TMI Blog2010 (9) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Settlement Commission did not go into the question of full and true disclosure at the stage of admission of the application filed by the respondents herein is untenable. No infirmity in the Settlement Commission entertaining the application for settlement. There is another aspect of the matter that needs to be highlighted. Appeal dismissed. - W.P. (C) No. 4410 of 2007, CM Nos. 8248, 11752 of 2007 & 11105 of 2008 - - - Dated:- 17-9-2010 - Badar Durrez Ahmed and Siddharth Mridul, JJ. Shri Mohan Prasaran, ASG, with Satish Aggarwala and Ms. Hrishika Pandit, for the Appellant. Shri Dushyant Dave, Sr. Advocate with Ms. Vibha Datta Makhija and Yashvardhan, Philemon Nongbri and D.D. Singh, for the Respondent. JUDGMENT The present writ petition under Articles 226 and 227 of the Constitution of India seeks quashing of the Final Order No. F-492-494/CE/07-SC(PB), dated 15th February, 2007 passed by the Settlement Commission, Customs Central Excise, Principal Bench, Delhi (hereinafter referred to as the Settlement Commission ) whereby the applications filed by the respondents herein for settlement were disposed of by the Settlement Commission. 2. The facts as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t before the Settlement Commission, admitting duty liability of ₹ 3,84,17,138/- and further disclosing that actual proportion of raw tobacco in their product i.e. Hans branded Khaini, is 70% and not 95% as shown in their records. On 26th October, 2005 a demand-cum-show cause notice, demanding duty of ₹ 34,50,57,409/- and proposing confiscation of seized Indian currency of ₹ 20.42 crores and ₹ 3.13 crores, 15 kilograms of foreign marked gold and finished goods worth ₹ 1.52 crores, was issued by the petitioner-Department to the respondent no. 1 to 16. On 23rd November, 2005 the petitioner filed reply to the applications for settlement filed by respondent no. 1 to 6. (h) On 2nd January, 2006 the respondent no. 1 to 6 filed revised applications under Section 32E of the said Act, before the Settlement Commission admitting an enhanced duty liability of ₹ 5,79,02,915/-. The respondent no. 1 to 6 quantified the duty evasion on the basis of data regarding consumption of raw tobacco, which had been discussed in the show cause notice for corroboration purposes. The amount admitted by the respondent no. 1 to 6 included the time-barred duty for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Govinda Roadways was not duly corroborated. (n) On 23rd January, 2007 after hearing the parties, the Settlement Commission directed the other respondents to file amended application. The respondent no. 6 filed amended application as per the directions of the Settlement Commission on 31st January, 2007. (o) On 9th February, 2007 during the initial hearing, the respondent no. 1 to 16 admitted further additional duty liability, thereby enhancing their total admission to ₹ 8,33,88,511/- for the period from 1st April, 1998 to 3rd November, 2004, by disclosing the fact that the quantity of raw tobacco shown as sold to three specific dealers may be included in the computation of use of raw tobacco. (p) Thereafter, vide the impugned order dated 15th February, 2007 the Settlement Commission settled the total duty at ₹ 16,70,76,824/- including Education Cess, with interest, to be adjusted out of cash seized from respondent no. 1 to 6. Further, 15 kilograms of seized gold was confiscated with an option to redeem the same on payment of fine in lieu of confiscation amounting to ₹ 30 lakhs. The currency seized from respondent no. 15 amounting to ₹ 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents that the decision of the Settlement Commission is not justifiable under Articles 226 and 227 of the Constitution of India and that a pragmatic/practical view should govern the proceedings before the Settlement Commission. 5. Before dealing with the merits of the contentions made on behalf of the parties it would be necessary to consider the relevant provisions of the said Act. (a) Section 31(c) of the said Act reads as under : Section 31(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 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 this clause; (b) Section 32E of the said Act reads as under : Section 32E : Application for settlement of cases. (1) An assessee may, in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er documents have been seized under the provisions of this Act or rules made thereunder, the assessee shall not be entitled to make an application under sub-section (1), before the expiry of one hundred and eighty days from the date of the seizure. (3) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed. (4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant. (c) Section 32F of the said Act reads as under : Section 32F : Procedure on receipt of an application under Section 32E. (1) On receipt of an application under sub-section (1) of Section 32E, the Settlement Commission shall within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the application made by him should be allowed to be proceeded with, and after taking into consideration the explanation provided by the applicant, the Settlement Commission, shall, within a period of fourteen days from the date of the 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative 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 and Commissioner (Investigation) under sub-section (3) or sub-section (4). (6) An order under sub-section (5) shall not be passed in respect of an application filed on or before the 31st day of May, 