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TMI Blog2021 (9) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excise duty demand stood satisfied on 11.09.2018 and the entire Service Tax demand stood satisfied on 13.06.2019. In the present case, though the petitioner no.1 had deposited the entire duty demand, however, on its own showing, there did not exist any adjudication order with respect to the same, let alone any demand of interest and/or penalty - this is also not a case under Section 123(c) of the Scheme, inasmuch as, the petitioner no.1 does not contend that the amount of penalty and interest had ever been quantified in writing, by any means. The procedure i.e. manner of filling up the statutory Form SVLDRS-1 or the explanations furnished cannot create any right to the relief claimed that otherwise does not exist under the Scheme. Even if there were any doubt in that regard, undisputedly according to the petitioners themselves, no show cause notice came to be issued to them before the cut off date 30 June 2019 to confirm, either any amount of interest or penalty. Those amounts were otherwise never quantified in writing either by any statutory authority or the petitioners. In view of the above reasons, the first submission advanced by learned counsel for the petitioners cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form ER-1 on time, for the period September 2016 to February 2017 and also for the period April 2017 to June 2017. Thus, total excise duty liability was admitted at ₹ 26,62,16,761/-. Of that, it discharged Central Excise duty liability to the extent of ₹ 16,68,84,918/-, by the due date. The balance Central Excise duty was discharged belatedly, during the period 23.11.2016 to 11.09.2018. 6. Similarly, petitioner no.1 filed its return under the Finance Act, 1994 with respect to its Service Tax liability, for the period April 2016 to June 2017, on or before the due date. It admitted Service Tax liability, ₹ 1,98,34,281/-. That petitioner did not discharge any part of that liability within the due date and it discharged that liability after the due date, between the period 21.09.2018 to 13.06.2019. 7. The reason for the delayed payment is stated to be financial distress suffered by petitioner no.1. It is also on record that the auto division of petitioner no.1 came to be transferred by way of slump sale, in favour of the petitioner no.2, under the Business Transfer Agreement dated 14.03.2017. Thus, all assets and liability of the auto division are stated to have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by any order of adjudication passed under Section 11 of the Central Excise Act, 1944. By means of paragraph no.54 of the writ petition, it has been specifically stated that no such adjudication had taken place. That averment has not been denied by means of paragraph no.32 of the counter affidavit filed by the respondent. 11. Third, it has been submitted, in any case, the provisions of Section 142(1)(d) of the Customs Act, 1962 are not applicable with respect to any demand under the Central Excise Act, 1944. 12. Last, it has been submitted, in any case, in view of the Business Transfer Agreement dated 14.03.2017 entered into between the parties, interest or penalty liabilities, if any, would have to be split up between two petitioners with respect to the auto division and the engineering division. That exercise could only be done by carrying out proper adjudication. Insofar as that adjudication has not been done till date, the recovery of interest and penalty is wholly without jurisdiction or authority of law. 13. Responding to the above, learned counsel for the revenue has placed heavy reliance on the provisions of Section 121(c) read with Section 121(d) read with Section 123( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,-- (A) rupees fifty lakhs or less, then, sixty per cent, of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty per cent, of the tax dues; (d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is-- (i) rupees fifty lakhs or less, then, seventy per cent, of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent, of the tax dues; (e) where the tax dues are payable on account of a voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues. (2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant: Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the words "amount in arrears". 21. Once a valid settlement is reached, then, by way of a consequence provided under Section 129(1)(a) of the Scheme no interest or penalty liability may exist. Consequently, for the purposes of Sections 121(1)(c), 123(e), 124(1)(c) and 125(1)(f) also, the "amount in arrears" would be referable only to duty liability outstanding and not to interest or penalty liability, where only that liability may exist. If no amount of the Central Excise duty or Service Tax was due on the date of filing the declaration on SVLDRS-1, the fact that interest or penalty alone may have been claimed on that date, may not give rise to an eligibility under the Scheme. Here, admittedly, the entire Central Excise duty demand stood satisfied on 11.09.2018 and the entire Service Tax demand stood satisfied on 13.06.2019. 22. Even if there were any doubt in that regard, undisputedly according to the petitioners themselves, no show cause notice came to be issued to them before the cut off date 30 June 2019 to confirm, either any amount of interest or penalty. Those amounts were otherwise never quantified in writing either by any statutory authority or the petitioners. 23. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relief available under Section 124(1)(c) will be applied to the net outstanding amount so arrived at. It may be noted that in respect of all other categories, any money paid before its appropriation is in the nature of a deposit only. Hence, in respect of declarations made under these other categories, the relief will be applied to the outstanding amount and, only thereafter the pre-deposits/deposits [Section 124(2)] shall be adjusted. The same is illustrated as follows: (a) Tax paper has outstanding arrears of confirmed duty demand of ₹ 1 crore and he has already paid ₹ 60 lakhs. So, the amount of tax dues is ₹ 40 lakhs. After applying applicable relief @ 60%, the amount payable under the Scheme is ₹ 16 lakhs. (b) Taxpayer has outstanding arrears of confirmed duty demand of ₹ 1 crore apart from ₹ 20 lakh penalty and interest as applicable. He has already paid ₹ 1 cr towards duty. So, the amount of tax dues is zero, and the amount payable under the Scheme is zero." 27. The Circulars are not pieces of legislation but only binding directions issued to executive authorities, by virtue of Section 133 of the Scheme. Their applicability w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002 reads as under:- "8(4). The provisions of section 11 of the Act shall be applicable for recovery of the duty as assessed under rule 6 and the penalty under sub-rule 3(A) in the same manner as they are applicable for recovery of any duty or other sums payable to the Central Government." Therefore, before any recovery of interest or penalty may be enforced against the petitioners it would have to be first adjudicated. Consequently, the communications dated 17.03.2020 and 07.04.2020 issued by respondent no.6 are found to be wanting in jurisdiction and wholly pre-mature. 33. Also, Clause 1 of the Notification No. 68/63-CE dated 04.05.1963, reads as under:- "(1) In supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) Central Excise No. 69/59 (G.S.R. No. 822 of 1959), dated the 18th July, 1959, the Central Government hereby declares that the provisions of sub-section (1) of Section 105, Section 110, Section 115 [excluding clauses (a) and (e) of sub-section (1)] clause (a) of Section 118, Sections 119, 120, 121 and 124, clause (b) and sub-clause (ii) of clause (c) of sub-section (1) of Section 142 and 150 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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