TMI Blog2001 (8) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement of the case on 23-4-2001 before the Commission and the case is pertaining to the manufacture of sanitary napkins by M/s. Modern Hygiene Products Pvt. Ltd., Goa. During the course of investigation, DGAE recorded the statements of applicant and the co-noticees and issued show cause notice on 15-10-1999. The show cause notice alleges that the applicant is a manufacturer in terms of Section 2(f) of Central Excise Act, 1944 in respect of manufacturing activities conducted at M/s. Modern Hygiene Products Pvt. Ltd., Goa and as such the clearances effected from M/s. Modern Hygiene Products Pvt. Ltd., Goa to the applicant s sales depots during the period 1-11-1994 to 31-3-1997 should not be considered as stock transfers of the applicant. The ld. Advocate further submitted that the Applicants have already submitted their written reply to the demand notice on 12-12-2000. The learned Advocate submitted that in a similar matter involving receipt of interest free advances from M/s. Procter Gamble Ltd., a demand notice dated 20-11-1996 was issued demanding Central Excise duty on the notional interest accrued for the period November 91 to July 94 and the same has been dropped by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, as per paragraph 1 read with paragraph 6 to the Annexure-II for the last 6 months of manufacture of the said goods i.e. from 1-10-1996 to 31-3-1997. However, the said period in respect of which duty liability is admitted is itself a time barred period. As such, the Applicants reliance on the provisions of Section 11A and acceptance of a six month period for admitting additional duty liability is incorrect. In fact, in terms of Section 11A, the six month period is the period preceding the date of issue of show cause notice and which would be from April 99. The demand notice only refers to the period November 94 to 31-3-1997. The Commission asked the Revenue whether the applicant covered the parameters of the sections relating to Settlement Commission? The Revenue clarified that they have covered the three parameters specified in proviso to Section 32E(1) but they have accepted the duty as payable for a period of six month which itself lies in the extended period under Section 11A. As such, the applicant is required to admit the entire duty liability as reflected in the demand notice dated 15-10-1999 and which is Rs. 11,52,72,957/- since the admitted amount of Rs. 2,75,31,458 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on the date on which an application under sub-section (1) of Section 32E is made. 10. Settlement Commission may by order allow an application to be proceeded with or reject the application under the provisions of Section 32F(1) of Central Excise Act, 1944. 11. What is to be noted here is that the Settlement Commission may pass an order as it thinks fit on the matters covered by the application in accordance with the provisions of the Central Excise Act, 1944. 12. This application has been filed before us consequent upon a show cause notice issued by the Directorate General (Anti-Evasion) Mumbai Zonal Unit dated 15th October, 1999. Among other things, this show cause notice sought to recover a differential amount of Central Excise Duty amounting to Rs. 11,52,72,957/- from M/s. Procter Gamble under the proviso (1) of 11A of the Central Excise Act read with Rule 9(2) of the Central Excise Rules. This demand pertains to the period 1st November, 1994 to 31st March, 1997. 13. During the hearing the ld. Advocate on behalf of the Applicant admitted an additional duty liability of Rs. 2,75,31,458/- which according to them is for six months period of manufacture of the disputed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial leave petition was pending the Department issued two notices under Section 11A of the Act for recovering the Excise duty on yarn for the period from 6-11-1980 to 31-3-1981. However, the Department issued a notification on 20-2-1982 as a precautionary step, amending Rules 9 49 of the Central Excise Rules creating a fiction of deemed removal of the input goods at the intermediary stage within the factory. That amendment later gained incorporation in a legislative enactment also, vide Section 51(2)(d) of the Finance Act, 1982 by which it was given retrospective effect from 1944. Though the appellant challenged the aforesaid amendments first in the Delhi High Court and later in this Court, its validity remained undisturbed vide J.K. Spinning Weaving Mills Ltd. and Anr. v. Union of India and others - 1987 (32) E.L.T. 234 = AIR 1987 SC 191. A three-Judge Bench of this Court in that decision upheld the validity of the amendments to Rules 9 and 49 besides upholding the retrospectivity granted to the provisions as per Section 51 of the Finance Act, 1982. 16. However, in order to allay the apprehension of the assessees that the judicial imprimatur accorded to the long distant ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved during the month to which the said return relates, is to be filed by a manufacturer or producer or a licencee of a warehouse, as the case may be, the date on which such return is so filed; (B) Where no monthly return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (C) in any other case, the date on which the duty is to be paid under this Act or the Rules made thereunder; (b) in a case where duty of excise is provisionally assessed under this Act or the Rules made thereunder, the date of adjustment of duty after the final assessment thereof; . The period of six months envisaged in sub-section (1) thereof can thus be extended only under three eventualities. First is, if the impairment of the levy is attributable to any fraud, collusion or wilful misrepresentation or suppression of facts, the period of six months will stand stretched up to five years. The second eventuality is, if the original assessment was provisional, in which case the period would start running only from the date of final assessment. The third is, if the service of show cause notice on the person chargeable with duty is stayed by a Court, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the period of six months not from the date of issue of Show Cause Notice but from the date of suspension of manufacture i.e. for the period of six months prior to 31-3-1997. Thus, the date of suspension of manufacture is a period beyond six months from the date of issue of Show Cause Notice, as the Show Cause Notice was issued on 15th October, 1999. Since the allegations in the Show Cause Notice refer to collusion, wilful mis-statements, mis-representation etc. the logic for admitting only Rs. 2,75,31,458/- instead of the whole amount of Rs. 11,52,72,957/- has no rationale basis of true and full disclosure. The reasons for admitting short-levy/non-levy prior to a period of six months from 31-3-1997 have to be same for whole period of 1-11-1994 to 31-3-1997 mentioned in the Show Cause Notice. If that be the case, the disclosure in column No. 12 of the application is not a full and true disclosure. It is, therefore, apparent that the Applicant had failed to make a full and true disclosure as is contemplated in Section 32E(1) of the Central Excise Act, 1944. The said sub-section stipulates that the applications of the Applicant shall contain full and true disclosure of his dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the petitioner cannot be accepted. No assessee has a right to approach the Commission without disclosing or making a full and true disclosure of his income, as such disclosure is a necessary pre-condition for invoking the Commission s jurisdiction under Section 245C. An application to the Commission is not intended to enable the dishonest assessee to continue his dishonest conduct and still claim the benefits which can be conferred by the Commission if the Commission were to ultimately make an order for settlement. The Settlement Commission is not meant to be an optional forum chosen at the option of the assessee for the settlement of the tax liability of the assessee as also his liability for further proceedings or prosecution under this Act or other Acts, even while the assessee continues to be dishonest and deliberately fails to make a true and full disclosure of the extent of the income which he not disclosed before Assessing Officer. The machinery of the Settlement Commission is available to the assessee who, after exhibiting his dishonest conduct by filing a return in which true income has not been disclosed, has availed of the chance to correct himself by making a tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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