INTRODUCTION:
Chapter V of the Central Excise Act, 1944 ('Act' for short) deals with the settlement of cases. Section 31(C) of the Act defines the term 'case' as any proceeding under this Act or any other Act for the levy, assessment and collection of excise duty, pending before an Adjudicating Authority on the date on which an application is made. When any proceedings is referred back in any appeal or revision, as the case may be, by any court, Appellate Tribunal or any other authority, to the Adjudicating Authority for a fresh adjudication or decision, as the case may be, then such proceeding shall not be deemed to be a proceeding pending within the meaning of Section 31(C).
SETTLEMENT COMMISSION:
The Central Government established 'Customs and Central Excise Settlement Commission' ('Commission' for short) under Section 32 of the Act. The Commission shall consist of a Chairman and Vice Chairman and other members as the Central Government thinks fit and shall function within the department of the Central Government dealing with customs and central excise matters.
APPLICATION FOR SETTLEMENT OF CASES:
An assessee may, in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled in Form SC (E)-1 containing-
Ø A full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction;
Ø The manner in which such liability has been derived;
Ø The additional amount of excise duty accepted to be payable by him; and
Ø Such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short levy on account of misclassification, under valuation, inapplicability of exemption notification or Cenvat credit but excluding the goods in respect of which no proper record has been maintained by the assessee in his daily stock register;
The application shall be verified and signed;
The application shall be filed in quintuplicate and shall be accompanied by a fee of Rs.1000/-;
The application shall be presented by the applicant in person to the Secretary at the Headquarters of the Commission at New Delhi or of the Bench within whose jurisdiction his case falls or to any other authorities in this behalf by the Secretary, or shall be sent by Registered post;
A settlement application sent by post shall be deemed to have been presented to the Secretary on the day on which it is received in the office of the Commission;
No such application shall be made unless-
Ø The applicant has filed returns showing production, clearance and central excise duty paid in the prescribed manner;
Ø A show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant;
Ø The additional amount of duty accepted by the applicant in his application exceeds three lakh rupees;
Ø The applicant has paid the additional amount of excise duty accepted by him along with interest due under Section 11AB;
Where any excisable goods, books of accounts, other documents have been seized under the provisions of this Act or rules made there under, the assessee shall not be entitled to make an application before the expiry of 180 days from the date of such seizure;
An appeal shall not be allowed to be withdrawn by the applicant;
The additional amount of excise duty accepted by the applicant along with interest due thereon shall be deposited by him in any of the authorized bank under TR-6 challan in quintuplicate.
PROCEDURE ON RECEIPT OF APLICATION:
Allowing or rejecting the application:
On receipt of application, the Commission shall within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing so as to why the application made by him should be allowed to be proceeded with;
If the applicant proposes to refer or rely upon any documents or statements or other papers, he shall submit six copies of a paper book containing such papers indexed and paged within seven days from the date of issuance of the notice. The Commission if it is satisfied that there is sufficient reason for delay it may condone the delay and admit the paper book;
After taking into consideration the explanation provided by the applicant, the Commission shall within a period of fourteen days from the date of notice, by an order, allow the application to be proceeded with, or reject the application as the case may be and the proceedings before the Settlement Commission shall abate on the date of rejection;
Where no notice has been issued or no order has been passed within the aforesaid period by the Commission the application shall be deemed to have been allowed or to be proceeded with.
Procedure after allowing the application:
Where an application is allowed or deemed to have been allowed to be proceeded with the Commission shall, within seven days from the date of order call for a report along with the relevant records from the Commissioner of Central Excise having jurisdiction and the Commissioner shall furnish the report within a period of thirty days of the receipt of communication from the Commission;
If the Commissioner proposes to refer or rely upon any document or other papers he may submit six copies of a paper book containing such papers duly indexed and paged within the period stipulated. If the Commission is satisfied that there is sufficient reason, it may condone the delay and admit the paper work;
Where the Commissioner does not furnish the report within the period the Commission shall proceed further without the report of the Commissioner;
Where the report from the Commissioner is received the Commission may after examination of such report it is of the opinion that any further inquiry or investigation in the matter is necessary, direct, for reasons to be recorded in writing the Commissioner (Investigation) within fifteen days to make or cause to be made such further enquiry or investigation and furnish a report within a period of ninety days of the receipt of the communication from the Commission;
Where the Commissioner (Investigation) does not furnish the report within the period the Commission shall proceed to pass an order without such report;
Where a fact which is not borne out by or is contrary to the record relating to the case is alleged in the application it shall be stated clearly and concisely and supported by the duly sworn affidavit;
The Commission shall notify to the applicant and the Commissioner the date of place of hearing of the application;
A Bench shall hold its sitting at its headquarters. The Bench may, however, at the discretion of the Presiding Officer, hold its sittings at any place in its jurisdiction by the Commission;
The proceedings before the Commission shall not be open to the public;
The Commission may, on such terms as it thinks fit, and at any stage of the proceedings, adjourn the hearing of the application or any matters arising thereon.
Order:
After examination of the records and the report of the Commissioner of Central Excise, Commissioner (Investigation) and after giving an opportunity to the applicant and to the Commissioner of Central Excise either in person or through a representative duly authorized and also examining such order as it thinks fit on the matters covered by the application and any other matter relating to case not covered by the application but referred to in the report of Commissioner of Central Excise and Commissioner (Investigation);
The order shall provide for the terms of settlement including any demand by way of duty, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and in case of rejection contains the reasons therefore and it shall also provide that the settlement be void if it is subsequently found by the Commission that it has been obtained by fraud or misrepresentation of facts;
The settlement amount shall not be less than the duty liability admitted by the applicant;
The order of the Commission shall be conclusive.
POWERS OF COMMISSION:
Ø To order provisional attachment to protect revenue;
Ø To re-open completed proceedings;
Ø To grant immunity from prosecution and penalty;
Ø To send a case back to the Central Excise Officers.
IMPLEMENTATION OR ORDER:
Any sum specified in the order shall be recovered in accordance with the provisions under Section 11 of Central Excise Act;
If the sum is not paid within thirty days of the receipt of the copy of the order the same shall be recovered along with interest in accordance with the provisions under Section 11 of the Central Excise Act;
Where a settlement becomes void, the proceedings shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by Commission and the Central Excise Officer may complete such proceedings at any time before the expiry of two years from the date of receipt of the communication of the Commission that the settlement becomes void.
