2015 (7) TMI 751 - HC - Central Excise

Validity of order of settlement commission - a plea that the report was not furnished well in advance for perusal was not taken into account - Held that - Respondent No.2 has processed the application submitted by the petitioner, to a substantial stage. Not only the matter was discussed at length with reference to the relevant material, but also the report was called for, through a Commissioner attached to it. On a perusal of the record before it, as well as the report submitted by the Commissioner, respondent No.2 took the view that there are some more aspects that were not revealed by the writ petitioner. - The relief to be granted by the Settlement Commission is in the form of immunity from prosecution. That, however, is a reward for the assessee being truthful. The relevant procedure mandates that it is only when the disclosure is complete and truthful in all respects, without any reservation, that the Settlement Commission can be expected to grant relief. If it finds that any information or fact that has bearing upon the assessment has been withheld from it, it can simply refrain from proceeding further, and drop the proceedings at that. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Review of order passed by the Settlement Commission due to non-furnishing of investigation report for perusal.

Detailed Analysis:
The judgment involves a review application filed to challenge an order passed by the Settlement Commission. The petitioner, a manufacturer under the Central Excise Act, approached the Commission for settlement after a show cause notice was issued regarding excise duty evasion. The Commission, after investigation, found the petitioner did not fully disclose facts and did not cooperate, leading to the order for the case to go back to the assessing authority. The petitioner contended that cooperation was extended and the investigation report, relied upon by the Commission, was not furnished. The respondents argued that settlement depends on genuine disclosure and the Commission acted in accordance with the law.

The Court explained that Settlement Commissions operate differently from adversarial mechanisms, focusing on the nature of disclosure by the assessee. If concealment is found, the Commission can decline to proceed further. In this case, the Commission processed the application substantially, discussed the matter, and obtained a report. The term "cooperation" in settlement context refers to full and truthful disclosure by the assessee. The relief granted by the Commission, immunity from prosecution, is a reward for being truthful. The Commission can drop proceedings if any relevant information is withheld.

The Court emphasized that investigation reports must be furnished in advance to allow the party to present its version. Failure to do so would deny the opportunity to contest the report's findings, leading to potential detriment in future proceedings. Therefore, the Court allowed the writ petition, set aside the challenged order, and remanded the matter for fresh consideration. The petitioner was granted two weeks to submit remarks on the investigation report. No costs were imposed, and miscellaneous petitions related to the appeal were also disposed of.