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Rejection of application for compounding - Compounding of Offences under Indirect Tax Laws - Central Excise

Rejection of application for compounding
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Rejection of application for compounding

Application for compounding can also be rejected by the compounding authority. However, application shall not be rejected unless an opportunity has been given to the applicant of being heard and the grounds of such rejection are mentioned in such order. Therefore, in such a case, Personal hearing is necessarily to be given.

The Board has also clarified that on the basis of the decision of the Supreme Court in the case of U.O.I. vs. Anil Chanana (2008 (1) TMI 50 - SUPREME COURT) that compounding of offences is undertaken based on the principle of Disclosure. The basic rule of disclosure, underlying Section 137(3) read with Rule 6 of the Customs (Compounding of offences) Rules, 2005, is that if there are demonstrable contradictions or inconsistencies or incompleteness in the case of the applicant, then the application for compounding cannot be entertained. It is reiterated that the aforesaid decision of the Supreme Court and rule of disclosure shall be followed while considering the compounding of offences. Accordingly, compounding of offences may not be allowed where there are demonstrable contradictions, inconsistencies or incompleteness in the case.

 
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