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TMI Blog2014 (3) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Section 32-O(1)(i) of the Central Excise Act, 1944, without going into the merits of the case, both the applications are outrightly rejected and dismissed - decided against applicant. - Settlement Application Nos. 947-948/2013 in File No. C-449/CE/2013-SC(KB) - Final Order No. F-412/CE/2014-SC(KB)-REJ. - Dated:- 26-3-2014 - Shri M.I.J. Michael, Vice-Chairman, C. Dube and Karan K. Sharma, Members Shri B.N. Chattopadhyay, Consultant, for the Assessee. Shri B.S. Meena, Assistant Commissioner, for the Department. ORDER [Order per : Karan K. Sharma, Member ]. - This order disposes of two Settlement Application Nos. 947 and 948/2013 filed by M/s. Shakambhari Overseas Trades Pvt. Ltd., Raturia Industrial Area, P.O. Angadpur, Durgapur, Pin - 713 215 (hereinafter referred to as the applicant ) and Shri Vinay Kumar Agarwal, Director, residing at A/7, Armstrong Avenue, Sector-2B, Bidhan Nagar, Durgapur - 713212 ( the co-applicant in short), respectively, under Section 32E of the Central Excise Act, 1944 (in short the Act ). These applications have been filed for settlement of the dispute arising out of show cause notice No. 50/ADC/Bol/12, dated 4-9-2012 (her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erminded the entire illegal operation of evasion of duty, that without his active involvement such illegal activity would not have been possible and that he was aware of the fact that the subject goods (MS Ingot Pig Iron) were cleared without payment of Central Excise duty and without issuance of invoice. Penalty was proposed under Rule 26(1) of the Central Excise Rules, 1944 on the said Shri Vinay Kumar Agarwal, Director (co-applicant). 3. In the application for settlement dated 27-5-2013, the applicant admitted the demand of C.E. duty of ₹ 25,04,134/- and also admitted the additional liability towards interest amounting to ₹ 53,608/- as per their own calculation. They deposited ₹ 16 lacs vide Cyber Receipt dated 27-10-2012 and ₹ 9,04,134/- from Cenvat account towards duty and ₹ 53,608/- vide Cyber receipt dated 25-5-2013 towards interest before approaching the Commission. 4. The co-applicant, in his application dated 27-5-2013 referred to the acceptance of the liability towards C. Excise duty as demanded in the SCN by the applicant. Having admitted duty liability of more than ₹ 3 lac, and claiming to have made full disclosure while appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is written submissions dated 24-1-2014 has contended It is thus manifest that the Hon ble Bench after receipt of the application under Section 32E of the said Act is also required to call for the report from the concerned Jurisdictional Commissioner and also the report of Commissioner (Investigation) of the Hon ble Settlement Commission and if it is found that if there is concealment of its duty liability in the application and for that imposition of penalty may be warranted. In case such penalty is imposed the provisions of section 32-O will prevail. In other words, applicant would be barred from filing application under section 32E of the said Act. 9. During the hearing, the learned Consultant clarified that the bar under Section 32-O(i) is attracted only in those cases, where penalty has been imposed for concealment of duty particulars from Settlement Commission and such bar is not applicable where the penalty imposed under Section 32F(5) is for concealment of duty particulars, is from Central Excise Officer. 10. Learned Consultant is correct that as per the statutory provisions of Section 32F(3) Settlement Commission is required to call for a report from the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground of concealment of particulars of his duty liability from Central Excise Officer, and (b) an order of settlement that provides for imposition of a penalty on the person who made the application under Section 32E for settlement, on the ground of concealment of particulars of his duty liability in the application before the Settlement Commission, where this concealment is unearthed from the reports of the jurisdictional Commissioner or Commissioner (Investigation). 12. The distinction, as suggested by learned Consultant would entail the addition of words before the Settlement Commission in Section 32-O(l)(i). This is against the rule of literal interpretation also called plain meaning rule which stipulates that in construing statutes the cardinal rule is to construe its provisions literally and grammatically giving the words their ordinary and natural meaning. There should be no additions or substitution of words in its interpretation. The words are to be interpreted as they are. Words are not to be inserted by implication. Necessity of interpretation would arise only where the language of a statutory provision is ambiguous, not clear or where two views are pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... answered. 