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2022 (10) TMI 922 - HC - Central ExciseSettlement Application filed by the appellant under Section 32 L of the Central Excise Act, 1944 dismissed - alleged non-cooperation by the appellant - HELD THAT - Neither parties have questioned the 1st Report (legality). Admittedly, the 1st Report was made at the request of the appellant herein to the Respondent Commission to investigate the production capacity of the Plant pursuant to the order of this Court whereby, the order of the Settlement Commission dated 18.05.2011 rejecting the application on the ground of non-disclosure of true facts and non-cooperation was set aside. We intend to make it clear that we are not testing the legality of the 1st Report as neither parties to the Writ appeal have challenged the same and also the Report is stated to be made pursuant to and on the basis of the orders of this Court. Legality of the 2nd Report - HELD THAT - As seen from the analysis of Section 32 F(4) of the Act normally the power to call for additional information/enquiry/Report is postulated on receipt of a Report from the Principal Commissioner and within the timelines setout therein and the said power can be exercised once and on such exercise the power would get exhausted. However in the instant case the 1st Report is stated to be made in view of the direction of this Court in W.P.No.13754 of 2011 dated 14.11.2011, the same having been furnished on 24.05.2012, it appears that the power of the Respondent Commission to call for a Report stood exhausted. Assuming that powers to call for the 2nd Report is available with the Respondent Commission we shall test the 2nd Report as one which the Commission can call for under Section 32 F (4) of the Act - the order of the 2nd investigation was made by the 1st Respondent Commission only on 21.06.2013 i.e., after more than one year and 45 days. It thus seems doubtful, if any reliance can be placed upon the 2nd Report, since the 2nd Report is clearly barred in terms of the timelines prescribed under Section 32(F)(4) of the Central Excise Act. Whether the timelines are mandatory or directory? - HELD THAT - It has been consistently held that one of the test for determining whether a provision is mandatory or directory is to examine if the legislature provides for the consequences, which it does in the present case by requiring the Commission to proceed to dispose all the matters in terms of Section 32 F (5) if the Report is not received within the timelines prescribed. It is trite law that when consequences of failure to comply with a prescribed requirement is provided by the statute itself, there can be no manner of doubt that such statutory requirement must be interpreted as mandatory - The periods prescribed in the Schedule to the Indian Limitation Act, 1908, for bringing a legal proceeding are mandatory as the consequence of the expiry of the period of limitation is provided by Section 3 of the Act in that the court is enjoined to dismiss a legal proceeding instituted after expiry of the prescribed period. The order of the 1st Respondent Commission is vulnerable to challenge as prima-facie it appears to be in conflict with and disregard to the directions of this Court, wherein, the Commissioner was directed to examine the matter on merits. The Settlement Commission has grossly misdirected itself in not taking into account/ examining the case of the appellant which is impossibility and not improbability or difficulty in producing the quantum which is arrived at on the basis of the second report. The matter remanded back to the Respondent Commission to examine the matter and pass orders afresh in accordance with law - appeal disposed off.
Issues Involved:
1. Legality of the order dismissing the appellant's Settlement Application under Section 32 L of the Central Excise Act, 1944. 2. Validity of the investigation reports and their compliance with Section 32 F of the Central Excise Act, 1944. 3. Adherence to the directions of the High Court in W.P.No.13754 of 2011. 4. Examination of the appellant's claim regarding production capacity and alleged non-cooperation. Detailed Analysis: 1. Legality of the Order Dismissing the Settlement Application: The appellant challenged the order of the learned Single Judge, which upheld the Settlement Commission's decision to dismiss the Settlement Application under Section 32 L of the Central Excise Act, 1944, due to alleged non-cooperation. The court noted that the appellant's challenge must succeed as the Settlement Commission's order appeared contrary to Section 32 F(4) of the Central Excise Act, 1944. 2. Validity of the Investigation Reports and Compliance with Section 32 F of the Central Excise Act, 1944: The court examined the timelines and procedures under Section 32 F of the Central Excise Act, 1944, noting that the Settlement Commission is mandated to call for further investigation within specific timelines. The first investigation report dated 24.05.2012, which was favorable to the appellant, was made pursuant to the High Court's order in W.P.No.13754 of 2011. The second report dated 21.06.2013 was found to be in violation of the prescribed timelines, rendering it unreliable. The court emphasized that the timelines under Section 32 F(4) are mandatory, as the statute provides consequences for non-compliance, requiring the Commission to proceed without the report if not furnished within the prescribed period. 3. Adherence to the Directions of the High Court in W.P.No.13754 of 2011: The court found that the Settlement Commission's order was in conflict with the High Court's direction in W.P.No.13754 of 2011, which mandated the Commission to examine the matter on merits. The Commission failed to consider the appellant's claim of impossibility in producing the alleged quantum with the available plant and machinery, which vitiated the decision-making process. 4. Examination of the Appellant's Claim Regarding Production Capacity and Alleged Non-Cooperation: The court observed that the first investigation report supported the appellant's claim that their machinery could not produce more than 10 M.T. per heat, while the second report contradicted this, suggesting the appellant could produce up to 14.07 M.T. per heat. The court criticized the Commission for disregarding the first report and relying solely on the second report, which was obtained outside the statutory timelines. The court emphasized the need for the Commission to consider all materials on record, as mandated by Section 32 F(7) of the Central Excise Act, 1944. Conclusion: The court concluded that the Settlement Commission's order was flawed due to non-compliance with statutory timelines, failure to consider all relevant materials, and disregard for the High Court's directions. The matter was remanded back to the Settlement Commission for fresh consideration in accordance with law, ensuring adherence to the statutory provisions and judicial directions. The writ appeal was disposed of with no costs, and the connected miscellaneous petitions were closed.
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