TMI Blog2013 (10) TMI 238X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case would necessarily be involved even to record a finding that the decision is irrational - Relying upon R.B. Shreeram Durga Prasad and Fatechand Nursing Das v. Settlement Commission (It and Wt) and Anr. [1989 (1) TMI 4 - SUPREME Court ] With particular reference to orders of the Settlement Commission. The present case clearly appears to be eminently a case for adjudication and not for settlement. The decision making process adopted by the majority of the Settlement Commission is flawed. The majority opinion rightly posed the question to themselves that the real question is whether the applicant has accounted for all the catechu bought by it and whether any duty liability was incurred by utilizing the unaccounted catechu for the purpose of clandestine manufacture and clearance of the goods. However, it appears to us that they did not examine the question with the insights and incisiveness which the dissenting member employed in examining the question. That has to be examined by the adjudicating authority under the Central Excise Act in accordance with law and the provisions of the Act. We are quite aware of the limits of judicial review as contoured by the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Additional Solicitor General, purporting to meet the point filed a copy of the Circular No.44/2011-CUS dated 23.09.2011 and submitted that the petitioner No.2 came within the scope of the circular and was authorised to file the writ petition jointly with the Union of India. A perusal of the circular shows that consequent to the judgment of the Supreme Court on 18.02.2011 in Civil Appeal Nos.4294-4295/2002, 2603/2005 and 4604/2005 in the case of Sayed Ali 2011 (265) ELT 17 (SC), an amendment to Section 28 of the Customs Act, 1962 was made w. e. f. 16.09.2011 by insertion of clause (11) which reads as follows: - (11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority all persons appointed as officers of Customs under sub-section (1) of section 4 before the sixth day of July 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section. 3. The effect of the amendment is that the Assistant Director (Investigation) who is an officer of the DGCEI was retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the production and clandestinely clearing its products which resulted in evasion of payment of excise duty. There was also intelligence to the effect that all the close relatives of the Chairman and CMD of the first respondent were managing all the activities of the first respondent. A search was therefore conducted on 16.07.2008 in the course of which documents showing accounts of purchase of catechu and supply of the same to the various units of the first respondent, who is hereinafter referred to as DSL , were recovered. The following amounts of cash were also recovered: Rs. 47,00,000/- from the residence of Subhash Chand Gupta, a senior member of the family and uncle of respondent No.2, Rs. 9,00,000/- from respondent No.2, Rs. 1,50,000/- from the residence of respondent No.3 and Rs. 4,00,000/- from the residence of respondent No.5. The cash seized totalled to Rs. 61,50,000/-. According to the petitioner, no proper explanation was available for the cash and, therefore, the same was seized under panchnama. In the course of the search proceedings, DSL and its director, Ajay Kumar Gupta, who is respondent No.2 in the present proceedings, were asked to furnish the details of pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther were looking after the purchase of kattha and supari and explained the various entries in the file to the central excise authorities. After considering the explanation of Ajay Kumar Gupta with regard to the papers in the recovered file, it appeared to the central excise authorities that all these papers in the file showed the actual transactions of kattha by DSL from their suppliers. The details available in the file were tabulated by the central excise authorities (page 15-16 of the show-cause notice) and it was noticed that there were several quantities of kattha which, though have been received by DSL, were not shown in the accounts of the suppliers. According to the central excise authorities, DSL has actually received several quantities of kattha which were not accounted for in its books as well as in the books of the suppliers and it was this unaccounted catechu which was used in the production of paan masala, gutkha and mouth freshner which was suppressed and cleared clandestinely without payment of duty. Several persons employed with DSL were examined during the search and their statements were recorded to show unaccounted receipt of catechu and the utilisation thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were manufactured and clandestinely cleared by them from their registered factory premises in the aforesaid manner, is recoverable by invoking the extended period as provided under sub section (1) of Section 11 (A) of the said Act and proviso thereto. They are also liable for penal action under Section 11AC of the Central Excise Act, 1944 and are also liable to pay interest as per provisions of section 11 AB of the Central Excise Act, 1944. 12. In the other paragraphs of the show-cause notice the specific charges against the other respondents in the present proceedings were made. 13. The show-cause notice summarizing the aforesaid facts and seeking the explanation of DSL and its directors was issued on 14.07.2009 by the Additional Director General of DGCEI, New Delhi. The respondents, after participating in the proceedings pursuant to the issue of the show cause notice for some time, approached the Settlement Commission and filed settlement application Nos.S.A.