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2021 (4) TMI 1168 - HC - Central ExciseLevy of additional duty liability - duty imposed by restricting the loss due to the drying of tobacco leaves (driage of tobacco leaves) to 10% as against 24% claimed by the petitioner - HELD THAT - The proceedings before the Settlement Commission proceeds on the principal of trust. An applicant who was admittedly an evader of tax is expected to make a clean breast of his tax sins before the Settlement Commission and atone for mistakes and should undertake to pay the tax by making true and full disclosure before it - As an incentive to encourage such deviant assessee s who opt to alter their deviant ways, a golden chance is given to them for settling the case under the Act. In return such assessee s may be given immunity from prosecution and penalty under the scheme of the Act. Further, the 1st respondent Settlement Commission is manned by the senior officers drawn from the Central Excise, Customs and Service Department with vast experience. They have been given wide powers to not only accept the additional liability disclosed in the application for settlement but also give a deserving applicant a reprieve by granting immunity from prosecution and penalty. Earlier, this power also extended the power to grant waiver from payment of interest - In M/S SANGHVI RECONDITIONERS PVT. LTD. VERSUS UNION OF INDIA ORS. 2010 (2) TMI 6 - SUPREME COURT , the Hon ble 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. The submission that there was no rational basis on which the 1strespondent Settlement Commission has unilaterally restricted the loss due to drying of the tobacco leaves to 10% as against 24% claimed by the petitioner cannot be entertained as it would also amount to interference with the finding of facts arrived by the 1st respondent Settlement Commission - There is perversity in the impugned order, Therefore, scope for judicial review under Article 226 of the Constitution of India is to be eschewed. Petition dismissed.
Issues Involved:
1. Validity of the Settlement Commission's order. 2. Percentage of loss due to drying of tobacco leaves (driage). 3. Scope of judicial review under Article 226 of the Constitution of India. 4. Compliance with the Tobacco Manual and guidelines. 5. Finality of the Settlement Commission's order under Section 32M of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Validity of the Settlement Commission's order: The petitioner challenged the Settlement Commission's order dated 28.02.2018, which directed the petitioner to pay an additional duty liability of ?1,06,65,657/- by restricting the driage of tobacco leaves to 10% against the 24% claimed by the petitioner. The Commission settled the case for ?2,63,90,492/- and imposed a penalty of ?25,00,000/- on the applicant, granting immunity from further penalties and prosecution under the Central Excise Act, 1944. 2. Percentage of loss due to drying of tobacco leaves (driage): The petitioner claimed a 24% loss due to drying of tobacco leaves based on the Tobacco Manual and departmental guidelines. However, the Commission fixed the loss at 10%, considering it reasonable and fair. The petitioner argued that the loss should have been fixed between 15% to 19%, as suggested by the 2nd respondent Commissioner of Central Excise. The Commission's decision was based on a revised worksheet and the department's acknowledgment that up to 30% loss could be condoned under the Tobacco Manual. 3. Scope of judicial review under Article 226 of the Constitution of India: The respondent's counsel argued that the writ petition was without jurisdiction as the Settlement Commission's order is final under Section 32M of the Central Excise Act, 1944, and cannot be subjected to judicial review. The scope of judicial review is limited to the decision-making process and not the decision itself, as held by the Supreme Court in Union Of India & Others vs Ind-Swift Laboratories Ltd. and Tata Cellular vs Union Of India. 4. Compliance with the Tobacco Manual and guidelines: The petitioner contended that the Commission's order was contrary to the Tobacco Manual and the 2nd respondent's defense. The manual allowed up to 30% loss, and the petitioner claimed 24%, which was less than the prescribed limit. The 2nd respondent suggested a loss between 15% to 19%, but the Commission fixed it at 10%, which the petitioner argued was arbitrary and lacked a rational basis. 5. Finality of the Settlement Commission's order under Section 32M of the Central Excise Act, 1944: The court emphasized that the Settlement Commission's order is conclusive and cannot be reopened in any proceeding under the Act or any other law. The proceedings before the Commission are based on trust, and the applicant is expected to make a full and true disclosure. The Commission's findings are based on the doctrine of preponderance of probability and are not governed by strict rules of evidence. The court found no perversity in the Commission's conclusion and dismissed the writ petition, stating that the petitioner cannot dissect the Settlement Commission's order to accept favorable parts and reject unfavorable ones. Conclusion: The court dismissed the writ petition, upholding the Settlement Commission's order as final and conclusive. The Commission's decision to fix the driage loss at 10% was within its jurisdiction and based on the experience of its members. The scope of judicial review under Article 226 does not extend to re-evaluating the Commission's findings of fact.
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