TMI Blog2010 (1) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Commissioner, Meerut, had confirmed the duty to the tune of Rs. 10,00,001/- against the assessees under proviso 3(i) of Rule 96ZO(3) of the Central Excise Rules, 1944 and had levied equal amount of penalty and had ordered payment of interest @ 18% per annum. 4 Few facts relevant for the decision in the matter are that, the assessees are engaged in the manufacture of M.S. Ingots falling under sub-heading 7206.90 of the Schedule to the Central Excise Tariff Act, 1985. The annual capacity of production of the assessees factory was fixed at 4 M.T. by the Commissioner, Central Excise, Meerut, under his order dated 19-9-1997. Accordingly, the duty liability was assessed to Rs. 6,66,667/- per month. The assessees failed to discharge the duty liability within the stipulated time for the period from 1-9-1997 to 15-12-1997 without any valid closure for the period of seven days or more. The adjudicating authority under order dated 21-8-2002 confirmed the demand, as above, and also imposed the penalty and ordered payment of interest. Being aggrieved, the assessees filed an appeal. However, the appeal was filed beyond the period of limitation as it was filed on 24-11-2002. The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty. It was further contention on behalf of the Department that, the proceedings before the Settlement Commission were sought to be admitted only on 23-11-2004, much after filing of the appeals by both the parties before the Tribunal, and considering the proviso to Section 32E the Settlement Commission did not have jurisdiction to entertain such application and/or to pass any order on any such application filed by the party and hence considering the law laid down by the Apex Court in Deepak Agro Foods v. State of Rajasthan, reported in 2008 (228) E.L.T. 510 (S.C.) = 2009 (16) S.T.R. 518 (S.C.), the proceedings before the Settlement Commission were ab initio bad in law and without jurisdiction and, therefore the order passed by the Settlement Commission is a nullity. 8 On the other hand, the learned advocate appearing for the assessees has sought to assail the impugned order while contending that the application having been filed before the Settlement Commission on 27-5-2004, considering the proviso to Section 32F of the Central Excise Act, the Settlement Commission was already seized of the matter since May, 2004, much prior to the filing of the appeal before the Tribunal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in such form and in such manner as may be prescribed, and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and 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 or otherwise of such excisable goods to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless, (a) the applicant has filed returns showing production, clearance and Central excise duty paid in the prescribed manner; (b) a show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant; and (c) the additional amount of duty accepted by the applicant in his application exceeds two lakh rupees: Provided further that no application shall be entertained by the Settlement Commission under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent. 15 The term case under Section 31(c), at the relevant time, was defined as under : 31(c) case means any proceeding under this Act or any other Act for the levy, assessment and collection of excise duty, or any proceeding by way of appeal or revision in connection with such levy, assessment or collection, which may be pending before a Central Excise Officer or Central Government on the date on which an application under sub-section (1) of section 32E is made : Provided that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application or revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause; 16 The term case is defined in the said Act, as it stands today, is as under : 32(c) case means 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 under sub-section (1) of section 32E is made : Provided that when any proceeding is referred back i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant and to the Commissioner of Central Excise having jurisdiction. (3) Subject to the provisions of sub-section (4), the applicant shall within thirty days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the amount of additional duty admitted by him as payable and shall furnish proof of such payment to the Settlement Commission. (4) If the Settlement Commission is satisfied, on an application made in this behalf by the assessee that he is unable for good and sufficient reasons to pay the amount referred to in sub-section (3), within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by installments, if the assessee furnishes adequate security for the payment thereof. (5) Whether the additional amount of duty referred to in sub-section (3) is not paid by the assessee within the time specified or extended period, as the case may be, the Settlement Commission may direct that the amount which remains unpaid, together with simple interest at the rate of eighteen per cent per annum or at the rate notified by the Central Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that it has been obtained by fraud, or misrepresentation of facts. (10) Where any duty payable in pursuance of an order under sub-section (7) is not paid by the assessee within thirty days of the receipt of a copy of the order by him, then, whether or not the Settlement Commission has extended the time for payment of such duty or has allowed payment thereof by installments, the assessee shall be liable to pay simple interest at the rate of eighteen per cent per annum or at such other rate as notified by the Central Board of Excise and Customs on the amount remaining unpaid from the date of expiry of the said of thirty days aforesaid. (11) Where a settlement becomes void as provided under sub-section (9) the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the Central Excise Officer having jurisdiction may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the date of the receipt of communication that the settlement became vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nety days of the receipt of the Communication from the Settlement commission, on the matters covered by the application and any other matter relating to the case : Provided that where the Commissioner (Investigation) does not furnish the report within the aforesaid period, the Settlement Commission shall proceed to pass an order under sub-section (5) without such report. (5) After examination of the records and the report of the Commissioner of Central Excise received under sub section (3), and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (4), and after giving an opportunity to the applicant and to the Commissioner of Central Excise having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner of Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commission and the Central Excise Officer having jurisdiction may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the date of the receipt of communication that the settlement became void. 20 Similarly, Section 32I(1) and (2), at the relevant time, read thus : SECTION 32-I. Powers and procedure of Settlement Commission. -(1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in a Central Excise Officer under this Act or the rules made thereunder. (2) Where an application made under section 32E has been allowed to be proceeded with under section 32F, the Settlement Commission shall, until an order is passed under sub-section (7) of section 32F, have, subject to the provisions of sub-section (6) of that section, exclusive jurisdiction to exercise the powers and perform the functions of any Central Excise Officer, under this Act in relation to the case. 21 At present the said provision reads thus : SECTION 32-I. Powers and procedure of Settlement Commission. -(1) In addition to the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case in hand, as already seen above, the assessees had filed the application before the Settlement Commission on 27th May, 2004. However, the Settlement Commission admitted the proceedings only by order dated 23rd December, 2004. At the same time, the records disclose that, the Department had already preferred the appeal against the order of the Commissioner (Appeals) on 6th December, 2004. It is also pertinent to note that the records nowhere disclose that the fact of filing of such appeal was disclosed to the Settlement Commission either on 15th December, 2004 or any time thereafter. Nevertheless, considering the provisions of Section 32E read with the definition of the word case under Section 31(c), obviously, on the day when the matter was heard in relation to the point of admission by the Settlement Commission on 15th December, 2004, already there was an appeal pending before the Appellate Tribunal at the instance of the Department. Further, records also disclose that the assessees themselves had filed the appeal against the order of the Commissioner (Appeals) before the Appellate Tribunal on 21st December, 2004. The order admitting the proceedings for the purpose of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the fact that by that time the appeal was pending before this Tribunal, the entire exercise in the matter by the Settlement Commission was without jurisdiction and, therefore, the order passed by the Settlement Commission either on 23rd December, 2004 or any time thereafter during the pendency of the appeal before this Tribunal was without jurisdiction and, therefore, such orders are nullity. The issue in relation to nullity of the order, the same having been passed without jurisdiction, can be raised at any stage before any authority and in any proceeding. The law in that regard is well settled and the Department is justified in placing reliance in that regard in the decision of the Apex Court in Deepak Agro Food case (supra). 26 Reverting to the merits of the case, the only challenge in the matter by the Department is that, the Commissioner (Appeals) could not have reduced the penalty in contravention of the provisions of law and ignoring the mandate in that regard laid down by the Apex Court in Dharamendra Textile Processors case (supra). According to the Department, the law clearly requires imposition of penalty equivalent to the amount of duty. On the other hand, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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