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TMI Blog2003 (12) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 3 issued a show cause notice dated 21-6-1995 demanding the central excise duty from M/s. Ashoka Boot Factory, Agra to the extent of Rs. 40,08,312 under Rule 9(2) of the Central Excise Rules (hereinafter referred to as Rules ) read with proviso to Section 11A of the Act and also proposed to impose penalty on the firm under Rules 9(2), 52A, 173Q and 226 of the Rules. After considering the reply, filed by the firm including the petitioners, respondent No. 3 passed an order dated 14-1-1998 confirming the demand duty of Rs. 39,86,152 on the firm, Respondent No. 3 imposed a penalty of Rs. 15 lacs on the firm under various Rules. Respondent No. 3 also imposed penalty of Rs. 5 lacs on each of the petitioners under Rule 209A of the Rules. Against the aforesaid order of the respondent No. 3 confirming the demand of duty and penalty, partnership firm as well as the petitioners filed separate appeals before Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (in short CEGAT ). 3. During the pendency of the appeals before CEGAT vide Finance (No. 2) Act, 1998, Kar Vivad Samadhan Scheme, 1998 was enacted (hereinafter referred to as Scheme ) for the settlement of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de Notice No. MF (DR) CBE C (F. No. 275/33/98 - CX.8A) dated 9-12-1998 was issued by Board in the form of instructions relating to Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 under Section 92 of the Finance (No. 2) Act, 1998. Annexure-II of the Trade Notice reads as follows : Having due regard to the aims and objects of the Scheme, the Government have decided to issue an order for removal of difficulties in terms of the provisions of Section 97(1) of the Finance (No. 2) Act, 1998. It has been inter alia, clarified that no civil proceedings for imposition of fine or penalty shall be proceeded with against the co-noticees and in such cases the settlement in favour of the declarant under the Scheme shall be deemed to be full and final in respect of other persons also on whom show cause notices were issued on the same matter. 5. When the appeals of the petitioners came up for hearing before Tribunal, was mainly argued that in view of the Trade Notice No. 36/98, dated 9-12-1998, the petitioner would not be liable for penalty and in terms of Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998, Tribunal rejected the appeals and rejected the plea of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory provision contained in the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998, dated 8-12-1998. In particular, the CEGAT has not noticed the expression pending employed in the Removal of Difficulties Order, 1998. (c) If the order passed by CEGAT is contrary to the well settled position of law, then it is an error apparent on the fact of the record. It is well settled position of law that appeal is a continuation of original proceedings. It is also well settled legal position that the expression pending would cover pending in appellate proceedings also since appeal is continuation of original proceedings. In the impugned order, the CEGAT has held that pending would apply to only those pending before the adjudicating authority and not the appellate authority. Since this is contrary to the well settled legal position, it is error apparent on the record which requires rectification. (d) The appellant contended before the CEGAT that despite the firm having settled its case under the Kar Vivad Samadhan Scheme, the appellant is in a position to establish that it is not liable to penalty under Rule 209A of the Rules since the ingredients required for imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations. 8. Heard learned Counsel for the parties. 9. Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 came up for consideration before Division Bench of Kerala High Court in the O.P. No. 16334 of 1999 in the case of Sri Tom K. Thomas, 253, Hill Garden P.O. Kuttnallur, Trichuri v. Union of India Others., Division Bench of Kerala High Court has upheld the validity of the Kar Vivad Samadhan Scheme and Kar Vivad Samadhan Scheme (Removal of Difficulties) Order, 1998 but has interpreted the expression pending adjudication as follows : The object of the Scheme appears to be to shorten the litigation and settle the dispute between the parties. It is with this end in view, the Scheme has been promulgated. Tax arrears has been defined with regard to indirect enactment as the amount of duties, cesses, interest, etc., determined as due or payable under that enactment as on the 31st day of March, 1998 but remaining unpaid as on the date of making a declaration under Section 88. Under Section 88 of the Scheme where a person makes a declaration to the designate authority in accordance with the provisions of Section 89, then the liability shall be discharged as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners will be entitled to the benefit of the Scheme and their claims cannot be rejected because the matter is pending in appeal. Considering the above circumstances, we allow the Original petitions, declare that co-noticees like the petitioners are also covered by the Order dated 8-12-1998 notwithstanding the fact that the show cause notices has been adjudicated upon in relation to the co-noticees as well as the declarant under Section 90(1) of the Finance Act, 1998. 10. Now the matter has been finally decided by the Apex Court in the case of Union of India Others. v. Onkar S. Kanwar Others, reported in 2002 (145) E.L.T. 266 (S.C.) = 2002 (7) SCC 591. Apex Court has upheld the view taken by Division Bench of Kerala High Court. Hon ble Supreme Court held as follows : We have heard the parties. In our view, a reading of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order shows that where a declaration has been made in respect of a tax arrear and where in respect of the same matter a show cause notice has also been issued to any other person, then the settlement in favour of the declarant has to be deemed to be full and final in respect of other persons on who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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