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TMI Blog2021 (4) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... perience. They have been given wide powers to not only accept the additional liability disclosed in the application for settlement but also give a deserving applicant a reprieve by granting immunity from prosecution and penalty. Earlier, this power also extended the power to grant waiver from payment of interest - In M/S SANGHVI RECONDITIONERS PVT. LTD. VERSUS UNION OF INDIA ORS. [ 2010 (2) TMI 6 - SUPREME COURT] , the Hon ble Supreme Court held that the petitioner having opted for settlement is not permitted to dissect Settlement Commission s Order to accept what is favourable and reject what is not. The submission that there was no rational basis on which the 1strespondent Settlement Commission has unilaterally restricted the loss due to drying of the tobacco leaves to 10% as against 24% claimed by the petitioner cannot be entertained as it would also amount to interference with the finding of facts arrived by the 1st respondent Settlement Commission - There is perversity in the impugned order, Therefore, scope for judicial review under Article 226 of the Constitution of India is to be eschewed. Petition dismissed. - W.P.No.10324 of 2008 And M.P.Nos.1 & 2 of 2008 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been further observed as under:- 13. The Department's representative had no objection for following the raw material route for arriving at the quantum of manufacture of MBC tobacco. It is observed that the applicant has calculated the quantity taking into account of 24% loss. However, this Bench has fixed the loss to be allowed as 10% as discussed in para 12 above, a revised worksheet for calculation of duty has been prepared and is placed as Annexure to this Order . 4. These observations were made after recording the submission of the 2nd respondent Commissioner in para 12 which reads as under:- In this application, the applicant had claimed 24% driage of tobacco from the stage of procurement of raw material to the stage of manufacture of the MBC tobacco. The following chart was given by the applicant and reproduced in the Commissioner (Investigation)'s report is given below: S.No Stage Wastage in grams Percentage 1 Weight loss due to Ambaram Thirupudhal in the godowns and due to removal of sand and other particles etc 50 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent Commissioner of Central Excise before the 1st respondent Settlement Commission. 7. It is submitted that even if the claim of the petitioner for 24% loss on account of drying of tobacco leaves (driage) was not acceptable the 1st respondent Settlement Commission, the loss should have been fixed between 15% to 19% as was represented by office of the 2nd respondent. 8. It is therefore submitted that the 1st respondent Settlement Commission has instead of arbitrarily fixed the loss at 10% only to arrive at the additional duty liability of ₹ 1,06,65,657/-. 9. Defending the impugned order, Ms.Hema Murali Krishnan, learned Senior Standing Counsel for the Central Excise Department submits that the writ petition filed by the petitioner was without jurisdiction, inasmuch as the impugned order passed by the 1st respondent Settlement Commission was a final in all respect under Section 32 M of the Central Excise Act, 1944 and cannot be subjected to judicial review under Article 226 of the Constitution of India. 10. She submits that scope of judicial review under Article 226 of the Constitution of India was very limited and question of facts arrived by the 1st respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore submitted that the impugned order was perverse to that extent inasmuch as the 2nd respondent Commissioner of Central Excise, had estimated the loss that can be accepted between 15 to 19%. 15. Finally, the learned counsel for the petitioner also submits that the impugned order of the 1strespondent Settlement Commission gives no reason as to why loss due to drying of tobacco leave cannot be accepted between 15% to 19% as was suggested by the 2nd respondent or why loss 24% as was claimed by the petitioner is liable to be rejected. 16. I have considered the arguments advanced by the learned counsel for the petitioner and the respondents. The petitioner is a manufacturer of chewing tobacco and had approached the 1st respondent Settlement Commission to settle the case under the provisions of the Central Excise Act, 1944 after a show cause Notice No.26/2004 dated 1.6.2004 was issued to the petitioner. 17. The said show cause notice called upon the petitioner why an amount of ₹ 7,92,86,788/- should not be demanded from the petitioner for the period between 3.5.1999 and 19.8.2002 on the chewing tobacco manufactured and clandestinely removed without payment of tax duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits on power of condonation Limits upto which duty may be demanded Remarks 1. Inspector Upto 5% in case of whole leaf tobacco and 3% in all other cases provided the duty on the total deficiency does not exceed ₹ 100/- All cases which exceed limits laid down in column 3 should be referred to the next higher officer 2. Superintendent Upto 20% in case of whole leaf tobacco and 10% in all other cases provided the duty on the total deficiency does not exceed ₹ 500/- -do- 3. Assistant Collector Upto 30% provided the duty on the total deficiency does not exceed ₹ 4,000/- - do- 4. Deputy Collector Above 30% provided the duty on the total deficiency does not exceed ₹ 10,000/- - do- 5. Collector Without percentage or monetary limits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco sent as 7500 Kg., it is submitted that the applicant has accounted the wet weight of SPT in those records and at Kumbakonam, where the manufacturing takes place, the applicant preferred to account the quantity of SPT consumed in the manufacture of final products. It is once again reiterated that the applicant has not claimed any kind of loss of raw tobacco in their statutory records maintained for excise purposes, which confirms the applicant s stand on this issue. Further, the revenue has contained that the SPT has been transferred to Kumbakonam after certain processes carried out at P.Puliampatti and hence this quantity cannot be again claimed as wastage from the dispatched quantity of 7500 Kgs. In this regard, it is stated that though the applicant transfers SPT directly to their factories, the weight and driage loss to the tune of 24% are claimed as a whole, not at different stages/places i.e. at P.Puliampatti, Kumbakonam etc. As stated earlier, the losses starting from raw tobacco receipts to dust chewing tobacco are claimed totally and only the quantity of SPT consumed in the manufacture are accounted in the records. This has been the practice of the applicant com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t s contentions brought out in the report of Commissioner (Investigation) may kindly be considered on merits. 22. Formerly Rule 233-A of the Central Excise Rules, 1944, the Central Excise Act, 1944 provided a method for determining the annual stock. The said Rule was for annual stock taking for Tobacco at the end of the year. The said Rule read asunder:- Rule 223A:-Account of stock of goods in a factory or warehouse to be taken and balance to be struck . - As often as the Collector may deem it necessary or proper, and at least, once in every year, the stock of excisable goods remaining in a factory, warehouse or store room licensed or approved for the storage of such goods shall be weighed, measured, counted or otherwise ascertained in the presence of the proper officer, and if the quantity so ascertained is less than the quantity which ought to be found in such premises ( after taking into account receipts and deliveries, and making such allowance for waste by evaporation, or other natural causes, as the proper officer may consider reasonable, and as may be in accordance with any instructions issued by the Central Board of Revenue) the owner of such goods or if the premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean breast of his tax sins before the Settlement Commission and atone for mistakes and should undertake to pay the tax by making true and full disclosure before it. 27. As an incentive to encourage such deviant assessee s who opt to alter their deviant ways, a golden chance is given to them for settling the case under the Act. In return such assessee s may be given immunity from prosecution and penalty under the scheme of the Act. 28. Settling dispute before the Settlement Commission was devised as an mechanism to bring an end to the dispute based on the recommendation of the Wanchoo Committee as a compromise measure of a statutory settlement machinery where a big evader could make a disclosure, discharge what the Commission fixes as tax and thus buys quittance for himself and accelerates recovery of taxes in arrears by the State, although less than what may be fixed after long protracted litigation and recovery proceedings as was observed by the Hon'ble Supreme Court in CIT Central vs. B.N.Bhattacharjee and another (1979) 4 SCC 121. 29. Further, the 1st respondent Settlement Commission is manned by the senior officers drawn from the Central Excise, Customs and Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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