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TMI Blog2015 (6) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... e aluminium conductors manufactured and cleared by the Petitioners and demand of the Cenvat credit equal to Cenvat credit alleged to have been irregularly taken on inputs Annexure 'B' is a copy of the show cause notice. According to the Petitioners there were two types of issues raised in respect of which the demand of differential duty has been made. These two issues are distinct and independent. The demand for differential duty on aluminium conductors manufactured and cleared is one aspect and the demand for the Cenvat credit alleged to have been incorrectly and irregularly obtained is the other aspect. 3. After setting out as to how the issue relating as to alleged under violation of goods manufactured and cleared by the Petitioners has been raised, the Petitioners then refer to the issue of availment of Cenvat credit. These are extensively set out in the Writ Petition. 4. It is then alleged that the Petitioners had also initiated proceedings under Rule 12AA of the Cenvat Credit Rules, 2004 and Rule 12CC of the Central Excise Rules, 2002. That is pertaining to a notice dated 6th October, 2008 and seeking to withdraw the facility of monthly payment of Central Excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces issued by the Petitioners (Annexure 'D' to the show cause notice). They claim that they have not made any Application for settlement of the claim or issue because it is independent, severable and has no relation with other issues involved in the show cause notice. The Petitioners have also not admitted that they have paid the entire interest liability on the demand of duty in terms of Annexures A, B and E to the show cause notice. In the submission of the Petitioners this sum is not due on the ground that they maintained sufficient credit balance in their Cenvat Credit Account. The Petitioners complained that this Application made by them to the Settlement Commission was heard on 21st May, 2013 and the Petitioners argued in terms of the aforesaid pleas. However, by the impugned order, the Settlement Commission has held that the Application filed by the Petitioners (Applicants and Co-Applicants) in this case is not found admissible in terms of Section 32E of the Central Excise Act, 1944. The Commission, therefore, proceeded to reject it. 9. It is this rejection which is questioned in this Writ Petition and on several grounds. There is no Affidavit-in-Reply filed in this Wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance and Central Excise duty paid in the prescribed manner; (b) a show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant; (c) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; and (d) the applicant has paid the additional amount of Excise duty accepted by him along with interest due under Section 11AB : Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending with the Appellate Tribunal or any Court : Provided also that no application under this sub-section shall be made for the interpretation of the classification of excisable goods under the Central Excise Tariff Act, 1985 (5 of 1986). (1A) Notwithstanding anything contained in sub-section (1), where an application was made under sub-section (1), before the 1st day of June, 2007 but an order under sub-section (1) of Section 32F has not been made before the said date or payment of amount so ordered by the Settlement Commission under sub-section (1) of Section 32F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not mean that the Application for settlement made by them is not maintainable. Mr. Sridharan therefore, submits that the powers conferred on the Settlement Commission by Section 32C, Section 32E(1) clause (b) and Sections 32K and 32M seen in juxtaposition with the powers on a similar Commission conferred by the Income Tax Act, 1961 would indicate that there is a segregation possible and of claims and issues. It is not as if the Settlement Commission can proceed on the lines indicated by it in the impugned order. Mr. Sridharan has also invited our attention to the impugned order and the reasons assigned by the Settlement Commission. He submits that the Settlement Commission lost sight of the fact that an Application that the Assessee made in terms of sub-section (1) of Section 32E is in respect of a case relating to him. The Application has to be made before adjudication. The Application is made to the Settlement Commission to have the case settled, in such form and in such manner as may be prescribed. The Application was containing a full and true disclosure of the duty liability which has not been disclosed before the Central Excise Officer having the jurisdiction, the manner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mandhana Dyeing v. Union of India reported in 2010 (251) E.L.T. 481 (Bom.). Mr. Sridharan also places reliance on the judgment of the Hon'ble Supreme Court delivered in the case of M/s. Ram Naarin Sons Ltd. v. Asst. Commissioner of Sales Tax & Ors. reported in (1955) 2 SCR 483. 13. On the other hand, Mr. Jetly, learned Counsel appearing on behalf of the Respondents submits that the wording of Section 32E is crucial. That read together with the definition of the term 'case' would indicate that it is a single matter pertaining to the Assessee. In the present case, the show cause notice issued to the Petitioners/Assessees is the case relating to them. No bifurcation or segregation of the issues in the show cause notice is permissible. The basic requirement of entertaining the Application is not satisfied. It is in these circumstances that Mr. Jetly supports the order of the Commission and submits that the Writ Petition be dismissed. He has submitted that all the findings and which are directly referable to the powers of the Settlement Commission to throw out a case even at the preliminary stage indicate that this Court should not exercise its writ jurisdiction. The findings ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be a proceeding pending within the meaning of this clause. We had been taken through the scheme of this Act and by the Counsel appearing for parties. In the Division Bench decision in the case of Mandhana Dyeing v. Union of India reported in 2010 (251) E.L.T. 481 (Bom.) on which reliance is placed by Mr. Sridharan, the point was as to whether the Settlement Commission while admitting the Application made by the Petitioners before this Court for settlement was justified in directing them to deposit total amount of duty to the extent of Rs. 3,12,75,928/- by order dated 15th November, 2006. Whether the Settlement Commission was so justified and when the show cause notice demanded the duty, penalty and interest under the provisions of the Central Excise Act and Rules framed thereunder. 