2017 (8) TMI 1112 - HC - Central Excise

MODVAT/CENVAT credit - manufacture of paper and paper products falling under Chapter No. 48 of the First Schedule to the Central Excise Tariff Act 1985 - rejection of application by Settlement Commission - rejection solely on the ground that the petitioner has not made a full and true disclosure of their duty liability - Held that - Section 32E of the Central Excise Act 1944 deals with applications for settlement of cases. Sub-section (1) of Section 32E states that an assessee may in respect of a case relating to him make an application before adjudication to the Settlement Comission to have the case settled in such form and in such manner as may be prescribed and containing the full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction - the petitioner had rightly approached the Commission on issuance of show cause notice. Whether there has been a full and true disclosure of the duty liability by the petitioner in the application filed before the Commission? - Held that - the facts of the case are quite peculiar and distinct and the term full and true disclosure has to be interpreted considering the facts of each case and if such an interpretation is given in my view there has been a full and true disclosure by the petitioner though the manner in which it has been presented may not be appropriate the reason being that the show cause notice itself was restricted to the period from November 1997 to June 2001. It is only after the receipt of the show cause notice that the petitioner had the cause of action to appear before the Commission. The show cause notice admits that the petitioner had paid Central Excise duty to an extent of 28, 00, 923/- and that covers the period anterior to the period mentioned in the show cause notice and that is from June 1996 onwards. The show cause notice covered only the period from November 1997 to June 2001. It is not a case where though the petitioner failed to make a full and true disclosure of their duty liability but appeared to have raised a technical plea which could not have been the reason to throw out the application filed by the petitioner which is a Public Sector Company wholly owned by the Government of Tamil Nadu. The matter is remitted back to the Settlement Commission for consideration of the petitioner s application on merits and in accordance - petition allowed by way of remand.

Summary

Issues:
Petitioner aggrieved by Settlement Commission's order rejecting application for settlement of demand. Controversy over duty liability disclosure. Interpretation of "full and true disclosure" under Section 32E of Central Excise Act, 1944. Commission's rejection based on lack of full disclosure and refund claim. Jurisdiction to demand excise duty beyond 5 years.

Analysis:

1. Settlement Commission's Order Rejection:
The petitioner, a government company, challenged the Settlement Commission's order rejecting their application for settlement of a demand raised in a show cause notice. The notice demanded disallowance of wrong credit, duty on intermediate products, penalties, and interest. The Commission rejected the application citing lack of full and true disclosure of duty liability by the petitioner.

2. Interpretation of "Full and True Disclosure":
The key issue revolved around whether the petitioner made a full and true disclosure of duty liability as required under Section 32E of the Central Excise Act, 1944. The Commission contended that the petitioner should have admitted their entire duty liability without seeking a refund or claiming part of the demand as time-barred. However, the court analyzed the facts and interpreted "full and true disclosure" in the context of the case.

3. Disclosure of Duty Liability:
The court found that the petitioner did disclose their admitted duty liability, mentioning payments made and the period covered. Despite raising technical jurisdictional issues, the petitioner's disclosure was considered adequate. The court emphasized that the show cause notice itself was limited to a specific period, and the petitioner acted upon receiving the notice.

4. Refund Claim and Commission's Discretion:
Regarding the refund claim, the court noted that the Commission has the authority to decide on refunds, but this should not be a basis to conclude lack of full disclosure. The court highlighted that the petitioner's technical plea on jurisdiction did not invalidate their overall disclosure of duty liability.

5. Court's Decision and Remittance:
After thorough analysis, the court accepted the petitioner's case, set aside the Commission's order, and remitted the matter back to the Settlement Commission for reconsideration on merits and in accordance with the law. The court's decision favored the petitioner, emphasizing the specific circumstances of the case and the necessity for a fair evaluation of duty liability disclosure.

In conclusion, the judgment delves into the nuances of duty liability disclosure, the Commission's grounds for rejection, and the court's interpretation of "full and true disclosure" in the context of the petitioner's case. The decision underscores the importance of considering the specific facts and circumstances of each case while determining the adequacy of duty liability disclosure under relevant legal provisions.