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TMI Blog2009 (4) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... umber of other noticees had approached the Settlement Commission for settlement. 3.1 Before the issues raised in the Miscellaneous application under consideration are taken up, it would be appropriate to briefly mention the facts of the case and the matter settled in the aforementioned Final Order. 3.2 The facts in brief are that the applicant had been a registered manufacturer of readymade Khaini bearing brand name Madhu tobacco falling under Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985 prior to 1-8-2005. For the period subsequent to 1-8-2005, the same brand of the goods was manufactured at the same premises by M/s. Ashwani Fragrance Products Pvt. Ltd. which was also registered with Central Excise during the relevant time. Based on an information, the factory premises of the applicant/M/s. Ashwani Fragrance Products Pvt. Ltd., the residential premises of Shri Anup Kumar Sahu, offices/godowns of applicant s transporters, railway booking agents, raw-material suppliers and some of their dealers in Karnataka/Kerala, etc. along with other business related premises of the applicant/M/s. Ashwani Fragrance Products Pvt. Ltd. were searched by officers of DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egations of clandestine removal of Khaini by the applicant/M/s. Ashwani Fragrance Products Pvt. Ltd. The amount of duty demanded in the SCN was calculated with reference to 3235 RRs/luggage tickets. 1802 RRs booked from Kanpur Railway Station were segregated on the basis of the following criteria, besides minor demands of duty for goods transported by road and the goods seized during the investigations: - (a) The destinations as Hubli, Bangalore, Mangalore, Kasargod, Coimbatore, Cannanore for the period prior to 2004 and, thereafter, Bhusaval and LTT Kurla (b) Description of goods as tobacco , Khaini , Zarda , etc. (c) Weight per bag being about 40 kg. or 65 kg. (d) Handwriting in the forwarding note being observed to be similar. Similar parameters were adopted in the SCN for the goods covered by 1432 RRs booked at Bhusawal and LTT Kurla. Accordingly, the SCN proposed a demand of duty of Rs. 17,65,95,521/- on 80863 bags of Madhu Khaini clandestinely removed during the period from 1-1-2002 to 31-7-2005 and from 1-8-2005 to 13-12-2005 along with interest from M/s. Ashwani Tobacco Pvt. Ltd. and M/s. Ashwani Fragrances Ltd. and Shri Anup Kumar Sahu (co-appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s i.e., 2,23,48,000 (taking 6200 pouches of 10 gms. in each bag) 8000 are corrected to 2,23,48,000 (taking 3700 pouches of 10 gms. in each bag) and be read accordingly. 3. On page 29 of the aforementioned Final Order, in the sixth line from the top of the paragraph 48 and under heading Central Excise Duty the figure of balance amount i.e., Rs. 16,29,436.00 is corrected to Rs. 44,09,053.00 and be read accordingly. Sd/- Jogendra Singh Chairman Sd/- Anita Sahni Member 5. The aforementioned Final Order read with the corrections made under the Corrigendum dated 28-3-2008 settled the additional Central Excise Duty liability in the case at Rs. 4,74,09,053/-; appropriated an amount of Rs. 4,30,00,000/- deposited by the applicant during investigations against the finally settled amount of Rs. 4,74,09,053/-; and directed the applicant to deposit the balance amount of Rs. 44,09,053/- within 15 days of the receipt of the Final Order. In the said Final Order, the Commission had also, as a part of final settlement, ordered payment of interest by the applicant as applicable under the relevant provisions during the period from the dates when the duty w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess of 10%. The proposition on which duty was settled was never put to the applicants. If it was done, chance cannot be ruled out that they would have come forward to accept the preposition. Further, if the duty liability is deposited before the issuance of the SCN, it has been held in a catena of judgments of the Apex Court, High Courts and CESTAT, no penalty can be imposed under Section 11AC of the Act. As the applicant had deposited more than the duty liability even before the issuance of SCN, no penalty therefore could be imposed on the applicant under Section 11AC. Further in accordance with the parameters fixed by the Commission, duty liability works out to Rs. 3,12,23,991/- as against Rs. 4,74,09,053/- settled by Commission. Rs. 4,30,00,000/- having been deposited prior to issuance of SCN, no penalty could be imposed under Section 11AC of the Act. Further, without prejudice to above, penalty in the present case cannot exceed 25% of the duty demanded or determined because in terms of Proviso to Section 11AC of the Act, if the duty amount determined and the interest payable is paid within 30 days from the date of issuance of the order of the Central Excise officer determini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted by the Commission. As regards the number of pouches per bag, ld Sr. Advocate reiterated the contention made in the Miscellaneous Application. As regards the duplication of quantities, he referred to Para 41 of the Final Order and laid stress on the use of the word transhipment occurring therein. Referring to the annexures to the SCN, he said that consignments re-booked from LTT, Kurla and Bhusawal were the same which were earlier booked from Kanpur. Hence, there is duplication. The ld Sr. Advocate also emphasized that an amount not more than 25% of the duty determined by a Central Excise officer was imposable as penalty on the applicant in terms of Proviso of Section 11AC of the Act and pleaded that the penalty amount may be accordingly reduced by the Commission and this mistake be rectified. He also argued for grant of immunity from interest on the ground that Commission has given immunity from interest in excess of 10% in a number of cases. 