17. After considering the rival submissions, the Division Bench in paras 11 to 16 held as under : "Background Legislation : 11. As early as 1992, in the Budget speech, the Finance Minister had proposed setting up of Settlement Commission for Customs and Central Excise disputes. But, such provisions were actually introduced only in the Finance Bill of 1998. The stated objective was that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such report within a period of one month of the receipt of the communication from the Settlement Commission, failing which it shall be presumed that the Commissioner of Central Excise has no objection to such application; but he may raise objections at the time of hearing fixed by the Settlement Commission for admission of the application and the date of such hearing shall be communicated by the Settlement Commission to the applicant and the Commissioner of Central Excise within a period not exceeding two months from the date of receipt of such application, unless the presiding officer of the Bench extends the time, recording the reasons in writing. (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Commissioner of Central Excise having jurisdiction. (3) Subject to the provisions of sub-section (4), the applicant shall within thirty days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the amount of additional duty admitted by him as payable and shall furnish proof of such payment to the Settlement Commission. (Emphasis supplied) (4) If the Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd prevent settlement. Beneficial statutes should not be construed too rigidly as it was for the protection of certain class of persons that the statute was enacted. The intention of the legislature and the policy underlying it has also to be kept in mind. As far as possible, the language of the statute, unless it goes against the intention of the specific provisions, must be construed consistent with the changing social attitudes. The well settled principle of interpretation is that a statutory provision should be construed according to the plain natural meaning of its language. When the language of a particular provision is clear and according to the plain natural meaning thereof one need not travel in the territory of interpretation [See : CIT v. Sundaram Iyengar & Sons (P) Ltd. - (1975) 101 ITR 764 (S.C.)]. 15. Keeping the objective of the Legislation in mind and the scheme framed, any assessee can make application to the Settlement Commission containing full and true disclosure of his liability which was not disclosed by him before the Central Excise Officer. The applicant is expected to deposit additional amount of Excise duty admitted to be payable by him as per his ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment is not admitted in its entirety but partially the Commission would not be justified in rejecting the Application. The Settlement Commission can either accept the Application as it is or reject the same in toto. That is because this Settlement Commission has been set up and with the avowed object of encouraging settlement of contested claims with the aid of the Department. There are certain vexed issues and which are raised time and again and the litigation drags on and on. To curtail the litigation and to encourage settlement of revenue issues by such mode that a comprehensive legislation has been made in the Chapter V of the Central Excise Act, 1944. It is not as if this mode of putting an end to the litigation has been initiated only in this Act. 19. Another Division Bench of this Court in the case of B.K. Industrial Corporation v. Union of India reported in 2004 (169) E.L.T. 13 (Bom.) held that the Settlement Commission being exercising the very same power which can be exercised by the adjudicating authority it can, while deciding the Application, direct payment of interest on the duty liability. Thus it is not as if the powers of the Settlement Commission are in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the learned Counsel appearing for the private parties, the Settlement Commission has power to grant immunity with regard to all kinds of prosecution under the Customs Act and any other law including the Indian Penal Code, which obviously would necessitate the Applicant being involved in a serious fraud wherein he is likely to be prosecuted under the Indian Penal Code or any other penal law. If that be so, one cannot say that the Settlement Commission has jurisdiction only to deal with the bona fide case of misclassification or at the most wilful case of misclassification. 42. One cannot minimise the scope of jurisdiction of the Settlement Commission without any express provisions found in the said Chapter, whereas on the contrary, the provisions as indicated hereinabove clearly show that the Settlement Commission has a very wide jurisdiction to entertain all kinds of settlement claim applications with the liberty to reject the same even at the preliminary stage, depending upon the nature and circumstances of the case and the complexity of the case. Therefore, it is not the case that the Settlement Commission is forced to entertain and accept all settlement applications. