2018 (3) TMI 1057 - HC - Central Excise

Rejection of application for Settlement Commission - maintainability of petition - section 32(O)(1)(i) of the Central Excise Act, 1944 - The Customs and Central Excise Settlement Commission by the impugned order dated 23. 12. 2015 rejected the application holding that it had no jurisdiction to entertain the application as it was barred under section 32(O)(1)(i) of the 1944 Act. Held that - It is not necessary to consider whether it can be said that the explanation has retrospective or retroactive effect. The Explanation to section 32(O)(1)(i) was proposed to be inserted by Clause 94 of Bill No. 35 of 2014- a Bill to give effect to the financial proposals of the Central Government for the financial year 2014-15 - The Explanation is, therefore, clarificatory. This is clear from the Statement of Objects and Reasons. Being clarificatory, it has retrospective effect. Further even apart from the Statement of Objections and Reasons, it is clear that the explanation to Section 32(O)(1)(i) is clarificatory. Section 32(O)(1)(i) does not exclude from its ambit cases where penalty is imposed on the person on the ground of concealment of particulars of his duty liability before the Central Excise Officer. The plain language of the section does not warrant an interpretation to the effect that concealment of particulars only before the Settlement Commission and not before the Central Excise Officer is contemplated. The legislative intent is quite clearly to bar a party from making an application under section 32E of the 1944 Act for settlement if he has concealed particulars of his duty liability. It is difficult to appreciate why concealment of particulars before the Central Excise Officer ought to be treated more lightly than the concealment before the Settlement Commission. The Explanation is clarificatory and applies retrospectively. Even absent the Explanation we would interpret Section 32(O)(1)(i) to include the orders of settlement which provides for imposition of penalty on the ground of concealment of particulars of duty liability from the Central Excise Officer - Petition dismissed.

Summary

Issues Involved:
1. Maintainability of the petitioner's application for settlement under Section 32E of the Central Excise Act, 1944.
2. Applicability of Section 32(O)(1)(i) of the Central Excise Act, 1944.
3. Retrospective effect of the explanation to Section 32(O)(1)(i).

Issue-wise Detailed Analysis:

1. Maintainability of the Petitioner's Application for Settlement:
The petitioner, a manufacturer of mineral and aerated water, challenged an order dated 23.12.2015 by the Customs and Central Excise Settlement Commission, which dismissed its application for settlement under Section 32E of the Central Excise Act, 1944. The Commission held that the application was barred under Section 32(O)(1)(i) due to a previous settlement application dated 15.04.2013, which was disposed of by an order dated 31.01.2014. This previous order imposed a penalty on the petitioner for concealment of duty liability. The petitioner had filed the current application for settlement on 11.07.2015, which was rejected on the grounds of non-maintainability due to the earlier penalty.

2. Applicability of Section 32(O)(1)(i) of the Central Excise Act, 1944:
Section 32(O)(1)(i) bars subsequent applications for settlement if a previous settlement order imposed a penalty on the applicant for concealment of duty liability. The explanation to this section clarifies that "concealment of particulars of duty liability" includes concealment from the Central Excise Officer. The petitioner argued that the explanation, inserted with effect from 06.08.2014, should not apply retrospectively to their case. However, the court held that the explanation is clarificatory and thus has retrospective effect, meaning it applies to the petitioner's current application despite the previous order being passed before the explanation was inserted.

3. Retrospective Effect of the Explanation to Section 32(O)(1)(i):
The court determined that the explanation to Section 32(O)(1)(i) is clarificatory, as indicated by the Statement of Objects and Reasons accompanying the Finance Bill, 2014. It was intended to remove any confusion regarding whether concealment must be from the Central Excise Officer or the Settlement Commission. As a clarificatory provision, it has retrospective effect. The Supreme Court's decision in Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited supported this interpretation, stating that clarificatory amendments are generally intended to have retrospective effect. Therefore, the explanation applied to the petitioner's case, barring the current application for settlement.

Conclusion:
The court dismissed the petition, upholding the Settlement Commission's decision that the petitioner's application for settlement dated 11.07.2015 was not maintainable due to the previous order dated 31.01.2014, which imposed a penalty for concealment of duty liability. The explanation to Section 32(O)(1)(i), being clarificatory, applied retrospectively, reinforcing the bar on subsequent settlement applications in cases involving concealment of duty liability.