9. The representative of Revenue Shri R.L. Thapliyal, SIO, DGCEI referred to the written comments sent by the Revenue vide their letter No. 83/INT/DGCEI/HQ/2005/Pt./9547, dated 2-12-2008 and submitted that during the investigations it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Final Order is accepted, the duty calculation in the Order is not correct. Although no calculation chart showing the method of calculating duty liability was enclosed with the Final Order yet when the same is calculated by the applicant by taking all the RRs with the description of goods as Khiani irrespective of the station of its issuance, the total duty liability comes to Rs. 40137590.47 and not Rs. 47409053.00 as mentioned in the Order. (c) That apart from the above, there is a minor error in the Order regarding number of pouches of Khaini per bag of 41 Kgs. and 65 Kgs. In the SCN itself, at para 29, it is mentioned that a bag of 41 Kgs. was containing 5200 pouches of 7 gms. each and one bag of 65 Kgs. was containing 6000 pouches of 10 gms. each, whereas in the Final Order this quantity is taken as 3700 pouches of 10 gms. each in a bag of 41 Kgs. and 6200 pouches of 10 gms. each in a bag of 65 Kgs. This mistake has resulted into an excess demand of Rs. 1007539.00. (d) That finally, the applicant had requested to reconsider the lowering down the penalty imposed by the Bench in the Order as the same is more than what the applicant would have been required to pay in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pack a few extra pouches in the bags of Khaini. Applicant was clandestinely removing these bags which had 6200 pouches or even more. Hence, based on evidence, the Commission had rightly taken 6200 pouches of 10 gms. per bag of 65 Kg. and there is no mistake and no correction is called for in this regard. Further, on careful consideration of the other plea of the applicant that a 41 Kg. bag was containing 3700 pouches, the Bench would like to clarify that so far as the bags weighing 41 Kgs. are concerned, the SCN figure of 5200 pouches of 7 gms. was not given a go bye by the Commission. In fact, it was only in order to simplify the calculations that the figures were converted into 3700 pouches of 10 gms. on the pro-rata basis. Arithmetically, this did result in extra addition of 0.6 Kg. per bag which was ignored so as to round off the figure. Even though in settlement proceedings ignoring of such minor variations in respect of clandestine removals may not have been inappropriate, Commission has still to be fair, and is of the view that if this minor error flowing from simplification causes some prejudice to the applicant, Commission is duty bound to rectify the same. Bench would, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaded that duty liability comes to Rs. 4,01,37,590.47 instead of Rs. 4,74,09,053/- as arrived at in the Final Order. Bench notes from Annexures B1 and B2 that applicant seems to have omitted a number of consignments wherein the RRs, the word Khaini was preceded or succeeded by some other word also. Bench would like to make it clear that Khaini continues to be Khaini irrespective of the adjective used to signify it. Labouring under a misconstruction of the Bench s Order, applicant has excluded the RRs in Annexures B1 and B2 which also suffer duty as per the Final Order. Hence, there is no substance in applicant s contention that an error has taken place. This contention is, therefore, liable to be rejected. 12. As regards the issue of penalty of Rs. 3,00,00,000/- imposed on the applicant, applicant s contention that no penalty was payable because he had deposited duty in advance of receipt of the SCN is based on incorrect understanding of the law. Imposition of penalty was proposed in the SCN (supra) under Section 11AC of the Act. There is no provision under Section 11AC which provides for waiver of total penalty. Even under Section 11A of the Act, if duty evasion had taken pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munity from interest and penalty if it is satisfied that the applicant has cooperated with the Commission in the proceedings before it and has made a full and true disclosure of its duty liability. The Order of the Commission, therefore, cannot be said to be an Order of a Central Excise Officer determining the duty liability. It is an order of settlement and sub-section (5) of Section 32F of the Act confers on the Commission power to pass such Order as it thinks fit on the matters covered by the application----- . In fact, a Settlement Order as distinct from an Adjudication Order of a Central Excise Officer, is in the form of a package under which all aspects of the case are taken into account in a holistic manner while deciding issues of penalty and interest and the extent of immunity therefrom. Unlike a Central Excise Officer who while determining duty liability has no power to grant immunity from prosecution, the Commission has power to accord immunity from prosecution. The benefit under the Proviso to Section 11AC could be availed when matter of determination of duty is before a Central Excise Officer. If an assessee has adopted the course of settlement under Chapter V of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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