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument with regard to the short levy due to misclassification or otherwise is purely a procedural one, in the sense, as long as rules are not even provided, there is no need to decide the same. 45. In any event, having regard to the entire structure of Chapter XIV-A we are very clear in our mind that the Settlement Commission has jurisdiction to entertain all kinds of applications for settlement, provided they satisfy the mandatory requirements of filing the Bill of Entry/Shipping Bill, and issuance of a show cause notice in relation to such a Bill of Entry/Shipping Bill and by making a full and true disclosure of a duty liability which was not disclosed earlier before the proper officer and the manner in which such liability has been incurred and the additional amount of Customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification or otherwise of goods. These are the essential requirements for making an application under Section 127B of the Customs Act, which are also clear from the wording of the very section as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to inadmissible Cenvat credit, as detailed in Annexure C of the show cause notice is not placed before the Commission and may be considered as not included in their Application. Further, in para 8.4 the Petitioners clarified that the show cause notice had raised two separate issues relating to valuation and the availability of Cenvat credit and it was open for the Petitioners to place only certain issues before the Commission. In para 8.5 the Tribunal also noticed the contention of the Petitioners that though the demand of duty is admitted in terms of Annexures A, B and E of the show cause notice and that amount is paid, the interest thereon is not due and payable. The reasons for same are also set out in para 8.5. Then in para 8.7, the Commission records the submission of the Revenue that the attempt of the Applicants/Petitioners is of splitting the case in as much as there is a demand in respect of three issues and which is admitted. The fourth issue relating to inadmissible Cenvat credit has not been placed before the Commission. The matter is kept pending before this Court and which makes the present Application not admissible. 24. The findings of the Settlement Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on had before it an Application and in respect of a case relating to the Assessee. If the case relating to the Assessee according to Mr. Jetly appearing before us for the Revenue is that which pertains to the show cause notice, then, we do not see how the Commission could have refused to entertain the Application. If the 'case' relating to the Applicant before the Commission is the show cause notice and it is not yet adjudicated but the Settlement Commission can make an adjudication in terms of sub-section (1) and settle it, then, we do not see how the Application could have been rejected or thrown out at the threshold. The Application could have been made in terms of sub-section (1) of Section 32E only upon the show cause notice for recovery of duty being issued by Central Excise Officer has been received by the Applicant. However, the show cause notice can comprise of several claims and made by the Department. The demand in the show cause notice for payment of duty, interest and penalty can be comprehensively raised. If that can be raised and the show cause notice is composite or comprises of all such issues, then, we do not see how in the facts and circumstances of the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the infirmities pointed out in para 9.5, there, the Cenvat credit demanded is Rs. 1,59,39,047/-. It has been held to be a matter given up by the Assessee Petitioners and they desire to go and proceed with the adjudication. However, what the Commission faults the Petitioners for is that the issues raised in the show cause notice relating to Central Excise duty evasion were also before the Central Board of Excise and Customs which by its order dated 6th January, 2009 withdrew the facility of monthly payment of Excise duty under Rule 8(1) of the Central Excise Rules, 2002 and also stopped the utilization of Cenvat credit during the relevant period. The matter is pending before this Court. 27. We do not find that the Commission was justified in taking this view in relation to the demand of Cenvat credit. That demand was pertaining to availment of the said credit illicitly and without receipt of inputs. There, it was the stand of the Petitioners that though the Application mentions the same or the claim in relation thereto, yet they do not desire to proceed before the Settlement Commission for adjudication of the demand which is disputed and the matter should go before adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the matter is pending before this Court. The matter which is pending before this Court has nothing to do with the show cause notice dated 30th August, 2011 and the claims therein which are referred to particularly in Annexures A, B, C and E. In such circumstances, we do not see any justification for the Commission rejecting the Application on the ground that the matter is pending before the Authority. The refusal to entertain the Application on the ground that it is pending before the Authority is therefore, patently erroneous and illegal. The Application could have been refused to be entertained in cases which are pending with the Appellate Tribunal or any Court. That could have been in relation to the case/proceedings under the Act or under any other Act and which is subject matter of show cause notice in this case. It is conceded that when the Petitioners approached the Settlement Commission and admitted their duty liability all that had happened and transpired was that they had received a show cause notice raising the claims and which they have admitted. In such circumstances, the other reason assigned in para 9.7 for rejecting the Application at the threshold c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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