2023 (5) TMI 94 - HC - Central Excise

Levy of redemption Fine under Kar Vivad Samadhan Scheme - matter already got settled under the Scheme - non-issuance of certificate of declaration of full and final settlement of the dispute - HELD THAT - Reference, at this stage, can be made to the order KEDIA GREAT GALLEON LTD. VERSUS COMMISSIONER OF C. EX., INDORE 2000 (8) TMI 705 - CEGAT, NEW DELHI , wherein in a similar situation, the matter was referred under the Kar Vivad Samadhan Scheme . In that case the redemption fine of Rs.1.5 Lakhs was imposed. It was held that once the matter got settled under the Kar Vivad Samadhan Scheme, order imposing fine passed by the Commissioner of Central Excise had no validity. The Kar Vivad Samadhan Scheme was formulated only to settle the dispute with respect to imposition of penalty and tax dues etc. The redemption fine could not be imposed. In this backdrop, failure to deposit Rs.7500/- by the petitioner, cannot be made a ground for not issuing the certificate of declaration of full and final settlement of the dispute under the aforesaid Scheme. The impugned certificate of intimation (Form 2-B) dated 29.12.1998 (Annexure P-1) issued by the designated authority along with letter dated 26.04.2001 (Annexure P-3) issued by the Commissioner, Central Excise, Chandigarh-II, is set aside - Petition allowed.

Summary

Issues:
The petitioner seeks to quash an impugned certificate of intimation and a letter issued by the Commissioner, Central Excise, Chandigarh-II, and requests a direction for the issuance of a certificate for full and final settlement of the case along with a refund.

Impugned Certificate of Intimation:
The petitioner, a registered firm, had a demand for central excise duty, a redemption fine, and a penalty imposed by the Collector, Central Excise, Chandigarh. The petitioner filed a declaration under the Kar Vivad Samadhan Scheme in the prescribed format before the Designated Authority, seeking settlement of the arrears. The Designated Authority determined the payable amounts and directed payment within 30 days. The petitioner deposited the duty amount but did not pay the personal penalty amount as it was deemed not legally payable under the Scheme.

Validity of Redemption Fine under the Scheme:
A similar situation under the Kar Vivad Samadhan Scheme was referred to in a previous case, where it was held that once a matter is settled under the Scheme, fines imposed lose validity. The Scheme was designed to settle disputes regarding penalties and tax dues, not redemption fines. Therefore, the failure to deposit the specific penalty amount should not hinder the issuance of a certificate for full and final settlement under the Scheme.

Judgment:
The High Court set aside the impugned certificate of intimation and the letter issued by the Commissioner, Central Excise, Chandigarh-II, as the failure to deposit the penalty amount should not prevent the issuance of the settlement certificate under the Kar Vivad Samadhan Scheme. The petition was allowed accordingly.