(E)Nos.2693/20011 to 2697/2011 on 01.08.2011. On 19.08.2011 the Settlement Commission sought the views of the DGCEI on the settlement applications filed by the respondents under Section 32E of the Central Excise Act, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement Commission by the DGCEI, a copy of which is annexed as Annexure P-2 to the writ petition. After reiterating the earlier submissions by letter dated 05.12.2011, the DGCEI placed the following further objections to the processing of the settlement applications: - (a). The applicants before the Settlement Commission have adopted a contradictory stand. Though they have deposited the duty liability of Rs. 81,71,625/- along with interest of Rs. 66,91,245/-, yet they maintain in their application that the entry for the receipt of 2700 kg catechu on 03.05.2005 in the bunch of documents contained in the seized file, was a mere accounting mistake. There is thus no full and true disclosure. (b). The applicants have taken a new plea regarding the weight loss during the process of pulverization of the catechu cake/ biscuit into catechu powder and on this basis, have claimed a huge reduction in their duty liability. This point was never raised by the applicants at any stage of the investigation. Accordingly their claim of weight loss of 9.91% made for the first time before the Settlement Commission was devoid of substance and should not be permitted. Apparently its only a ploy to cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot submitted to the Settlement Commission. The applicants have planned a systematic evasion of huge amounts of excise duty. (b). Show-cause notice is based on solid documentary evidence recovered through the search, including details of catechu received from the suppliers, which are corroborated by various persons including directors and employees of DSL. Despite ample opportunity given, the seized records were not properly explained by the applicants. (d). The interpretation placed by the applicants upon the entries of purchase of catechu in the seized records is contrary to what was reflected in the private records and the written submissions of the parties. The explanation of the applicants before the Settlement Commission is nothing but an afterthought. (e). The explanation of the applicants that they had no incentive to evade excise duty since they would be entitled to refund of the duty is facile because according to the scheme the refund of the excise duty, which would be credited to an escrow account can only be utilised for further investment in plant and machinery, civil, social or infrastructure projects, etc. in the north-eastern States which is approved by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t DSL has actually received the excess catechu which has not been accounted for in its books as well as in the books of accounts of the supplier. There can be no other objective except to use such catechu in the production of the products such as paan masala, gutkha and mouth freshner with kattha which was suppressed and cleared without payment of duty. (k). All the statements recorded from the employees and the directors of DSL confirmed that DSL was actually receiving more quantity of catechu but indulging in fudging their accounts by showing such receipt with the sole intent to use the suppressed quantity for clandestine manufacture and sale without duty. 16. The above is a brief summary of the parawise reply of DGCEI to the settlement applications filed by DSL and others. Thereafter the issues for settlement were pointed out to the Settlement Commission in the following paragraph: - ISSUES for Settlement As per provisions of Section 32E of Central Excise Act, 1944, Applicant has to make a full and true disclosure of the duty liability which has not been disclosed before the Central Excise officer, but in this case applicant has not made full and true disclosure of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation due to oversight would make a mockery of the settlement proceedings . (c). After receipt of the show-cause notice, DSL manipulated their records and furnished untenable reasons without supporting evidence, which are all contrary to the statements of the directors and employees of DSL recorded under Section 14 and contrary also to the private records recovered from the premises of the directors of DSL. The Commissioner (Investigation) has accepted the reasons given by the applicants without further verification. (d). The applicant did not make any full disclosure of the facts during the investigation, nor were these facts given to the Commissioner (Investigation). Despite this, the Commissioner (Investigation) has not taken any action or attempted to investigate the actual status of untraceable/ non-existent suppliers of catechu. Not only that, they have also accepted the assessee s reasons without any supporting documents. (e). Several contentions of the Revenue were not considered at all by the Commissioner (Investigation) and these are as under: - (i). The statements made under Section 14 of the Act have not been controverted or explained in the report of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the filing of the applications before the Settlement Commission was sufficiently long to manipulate their records cleverly to accommodate the entries which they could not have explained and for this purpose they may have created forged ledger, forged documents showing return of catechu, etc. which the Commissioner (Investigation) has taken as sacrosanct document. The applicants have thus thrown a challenge to most of the allegations in the show-cause notice on the basis of which the demand of duty has been worked out. Such an issue can only be sorted out before the proper adjudicating authority and cannot be taken to the portals of the Settlement Commission. The adjudicating authority is equipped with sufficient investigative powers and authority and has an effective machinery to deal with the explanations and replies of the applicants and to examine the authenticity of the documents such as transactions with the banks, goods receipts of the transporters, entries recorded at the end of the suppliers. 