2019 (1) TMI 707 - HC - Central Excise

100% EOU - evasion of taxes - misuse of the scheme of EOU - discharge of duty liability during the de-bonding of the unit - petitioner contends that the orders are ex-facie illegal arbitrary and left with no other alternative remedy they are forced to approach this Court in a Writ Petition - disagreements for the applicants in the proceedings before the settlement commission - Held that - It is not open for the petitioner to opt for remedy under the settlement commission and contest its conclusions after choosing immunity from the adjudication and appeal processes set out in Law - The Hon ble Supreme Court in the case of Sanghvi Reconditioners Private Limited 2010 (2) TMI 6 - SUPREME COURT held that the petitioner having opted for settlement is not permitted to dissect Settlement Commission s Order to accept what is favourable and reject what is not. On perusal of the petition and the Final Order of the Settlement Commission it is seen that no new averments are placed in the Writ Petition. All the averments in the Writ Petition are part of the settlement application that are considered and covered in the Settlement Commission proceedings culminating in the impugned orders. Though this court does not want to get into the merits of the disputes it is difficult to lose sight of the fact that some of the claims of the petitioner is patently at error - Rightly the Commission had directed to pay the amount. Demand of 7, 47, 15, 817/- being the duty on the manufactured goods escaping assessment at the time of de-bonding of the Petitioner s Unit - Held that - The conditional permission of the Assistant Commissioner is at worst a concession/relaxation extended to the petitioner. It is unclear whether such a concession is permissible in law. However it is certain that the final products in question manufactured under bond availing the benefits of the EOU Scheme had to be cleared for exports without illegitimately availing any export incentives/benefits like DEPB or Draw Back. But the finished goods under question were exported under claim of DEPB Drawback which is not permissible under the EOU Scheme under the EXIM Policy - Rightly the issue was concluded in favour of revenue by the Settlement Commission. But the petitioner herein is aggrieved by the conclusion and had pleaded arbitrariness in the Writ Petition. No extra ordinary situation warranting writ interference under Article 226 is brought out in the Writ Petition - petition dismissed.

Summary

Issues:
1. Settlement Commission's final order rejection of Rectification of Mistakes (ROM) application.
2. Legality and arbitrariness of the Settlement Commission's final order.
3. Dispute regarding diversion of power under the EOU scheme.
4. Duty liability on manufactured goods during de-bonding of the unit.

Issue 1 - Settlement Commission's ROM Application Rejection:
The petitioner, an EOU engaged in Terry Towel manufacturing, faced a duty demand after a Show Cause Notice. The Settlement Commission's final order rejected the ROM application, stating no factual errors but a grievance against interpretations. The court upheld this rejection, emphasizing ROM for self-evident errors only, not to re-agitate settled matters.

Issue 2 - Legality of Settlement Commission's Final Order:
The petitioner challenged the legality of the Settlement Commission's final order, claiming arbitrariness. The court clarified that the Commission settles disputes based on voluntary disclosures, with no scope for challenging facts. The Commission's discretion in reducing penalties and granting immunity was upheld, emphasizing the finality of its conclusions.

Issue 3 - Dispute on Power Diversion under EOU Scheme:
A significant issue involved a demand for duty due to power diversion from EOU scheme to other units. The petitioner disputed this based on limitation grounds, but the Commission upheld the demand, emphasizing the duty on diverted goods. The court supported the Commission's decision, highlighting the seriousness of such offenses.

Issue 4 - Duty Liability during De-bonding:
Another issue concerned duty liability on goods during the unit's de-bonding. The petitioner contested the duty on final products, citing a relaxation letter from the Assistant Commissioner. However, the Commission ruled in favor of the revenue, emphasizing duty payment on de-bonded goods and the impermissibility of claiming export benefits. The court upheld this decision, emphasizing the revenue loss due to dual benefit availing.

In conclusion, the court dismissed the writ petition, emphasizing that re-agitating settled issues would frustrate public interest and defeat the purpose of speedy dispute resolution under Section 32 of the Central Excise Act, 1944. The judgment highlighted the importance of upholding settlement commission decisions to maintain revenue interests and administration of justice.