2007, later than the 29th day of February, 2008 and in respect of an application made on or after the 1st day of June, 2007, after nine months from the last day of the month in which the application was made, failing which the settlement proceedings shall abate, and the adjudicating authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under Section 32E had been made. (7) Subject to the provisions of Section 32A, the materials brought on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he concurrence of the applicant, reopen such proceeding and pass such order thereon as it thinks fit, as if the case in relation to which the application for settlement had been made by the applicant under that section covered such proceeding also : Provided that no proceeding shall be reopened by the Settlement Commission under this section after the expiry of five years from the date of application. Provided further that no proceeding shall be reopened by the Settlement Commission under this section in a case where an application under Section 32E is made on or after the 1st day of June, 2007. (e) Section 32-I of the said Act reads as under : Section 32-I : Powers and procedure of Settlement Commissions. (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 (5) of Section 32F, have, subject to the provisions of sub-section (4) of tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere, before the 1st day of June, 2007- (i) an order of settlement passed under sub-section (7) of Section 32F provides for the imposition of a penalty on the person who made the application under Section 32E for settlement, on the ground of concealment of particulars of his duty liability; or (ii) after the passing of an order of settlement under the said sub-section (7) in relation to a case, such person is convicted of any offence under this Act in relation to that case; or (iii) the case of such person is sent back to the Central Excise Officer having jurisdiction by the Settlement Commission under Section 32L, then, he shall not be entitled to apply for settlement under Section 32E in relation to any other matter. (2) Where an assessee has made an application under sub-section (1) of Section 32E, on or after the 1st day of June, 2007 and if such application has been allowed to be proceeded with under sub-section (1) of Section 32F, such assessee shall not be entitled to apply for settlement under Section 32E in relation to any other matter : Provided that such assessee shall not be prevented from filing an application for settlement if the issue in the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considerably or vastly different from the amount which he thought would be one at which he seeks to get the matter settled by making a full and complete disclosure. This very sub-section of Section 127B again uses the expression to have the case settled , again indicating that the scope of the Settlement Commission is to have the case settled on a duty which an applicant accepts to be payable by him. In the form it has been prescribed under these Chapter of settlement, in para 12 it is stated additional amount of duty disclosed and accepted as payable . In fact, Annexure 11 to such form in para 4 states full and true disclosure of the facts regarding the issues to be settled, including the terms of settlement sought for by the applicant . 10. All the abovesaid provisions and the paragraphs of the forms make it abundantly clear that what is required is a decision when there are terms of settlement which are agreed to by an applicant and a liability of duty which is accepted by him. Thus, it cannot be said that when an applicant comes for settlement he can be fastened with a liability which he never intended as accepted to be payable by him. We may further hold from sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if it is found by the Settlement Commission subsequently that the settlement has been obtained by fraud or misrepresentation of facts. This expression obtained by fraud or misrepresentation of facts again shows that the Settlement Commission is confined to the facts as accepted and stated by an applicant to the Settlement Commission and such statement of facts including the duty accepted as payable cannot be altered by making the huge variations upward to the same. 12. In fact, we feel that in a case where at an admission stage under Section 127(C)(1) the case throws a high degree of variation between the facts and contentions of both the parties before the Settlement Commission, then in such a case the Settlement Commission should not even admit an application because it is clear that the Department of customs does not accept the duty which an applicant feels is payable by him and therefore is bound to enquire into highly disputed question of facts. Of course, we may hasten to add in certain cases in spite of a huge variation and dispute which may be sought to be raised by the Department, it can be found that the disputes raised by the Department as to rates or other relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercisable when it is subsequently found by the Commission that the settlement had been obtained by fraud or misrepresentation of facts. The Commission after having held that the case of the appellant was not covered by Section 245-D(6) of the Act had given clean chit to the assessee by abruptly concluding that the stand presented by the assessee s counsel was acceptable. It also lightly brushed aside the evidentiary value of the materials placed on record to justify the stand of the revenue that the settlement order had been obtained