18. It will thus be seen that the DGCEI had strongly objected to the correctness of the conclusions and the manner in which the Commissioner (Investigation) had carried out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re has conferred sufficient powers and authority upon the adjudicating officers/ forums before whom the assessee may challenge or dispute any question of fact or law but that is not possible before the Settlement Commission which was constituted to deal with errant taxpayers who want to turn a new leaf and settle all their disputes. It is not possible, according to the central excise department, to convert the Settlement Commission into an adjudicating body to deal with disputed question of fact and law nor was it an appellate body examining the merits of the show-cause notice. There are separate forums in which the applicants before the Settlement Commission can take such matters and contest them, but not before the Settlement Commission. The Settlement Commission is a forum of surrender and not a place to challenge the legality of the show-cause notice, the statements recorded under Section 14, etc. nor is the Settlement Commission constituted to compute the duty liability of the applicants by examining hotly contested issues. It is required of any applicant who wants to approach the Settlement Commission to make a full and true disclosure of his duty, liability which has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the adjudicating authority and settlement before the Settlement Commission which has been brought out in the judgment of the Delhi High Court cited above. It was the duty of the Settlement Commission to weigh the additional evidence/ disclosure made by the applicant to ensure that there was a true and honest disclosure. Attention was drawn to the fact that the department has found various incriminating documents during the search which contain strong evidence of duty evasion involving huge revenue and the applicants cannot be permitted to approach the Settlement Commission when fraud is about to be unraveled and the department is in possession of adequate material to do so, just to enable the applicants to settle their dispute and obtain immunity from penalty, prosecution, etc. Reliance for this proposition was placed on the judgment of the High Court in Kuldeep Industrial Corporation v. Income Tax Officer, (1997) 223 ITR 840. Instances of incorrect information supplied by the applicants in order to mislead the excise department in the course of the investigation were also furnished in the reply. 23. The Settlement Commission passed the impugned order on 12.03.2012. The princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme of the law. 25. The Settlement Commission (majority) agreed with the contention of the Revenue that the settlement proceedings are different from adjudication proceedings, but at the same time observed that merely because the settlement proceedings also involved or required appreciation or evaluation of evidence, particularly in cases where the applicants do not admit in full the duty liability as demanded in the show-cause notice, it cannot be said that wherever appreciation of evidence is involved, there can only be adjudication proceedings and not settlement proceedings. The Settlement Commission agreed in principle with the contention of the Revenue that the question of adjudication would arise where there is a huge gap between the duty demanded in the show-cause notice and the amount of duty admitted by the applicant and the applicant does not accept the amount of duty, which appears to the Settlement Commission to be payable by him, on looking at the evidence produced by both the sides during the proceedings before the Settlement Commission. However, with regard to the specific cases of the applicants, it was observed by the majority that an enquiry was ordered to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould receive a show-cause notice and, therefore, there was no question of the application before the Settlement Commission being voluntary under the Customs Act and that even if the show-cause notice alleges fraud, the Settlement Commission can be approached. On the basis of the judgment of the Bombay High Court, the Settlement Commission observed that even in cases of fraud an application can be made (under the Central Excise law) for settlement, but hastened to add that in the present case we are not convinced that the applicant has committed any fraud . According to the Settlement Commission, the question was whether the applicant (DSL) received any unaccounted catechu which it used for the clandestine manufacture and removal of its products and that in case the DGCEI had collected, information showing further duty evasion, nothing prevented them from issuing further show-cause notices to the applicants. 