14. The doubts about the applicability of the provisions of Section 32-O(1)(i) of the Act raised by the learned Consultant, are unfounded, seen in the light of the provisions of Section 32F(5) of the Act read with Section 32F(8) of the Act. The question whether the penalty imposed under Section 32F(5) of the Act for concealment of duty liability particulars on the assessee who made the application under Section 32E of the Act is in relation to - (i) the concealment of duty liability particulars before the Central Excise Officer, or (ii) the additional duty liability discovered during the settlement proceedings, or (iii) both [(i) and (ii)] of these components combined, can be answered, when we refer to the provisions of sub-section (8) of Section 32F of the Act. Section 32F(8) of the Act clearly states that order under Section 32F(5) shall provide for terms of settlement including any demand by way of penalty or interest... The procedure for determining the demand for duty is explained in Section 32F(5), which reads as : 32F(5) After examination of the records and the report of the Commissioner of Central Excise received under sub-section (3), and the report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure as required under the provision of Section 245C of the Income-tax Act or Section 32E of the Central Excise Act, but it is equally true that the requirement of a full and true disclosure need not be examined and authoritatively determined at the threshold of any proceedings initiated before the Commission under Chapter V. There may be cases where it is possible for the Commission to record a finding that the disclosure made in the application is full and true . There may, however, be situations in which the Commission may not be able to, at the stage of admission of the application, record a finding with any amount of certainty. In any such situation, it will not be legally impermissible for the Commission to keep the question open as it has done in the instant case to be examined at a later stage or at the stage of final disposal of the application. What is important is that there must be full and true disclosure to the satisfaction of the Commission before any relief can be granted to the applicants which implies that the requirement of such a full and true disclosure is a continuing requirement that needs to be satisfied from the beginning of the proceedings till the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned Consultant would also be in stark contradiction to the purpose of the settlement which offers a one-time opportunity to tax evaders to come clean. Bombay High Court in the case of Mandhana Dyeing v. Union of India has observed : A rigid attitude would inhibit a one-time tax evader or unintending defaulter from making a clean breast of his affairs and would also unnecessarily strain the investigation resources of the Government. [(2010 (251) E.L.T. 481 (Bom.)] 20. If such an incorrect interpretation, as advanced by the learned Consultant, is allowed to be followed, then everyone can with impunity conceal their duty liability from the central excise officer and approach Settlement Commission again and again since the bar under Section 32-O(1)(i) shall not apply to them. Such a situation shall not only encourage rampant evasion of Government revenue but also render the adjudication procedures in Central Excise Act redundant. 21. Now, coming to the 3 cases, cited by the learned Consultant for the applicants in their written submissions in defence, namely : (i) 2009 (242) 504 (Mad.), Commissioner of Central Excise (Chennai-II) v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Excise Act, 1944 can apply again. This is the third application (dated 27-5-2013) filed by the applicant for settlement. In the previous application dated 18-5-2011 (which was the second application of the same applicant in another case), a penalty of ₹ 1.5 lakhs was imposed on the applicant. The matter has been discussed and issues raised critically analysed. 25. On the issue of the applicability of the provisions of Section 32-O(1)(i) of the Act, the learned Consultant for the applicants, Shri B.N. Chattopadhyay made the following additional written submissions dated 24-1-2014 (filed on the same day, which was the date of hearing) - On the question of whether the applicants are barred under Section 32-O(i) of the Central Excise Act, 1944 as on earlier occasions(s) penalty was imposed on the applicants, it is submitted in addition to the submissions made on 16-1-2014 that this bar would be applicable only in cases where the Hon ble Commission imposes penalty on earlier occasion under Section 32F(5)/(7) for concealment of the particulars declared in the application for settlement when and if the same is so found out from the report of the jurisdictional Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the penalty , it was with reference to the provisions invoked in the SCN , namely, Section 11AC of the Act read with Rule 25 of the Rules [Para 3 of the Order dated 18-5-2011]. 27. From the earlier case (Final Order dated 18-5-2011) mentioned above, it is seen that for evasion of duty on clandestine manufacture and clearances, while noting that they are an habitual offender, a penalty of ₹ 1,50,000/- was imposed by the Bench of the Settlement Commission on the applicant with reference to the provisions invoked in the show cause notice, namely, Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. The penal provisions of Section 11AC of the Act are attracted in the case of - (i) a person who is liable to pay duty and (ii) where the duty has not been levied or paid or short-levied or short-paid by reason of fraud or collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made thereunder with intent to evade payment of duty . Being a case of clandestine clearance of excisable goods from the factory without payment of duty invoking the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was concealment before the jurisdictional Central Excise Officer and a case of penalty where there was concealment before the Settlement Commission . This has been done by, artificially, adding words to the actual statutory provisions under Section 32-O(1)(i) of the Act. The said statutory provisions only speak of concealment of particulars of his duty liability , without any further additional words. 