2018 (6) TMI 1075 - HC - Central Excise

Duty evasion - goods purchased through unaccounted sources - It is also the contention of the petitioner that the Commissioner (Investigation) appointed under Settlement Commission has submitted a report on 28.11.2005 and the Settlement Commission has totally ignored the same - Held that - The observation made by the Settlement Commission in paragraph 8 of the impugned proceedings dated 16.09.2009 is set aside, as controverted by the learned Counsel for the petitioner. A direction is issued to the Settlement Commission to look into the Investigation Report submitted by the Commissioner (Investigation) appointed by the Settlement Commission and also the materials that are going to be produced by the petitioner before the Commission and arrive at a conclusion - matter remanded to Settlement Commission.

Summary

Issues involved:
Dispute over paragraphs 8 and 9 of the order of the Customs and Central Excise Settlement Commission, Chennai; Lack of documentary evidence to substantiate admitted duty evasion; Ignoring report of Commissioner (Investigation) by the Settlement Commission; Validity of oral evidence recorded by Customs; Requirement for positive evidence from Revenue to cooperate with Settlement Commission.

Analysis:

1. Dispute over Paragraphs 8 and 9:
The petitioner challenged paragraphs 8 and 9 of the order dated 16.09.2009, claiming lack of documentary evidence to support the admitted duty evasion related to the manufacturing of soaps. The Bench emphasized the need for a full and true disclosure, advising the petitioner to provide details of raw material purchases and supplies. The petitioner contended purchasing goods from unaccounted sources, raising concerns about the lack of documentary evidence.

2. Ignoring Report of Commissioner (Investigation):
The petitioner argued that the Settlement Commission disregarded the report of the Commissioner (Investigation) submitted on 28.11.2005. Citing a previous judgment, the petitioner highlighted the importance of relying on the investigation report. The Court noted discrepancies in the Settlement Commission's findings and directed a reevaluation based on the investigation report and evidence to be presented by the petitioner.

3. Validity of Oral Evidence Recorded by Customs:
The respondents asserted that oral evidence recorded by Customs should be considered valid in the absence of disclosed sources for the admitted duty amount. Referring to Supreme Court judgments, they emphasized the significance of oral evidence in such cases. The Court acknowledged the importance of positive evidence and cooperation from the Revenue with the Settlement Commission.

4. Requirement for Positive Evidence from Revenue:
A previous court order emphasized the necessity for the Revenue to produce positive evidence and cooperate with the Settlement Commission. The Court directed the Settlement Commission to review the investigation report and the materials to be submitted by the petitioner to reach a conclusion. The matter was remitted to the Settlement Commission for further consideration.

In conclusion, the judgment addressed the issues of lack of documentary evidence, the importance of investigation reports, validity of oral evidence, and the requirement for positive evidence and cooperation with the Settlement Commission. The Court directed a reevaluation based on the evidence presented, emphasizing the need for a comprehensive and truthful disclosure to resolve the dispute effectively.