2020 (3) TMI 306 - Commission - Central Excise

Maintainability of Application for Settlement application - bar under Section 32-O of the Act - co-applicant earlier approached Customs, Central Excise Service Tax Settlement Commission, Additional Bench, Kolkata and was subsequently penalized ₹ 50,000/- - HELD THAT - The debarring provision under Section 32-O(1)(i) refers to the case of the assessee to whom a SCN demanding duty has been issued and if during the process of settlement, the assessee has been imposed with certain amount of penalty, then such assessee cannot approach the Commission once again in a second .case where a demand has been issued to him. The co-applicant is a person other than the assessee and no demand for payment of any duty or tax has been issued to him. It is only because he has been implicated in the SCN demanding duty to the assessee with a proposal of penal action, he has approached the Settlement Commission to settle his issue. He therefore cannot be barred from approaching the Settlement Commission, if he is penalised earlier, as a main applicant or a co-applicant because he is not the main applicant. In the present case, M/s. Royal Touch Fablon Private Limited (Unit-1), the Co-applicant No. 1, has been proposed penalty in the SCN. This SCN was issued to M/s. Royal Touch Fablon Private Limited (Unit-IV). The case of M/s. Royal Touch Fablon Private Limited (Unit-IV) has already been settled by the Commission where he has applied as main applicant. Here, the co-applicant, M/s. Royal Touch Fablon Private Limited (Unit-I), has approached the Settlement Commission under Section 32E(5) to decide the issue of imposition of penalty. He has been penalised earlier in a case relating to him where he was an assessee and the main applicant. Since he is not the main applicant in the present case, he will not be debarred from approaching the Settlement Commission. Had he been the main applicant in this case to whom a duty demand has been issued in the form of a SCN, he would have been barred from approaching the Commission as he was penalised earlier in the settlement of another case relating to him where a SCN was issued to him demanding duty - the Commission is of the opinion that M/s. Royal Touch Fablon Private Limited (Unit-I), the Co-applicant No. 1, is not debarred from approaching the Settlement Commission and thus the Commission is admitting his case to decide the issue of penalty and prosecution. The Bench settles the case on the following terms and conditions - (a) The Bench imposes penalty of ₹ 10,000/- (Rupees ten thousand only) on M/s. Royal Touch Fablon Private Limited (Unit-I) (Co-applicant No. 1), under the provisions invoked in the show cause notice and grants waiver in excess of the penalty indicated herein. (b) The Bench granted full immunity from penalty to Shri Vikas Kandoi (Co-applicant No. 2), Shri Raj Kr. Jaisansaria (Co-applicant No. 3) and Shri Pawan Sharma (Co-applicant No. 4). (c) Subject to the payment of the amounts ordered above by the Co-applicant No. 1 within 30 days of receipt of the order, the Co-applicant No. 1 is granted immunity from prosecution under the Central Excise Act, 1944 and Customs Act, 1962. (d) Shri Vikas Kandoi (Co-applicant No. 2), Shri Raj Kr. Jaisansaria (Co-applicant No. 3) and Shri Pawan Sharma (Co-applicant No. 4) are granted immunity from prosecution under the Central Excise Act, 1944 and Customs Act, 1962.

Summary

Issues Involved:
1. Settlement of Central Excise and Customs duty evasion.
2. Confiscation of goods and imposition of penalties.
3. Applicability of Section 32-O of the Central Excise Act, 1944.
4. Immunity from penalties and prosecution.

Issue-wise Detailed Analysis:

1. Settlement of Central Excise and Customs Duty Evasion:
The main applicant, M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV), was found to have evaded Central Excise duty and Customs duty through unlawful manufacture, clandestine removal of finished goods, illegal diversion of raw materials, and unauthorized shifting of capital goods to their DTA Unit (Unit-I). The Settlement Commission settled the case with the applicant under specific terms, including settling Central Excise duty at ?13,45,257/- on finished goods, ?7,38,995/- on 20 looms after depreciation, and Customs duty at ?7,47,335/- on raw materials. Confiscation orders were issued for various goods, with redemption fines imposed. A penalty of ?50,000/- was imposed on the applicant, with immunity granted from further penalties.

2. Confiscation of Goods and Imposition of Penalties:
The show cause notice (SCN) issued to M/s. Royal Touch Fablon Pvt. Ltd. (Unit-IV) and co-applicants proposed the confiscation of finished goods, capital goods, and raw materials, and demanded Customs and Central Excise duties along with interest. Penalties were proposed under Section 11AC of the Central Excise Act, 1944, and Section 114A of the Customs Act, 1962. The Commission ordered confiscation and allowed redemption of the goods on payment of fines. The co-applicants were also called upon to show cause why penalties should not be imposed under Rule 26 of the Central Excise Rules, 2002, read with Section 112 of the Customs Act, 1962.

3. Applicability of Section 32-O of the Central Excise Act, 1944:
The co-applicant No. 1, M/s. Royal Touch Fablon Pvt. Ltd. (Unit-I), had previously approached the Settlement Commission and was penalized ?50,000/-. The Commission examined whether this earlier penalty barred the co-applicant from applying for settlement again under Section 32-O. The Commission concluded that the penalty in the previous order was of a general nature and not for concealment of particulars of duty liability. Therefore, the co-applicant was not barred from applying for settlement in the current case.

4. Immunity from Penalties and Prosecution:
The co-applicants requested immunity from penalties and prosecution, arguing that they had cooperated fully during the proceedings and that the main applicant had already been granted partial immunity. The Commission considered the cooperation and the full and true disclosure of duty liability by the main applicant. The Commission granted full immunity from penalties to co-applicants No. 2 (Shri Vikas Kandoi), No. 3 (Shri Raj Kr. Jaisansaria), and No. 4 (Shri Pawan Sharma). A penalty of ?10,000/- was imposed on co-applicant No. 1, with immunity granted in excess of this amount. Immunity from prosecution under the Central Excise Act, 1944, and the Customs Act, 1962, was also granted to all co-applicants.

Decision of the Bench:
The Bench settled the case with the following terms:
- Imposition of a penalty of ?10,000/- on M/s. Royal Touch Fablon Pvt. Ltd. (Unit-I) and waiver of excess penalties.
- Full immunity from penalties to Shri Vikas Kandoi, Shri Raj Kr. Jaisansaria, and Shri Pawan Sharma.
- Immunity from prosecution to all co-applicants under the Central Excise Act, 1944, and the Customs Act, 1962, subject to payment of the ordered amount by co-applicant No. 1 within 30 days.
- The immunities are granted under Section 32K of the Central Excise Act, 1944, and are liable to be withdrawn if any material particulars are found to have been withheld or false evidence is provided.