be kept under abeyance, the anxiety of the legislature that the proceedings be completed expeditiously can well be appreciated. In the order dated 04.10.2016, the Settlement Commission gave an impression that there shall be further hearing after both sides produce additional documents as envisaged. As noted, in none of the further responses that the petitioners filed before the Settlement Commission or the department, any request was made that a fresh personal hearing be granted - the petitioners now cannot raise a grievance that the Settlement Commission did not grant a further personal hearing, though required. The issue that the Settlement Commission committed serious errors in law in not accepting the petitioners contentions regarding the invoices relied upon requires closer scrutiny - partly decided against petitioner and part matter on remand.

Summary

Issues:
Challenge to Settlement Commission's order under Central Excise Act, 1944 - Lack of proper hearing as per section 32F - Errors in law regarding acceptance of contentions on invoices - Compliance with procedural requirements under section 32F - Time limit for completion of settlement proceedings - Interpretation of provisions for abatement of proceedings.

Analysis:
1. The petitioners challenged a Settlement Commission's order dated 03.02.2017, raising two primary grievances. Firstly, they contended that the Commission did not provide a proper hearing as required under section 32F of the Central Excise Act, 1944. Secondly, they argued that the Commission made serious errors in law by not accepting the petitioners' contentions regarding the invoices relied upon, along with other legal issues overlooked by the Commission.

2. The petitioners claimed that a hearing did take place on 04.10.2016 before the Settlement Commission, where both parties were allowed to submit further responses. While the petitioners and the Revenue filed multiple replies and documents subsequently, the Commission passed the impugned order without granting another hearing, which the petitioners alleged was a breach of subsection (5) of section 32F of the Act.

3. The record indicated that after the initial hearing on 04.10.2016, the Commission directed the petitioners to submit claims and evidence related to deductions sought, and the Revenue to provide specific comments within a specified timeframe. Subsequently, the petitioners submitted documents, followed by responses from the department, and further exchanges of documents until the Commission's final order on 03.02.2017.

4. Section 32F of the Act outlines the procedure for settlement applications, emphasizing the importance of a hearing, examination of records, and further evidence before the Commission passes a final order. The provision mandates a personal hearing for the applicant and the department, along with the consideration of all relevant evidence.

5. The Court examined the provisions under subsections (5) and (6) of section 32F, emphasizing the need for timely completion of settlement proceedings. The Court referenced a Supreme Court decision regarding a similar provision under the Income Tax Act, highlighting the importance of expeditious disposal of cases before the Settlement Commission.

6. The Court noted that the Settlement Commission's order on 04.10.2016 did not indicate a further hearing after the exchange of documents, and neither party requested another personal hearing in subsequent correspondences. Therefore, the Court concluded that both parties understood the initial hearing as final, with additional documents being considered for the final order.

7. After addressing the petitioners' first contention regarding the hearing, the Court proceeded to examine the merits of the Settlement Commission's final order, indicating a need for closer scrutiny. The Court acknowledged the importance of compliance with procedural requirements and the interpretation of provisions related to abatement of settlement proceedings, signaling a comprehensive review of the case.

Conclusion:
The Court analyzed the issues raised by the petitioners concerning the Settlement Commission's order under the Central Excise Act, emphasizing the importance of procedural compliance, timely completion of proceedings, and the interpretation of relevant legal provisions. The detailed examination of the hearing process, submission of evidence, and the Commission's decision-making highlighted the complexities involved in settlement proceedings and the need for a thorough legal analysis to ensure justice and procedural fairness.