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2018 (11) TMI 81 - HC - Central ExciseLevy of penalty by the Settlement Commission - Clandestine removal - Kar Vivad Samadhan Scheme - case of appellant is that the scheme of settlement under the Act envisages only one settlement proceeding. Once the settlement application of the main noticee is accepted by the Settlement Commission, there could thereafter be no separate adjudication of the case against the remaining noticees. In view of the fact that when in case of a manufacturer who was stated to have carry out clandestine removal of goods without payment of excise duty, the application for settlement was accepted by the Settlement Commission and was granted immunity from penalty and prosecution, the department can still proceed further against the present assessee who was facing only the notice for penalty? Held that:- The Court was clearly of the opinion that under KVS Scheme, there is no adjudication on the subject matter of the demand notice or show cause notice but there is a settlement of tax arrears. Even though the same show cause notice may call upon the company and its Directors to show cause, there is a separate tax demand for arrears against the Directors. Thus each entity or person would have to file a separate declaration. The settlement is in respect of each declaration. Under section 91, immunity would be available only in respect of matters covered in such declaration. It was emphatically held that the matter covered under the declaration by the Company is the tax arrears of the company and therefore, the directors or the officers of the company cannot claim immunity on the basis of immunity granted to the company. Kar Vivad Samadhan Scheme (Removal of Difficulties) Order thus made a special provision extending the benefit of settlement in case of the principal noticee to all persons to whom show cause notices were issued in respect of the same subject matter. In fact, the extension of such benefit to the so called subsidiary noticees was not the focal point of the judgments of Kerala and Gujarat High Court in case of Omkar S. Kanwar [2000 (11) TMI 19 - GUJARAT HIGH COURT] and [2000 (3) TMI 16 - KERALA HIGH COURT]. What was at the centre of controversy was what can be stated to be a pending adjudication. It was in this context while approving the decision of Kerala High Court, Supreme Court observed that “Thus read as a whole the words “pending adjudication” cannot be read to exclude cases where the proceedings are still pending in Appeal.” Any other way of understanding this judgment of Supreme Court would pose a serious difficulty. It was open for the Settlement Commission to impose penalty on the directors in addition to imposing penalty on the company, if there was material justifying imposition of such penalty. Merely because the appellants herein could not have applied for settlement due to monetary limit would not change the situation - question is held against the appellants and in favour of the department. Appeal dismissed.
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