by fraud or misrepresentation of facts. The fraud and/or misrepresentation of facts are tell tale. The investigating officer had categorically stated that the alleged lenders categorically denied to have advanced any loan. There was inherent improbability in the assessee s stand that seven persons would keep huge sums of money and would give money on the same day by cash. Since there was no assessment, question of furnishing certificates about assessment from unconnected persons is sufficient to show misrepresentation of facts. No returns of income were filed by the lenders up to the relevant time. Therefore, it was submitted that the order of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by fraud or misrepresentation of facts. It cannot be said that there has been a true and fair declaration of income which is the pre-requisite for settlement by the Commission. If an order is obtained by fraud or misrepresentation of facts, it cannot be said that there was true and fair disclosure. It was noted here that unlike Section 139 of the Act which provides for filing of revised return, there is no provision for revision of an application made in terms of Section 245-C. That shows clear legislative intent that the applicant for settlement has to make a true and fair declaration from the threshold. It is on the basis of the application received that the Commissioner calls for report to decide whether the application is to be rejected or permitted to be continued. The declaration contemplated in Section 245-C is in the nature of voluntary disclosure of concealed income, but as noted above it must be true and fair disclosure. Voluntary disclosure and making a full and true disclosure of the income are necessary pre-conditions for invoking the Commission s jurisdiction. (iii) In Light Engg. Corporation v. Union of India, 2007 (207) E.L.T. 40 (P H), the Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a disclosure or a finding on the satisfaction of that requirement as a condition precedent for the assumption of jurisdiction. (v) In Kihoto Hollohan v. Zachillhu and Others, 1992 Supp (2) SCC 651, the Supreme Court observed as under: 101. In the operative conclusions we pronounced on November 12, 1991 we indicated in clauses (G) and (H) therein that judicial review in the area is limited in the manner indicated. If the adjudicatory authority is a tribunal, as indeed we have held it to be, why, then, should its scope be so limited? The finality clause in Paragraph 6 does not completely exclude the jurisdiction of the courts under articles 136, 226 and 227 of the Constitution. But it does have the effect of limiting the scope of the jurisdiction. The principle that is applied by the Courts is that in spite of a finality clause it is open to the Court to examine whether the action of the authority under challenge is ultra vires the powers conferred on the said authority. Such an action can be ultra vires for the reason that it is in contravention of a mandatory provision of the law conferring on the authority the power to take such an action. It will also be ultra vire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 127F(2) and in such a case the Settlement Commission in spite of a contentious stand of the Department of Customs may still choose to go ahead and accept the figure of duty as acceptable by the applicant to the Commission as the said duty would be clearly born out from records of the Department of customs itself. Thus, this decision itself carved out an exception where complex issues could be gone into by the Commission provided other admitted facts appear from the records or the report called for by the Commission or such enquiry. In fact in the instant case the Settlement Commission directed the Commissioner (Investigation) to conduct investigation and the Commissioner (Investigation) submitted its report to the Settlement Commission. It is only thereafter that the Settlement Commission settled the total duty at ₹ 16,70,76,824/- as against the total admission of ₹ 8,33,88,511/- made by the respondents herein. Therefore, if the respondents have not made a complaint against the amount settled by the Settlement Commission, which is twice the amount admitted by them before the Commission, it does not lie in the mouth of the petitioner to assail that amount. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner that the application under Section 32E of the Act was filed before the issuance of the show cause notice and was consequently not maintainable. In this respect it is seen that Section 32E(b) provides that no such application shall be made unless a show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant. It is also seen that Section 32E(2) states that the assessee shall not be entitled to make an application under sub-section (1) before the expiry of one hundred and eighty days from the date of the seizure, where any excisable goods, books of accounts, other documents have been seized. In the present case, the respondents have admittedly made the application for settlement after the expiry of one hundred and eighty days from the date of seizure. In this behalf it must be observed that both these provisions are directory in nature and need not be obeyed or fulfilled exactly. Secondly, if the aforesaid provisions are interpreted harmoniously, which is essential to ensure that neither one of them is rendered repugnant or otiose, it can be said that the application could have been made after one hundred and eighty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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