2006 (9) TMI 188 - HC - Central Excise

Issues Involved:
1. Legality of the Customs and Central Excise Settlement Commission's rejection of the application under Section 32E of the Central Excise Act, 1944.
2. Allegations of improper availing of Cenvat credit by the assessee.
3. Compliance with the requirement of "full and true disclosure" under Sections 32E and 32F of the Central Excise Act.
4. Judicial review of the Settlement Commission's decision.

Detailed Analysis:

1. Legality of the Customs and Central Excise Settlement Commission's Rejection:
The petition challenged the order passed by the Customs and Central Excise Settlement Commission, New Delhi, which rejected the application of the petitioner under Section 32E of the Central Excise Act, 1944. The rejection was based on the grounds that the petitioner did not make a "full and true disclosure" of his duty liability as required by law. The Commission found that the petitioner was not candid and forthright and had provided varying and conflicting stands regarding the job work and the names of job workers.

2. Allegations of Improper Availing of Cenvat Credit:
The show cause notice dated 4-3-2004, Annexure P.2, alleged that the assessee was taking Cenvat credit on Pig Iron without having the necessary infrastructure for casting iron in the factory. It was admitted by a partner of the assessee that they were selling Pig Iron in the open market and were not performing any job work. Additionally, the notice mentioned that the assessee illegally availed of Cenvat credit on Copper wire and other violations.

3. Compliance with "Full and True Disclosure" Requirement:
Sections 32E and 32F of the Central Excise Act mandate that an application for settlement must contain a "full and true disclosure" of duty liability, which has not been disclosed before the Central Excise Officer. The Commission found that the petitioner failed to meet this requirement, as the disclosure was neither full nor true. The petitioner's application was inconsistent, and the Commission highlighted that the petitioner took varying and conflicting stands.

The statute aims to provide an opportunity for assessees who are willing to be truthful and pay their dues, irrespective of previous duty evasion. The Commission's jurisdiction hinges on the "full and true disclosure" of duty liability, which the petitioner failed to provide.

4. Judicial Review of the Settlement Commission's Decision:
The court emphasized that in exercising judicial review, it does not act as an appellate court to substitute its own opinion for that of the Settlement Commission. The court's role is to ensure that the Commission followed due procedure under the law. The court found no grounds to interfere with the Commission's decision unless the finding that the assessee had not made a true and full disclosure was shown to be perverse or patently erroneous.

Conclusion:
The court dismissed the writ petition, upholding the Settlement Commission's decision. It concluded that the Commission was justified in rejecting the application due to the petitioner's failure to make a full and true disclosure of duty liability, which is a sine qua non for the entertainment of such an application by the Commission. The court found no perversity or patent error in the Commission's findings, and thus, there was no ground for interference.

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