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TMI Blog2013 (9) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... aside on the ground that the dispute between the main noticee and the revenue stands settled in Settlement Commission - the order of imposition of penalties was set aside upon the appellants and the appeal was allowed - Decided in favour of Assessee. - E/2467/2009-SM(BR) - 1405/2012-SM(BR)(PB) - Dated:- 1-8-2012 - Ms. Archana Wadhwa, J. Shri Hrishikesh, Advocate, for the Appellant. Shri G.K. Dixit, AR, for the Respondent. ORDER The challenge in the present appeal is to imposition of penalty of Rs. 5 lakhs imposed upon the appellants in terms of provisions of Rule 26 of Central Excise Rules. 2. As per facts on record, the appellant is a merchant-exporter of the goods of fabrics and got the man-made fabrics processed from one M/s. Sona Processors (India) Ltd., Bhilwara. As per investigations conducted by the Revenue, M/s. Sona Processors availed excess deemed credit amounting to Rs. 15,19,430/- during the period from February, 2002 to November, 2002 on the grey fabrics sent by the present appellant. As per the allegations made by the Revenue, such excess deemed credit was availed by M/s. Sona Processors in connivance with the appellant, by overvaluing the process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 492 (Tri.-Mum.) wherein in identical circumstances, the penalty on the co-noticee was set aside on the ground that the dispute between the main noticee and the revenue stands settled in Settlement Commission. 7. Learned DR appearing for the Revenue draws my attention to Division Bench order passed in the case of M/s. K.I. International Ltd. vide Final Order Nos. 701-767/2012, dated 22-6-2012 [2012 (282) E.L.T. 67 (Tri.)] wherein the decision of the Tribunal in the case of S.K. Colombowala, cited (supra) was discussed but not followed by taking note of Supreme Court decision in the case of S.P. Chengalvaraya Naidu v. Jagannath reported in [1994 (1) SCC 1]. As such, he submits that Tribunal is required to decide the issue on merits. 8. After carefully considering the submissions made by both sides, I find that the most important question required to be decided in the present appeal is as to whether when the person against whom demand has been raised by way of show cause notice approaches Settlement Commission and get the dispute settled on terms and conditions, as contained in the order, whether the same would bring an end to the penal proceedings against the co-noticee, or not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s upon the appellants and allow all the appeals with; consequential relief to them. Per M. Veeraiyan, Member (Technical) 11. The leniency shown to M/s. Amrit Laxmi Machine Works and its Director are in the mature of leniency shown by the criminal courts to approvers. In this case the major activities leading to the fraud have been undertaken by the following persons, (i) Ashwin Mehta of M/s. Nippon Bearings Pvt. Ltd., (ii) Manharlal H. Vora of M/s. Shalin Bearing Corporation. Therefore, the penalties imposed on them and their firms may not deserve to be set aside as they have not adduced any evidence to upset the findings or their involvement. However, taking into account the duty evasion caused and the role played, penalties can be reduced as mentioned below : S. No. Name of the appellant Amounts (Rs.) 1. Shri Manharlal H. Vora 1,00,000/- 2. Mr. Ashwin Shantilal Mehta 1,00,000/- 3. Nippon Bearing Pvt. Ltd. 50,000/- 4. Shalin Bearings Corporation 50,000/- Per Jyoti Balasundaram, Vice-President 23. .To my mind, the consequence of final ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at only the person liable to pay duty can make an application for settlement does not mean that the case insofar as the remaining co-noticees can continue even after a final order of settlement has been passed in relation to the case. 9. As is seen from the above, the dispute was resolved in favour of the appellant by referring to the Hon ble Supreme Court decision in the case of Union of India v. Onkar S. Kanwar [2002 (145) E.L.T. 266 (S.C.)], Tribunal s decision in the case of V. Abdul Rehman Musaliyar v. Commissioner [2001 (133) E.L.T. 145 (Tri.)] and another Tribunal decision in the case of D.P. Kothari v. Commissioner of Central Excise, Jaipur-I [2001 (135) E.L.T. 669 (Tri.-Del.)] as also in the case of Shitala Prasad Sharma v. Commissioner of Central Excise, Mumbai [2005 (183) E.L.T. 21 (Tri.-Mum.)]. Similarly, while deciding the difference of opinion, learned Vice-President referred to the provisions of Sections 127A, 127B and 127J and resolved the dispute in the light of the provisions of above sections. 10. Learned DR has drawn my attention to recent Division Bench decision in the case of K.I. International referred supra, wherein the majority decision in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defrauded Revenue. 11. As is seen from the above, the Division Bench has not followed the majority decision of the Tribunal in the case of S.K. Colombowala by observing that the said decision did not take into consideration the law laid down by Apex Court in the case of S.P. Chengalvaraya Naidu referred supra. 12. I have looked into the said decision of the Hon ble Supreme Court in the case of S.P. Chengalvaraya Naidu. On going through the entire judgment, I find that the same was in respect of judgment or decree obtained by fraud and without disclosing the factual position. The Hon ble Court observed that decree obtained by non-disclosure of the release deed amounted to fraud on Court and hence decree liable to be set aside. The facts of the said decision of the Hon ble Supreme Court are entirely different from the facts of the instant case or the facts available in the case of S.K. Colombowala. The proceedings are under the Central Excise Act as regards imposition of penalty in terms of Rule 26 of Central Excise Rules. The question of obtaining any decree or order by mis-representing the facts of the case or by fraudulently representing the case, as was the case before the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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