30. Proviso to sub-section (8) of Section 32F of the Central Excise Act, 1944 stipulates . - This is an important provision that clarifies the scope of settlement and has an important bearing on the issue of duty liability and penalty. (I) The proviso stipulates that the amount of settlement ordered by the Settlement Commission shall not be less than the duty liability admitted by the applicant under Section 32E . [Emphasis supplied]. (ii) It follows from (i) above that the amount of settlement ordered by the Settlement Commission can be equal to or more than the duty liability admitted by the applicant in the application filed under Section 32E . (iii) From the above it follows that - (a) a case can be settled for an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Shri Karan K. Sharma) in his order above, the initially admitted duty liability was ₹ 3.84 crores but the duty liability that was settled by the Settlement Commission, was ₹ 16.7 crores. Thus the amount of duty liability can undergo a change during the settlement process. The proviso to sub-section (8) of Section 32F of the Act ensures that the final duty liability and, consequently, the penalty imposed for concealment of duty liability particulars under sub-section (5) of Section 32F of the Act includes within it that element of penalty which is imposed for concealment of duty liability particulars, that was admitted in the application filed under Section 32E of the Act. 31. A single penalty imposed in the case is a composite whole in relation to the final duty liability . - Concealment of duty liability particulars has been mentioned under Section 32-O(1)(i) of the Act. The words and expressions disclosure , of his duty liability and which has not been disclosed are mentioned in the provisions under Section 32E of the Act, relating to the filing of the application for settlement - SECTION 32E. Application for settlement of cases. - (1) An assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assing the order of settlement under Section 32F(5) is the total duty liability, which is the aggregate of duty liability admitted in the application filed under Section 32E and any additional duty liability discovered/arrived at during the settlement process from the reports of the jurisdictional Commissioner, Commissioner (Investigation), evidence adduced during the hearings, evidence produced before it or obtained by it. The true and full liability of duty as mentioned in Section 32E, can, thus, undergo a change during the settlement process. This is aptly reflected in the case of Harish Chandra Murari Lal v. DGCEI . the applicant, M/s. Harish Chandra had approached the Settlement Commission, initially admitting duty liability of ₹ 3.84 crores. This liability was later revised by them to ₹ 5.79 crores and again revised upwards to ₹ 8.33 crores during the course of settlement proceedings. The Settlement Commission, however, settled the duty liability even further at an amount of ₹ 16.70 crores. In the case of Commissioner of Central Excise, Visakhapatnam v. True Woods Pvt. Ltd., 2006 (199) E.L.T. 388 (Del.), the Hon ble Delhi High Court has explained thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argument is that the specific word concealment does not appear anywhere in the penalty Section of the Central Excise Act, 1944 and that the only place where this particular word is used, is in Section 32K(3) of the Act, also pertaining to Settlement Commission which precedes Section 32-O of the Act. The word used in this sub-section [(3) of Section 32K of the Act] is, concealed material particulars to the Settlement Commission . In this connection it is observed that - (1) The word disclosure appearing in the expression disclosure of duty liability which has not been disclosed in sub-section (1) of Section 32E of the Act, is already there in the provisions of Chapter V relating to the Settlement of cases, from which it is evident that the factor of concealment of duty liability particulars , is already covered by the provisions of Section 32E of the Act, which in turn, has been, specifically, mentioned at clause (i) of Section 32-O(1) of the Act, which is the provision under consideration. Thus it is not a relevant argument that the word concealment does not appear anywhere in the penalty section. (2) there are other words deployed in Chapter V of the Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be in order to deceit the Revenue keeping it in dark so that its acquiescence and endorses an unlawful act thinking that it is lawful.. . Thus it appears to be an incorrect and futile argument that the word concealment is mentioned in Chapter V of the Central Excise Act, 1944 but not elsewhere in the said Act. (6) When suppression of facts is mentioned in the mandatory penalty Section 11AC of the Central Excise Act, 1944, which penalty Section 11AC is, in turn, specifically, mentioned in the show cause notice issued to the noticee (applicant) and further that, while passing its earlier order (2nd Order dated 18-5-2011) holding that the applicant is an habitual offender in the case of clandestine evasion of Central Excise duty, the Settlement Commission has referred to the provisions invoked in the SCN , while imposing penalty of ₹ 1.5 lakhs, then it is evident that the said penalty was imposed for concealment of the duty liability particulars by the applicant in that previous case. 35. Agreeing with the observations and findings of the learned Member (Shri Karan K. Sharma ) - (a) The provisions of Section 32-O(1)(i) are clear and there is no ambiguity in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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