28. Thereafter the majority of the Settlement Commission proceeded to examine the question as to whether on merits the assessee had admitted its full duty liability before it. It referred to the report of the Commissioner (Investigation) and noted that the report has been mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matches . It referred to the judgment of the Supreme Court in the case of CIT v. Express Newspapers Ltd. (supra) and Kuldeep Industrial Corporation v. ITO (supra) and observed that in these cases it was held that in ascertaining the complexity of investigation even the material brought after the date of receipt of the settlement applications and till the date of furnishing the report of the Commissioner can be considered. It was held that the Commissioner (Investigation) as pointed by it has conducted an investigation and rendered his findings only after considering the documents and explanations provided by both the sides. The Settlement Commission thereafter proceeded to provide examples of how the Commissioner (Investigation) had gone about the matter. After elaborately referring to the investigation of the Commissioner (Investigation), the Settlement Commission at the end of para 66 of the majority opinion observed that from the evidence produced by the applicant, we are satisfied that the explanation submitted by the applicant regarding the difference between the quantity of catechu consumed as per bill of material and quantity of catechu processed during the period under que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egation of illicit manufacture and removal of goods in the absence of which their allegations cannot be sustained. 31. As regards the contention of the DGCEI that the applicants did not make a full and true disclosure of the duty liability, the Settlement Commission observed that the only basis for the allegation is the fact that the applicant DSL could not explain 2000 kg of catechu, which it has admitted before the Settlement Commission. In respect of all other quantities of catechu, the applicant has explained all of them and it does not lie in the mouth of DGCEI to assail the basis adopted by the applicant to admit the duty liability of unexplained quantity of 2000 kg catechu or to allege that it has not made a full and true disclosure of the duty liability and the manner in which the liability was incurred. 32. In fine the majority of the Settlement Commission held as follows: - (a). The applicants have made full and true disclosure and have cooperated in the settlement proceedings; (b). The case is settled for a duty liability of Rs. 81,75,625/- in respect tof the 2000 kg of catechu and interest thereon of Rs. 66,91,245/-. These amounts have already been paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the setting aside of the duty demand raised in the show-cause notice required appreciation of evidence. The dissenting member then proceeded to refer to the settlement application under the heading amount of duty admitted in the application and basis thereof . He referred to entry No.3 of the table in para 5.6 of the show-cause notice, which was sought to be explained in the settlement application. He noted that the explanation of the applicant was as under: - However, with regard to entry No.3 in the said table corresponding to purchase of 135 cases (2700 Kg) on 03.05.2005 noted on Page No.127 of 166 papers recovered from the residence of Late Shri S. N. Gupta, the supplier M/s. Girdhari Lal Sons in his account statement provided to DGCEI has admitted supply of only 35 cases (700 Kg.) under invoice No.867 dated 12th May, 2005 which has been duly accounted for DSL in their account. The only plausible explanation to the aforesaid discrepancy is that there is a mistake while recording or entering the quantity on the said papers (Page No.127) which was recovered from the residence of Late Shri S. N. Gupta. Unfortunately, Shri S.N. Gupta is no more to explain the said discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant asserts that he has not concealed any thing which, it disclosed, would fasten him with additional duty liability. His admission of duty is on a presumption: that is, a presumption by default, that since the concerned person, who made an entry in the private documents is no more, a presumption could be drawn that Catechu relating to the entry had been procured which was not accounted and was used in the clandestine manufacture and clearance of excisable goods on which duty works out to be Rs. 81,75,625/- . 36. Apart from the above observation, the dissenting member also referred to the fact that out of the list of 35 suppliers of catechu provided by the applicant, only 18 could be located at their addresses and in respect of 17, the applicant did not disclose their correct address or whereabouts. Though he opined that this may not amount to non-disclosure ex facie, its relevance and bearing on the case cannot be ignored. He observed that the details supplied in respect of the 18 suppliers and the record recovered during the search disclosed discrepancies; therefore, in the absence of any information from the remaining 17 suppliers whose correct addresses were not given, a pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpert committee for the said purpose. 38. The dissenting member thereafter proceeded to summarise the rival claims before the Settlement Commission and express the following view regarding the complexity of the nature of the case: - 90. In a case like this, a noticee has right to cross examine any witness whose statement is relied upon in the allegations made against him. In support of his defense, he has a right to produce evidence before the adjudicating authority. As already mentioned, to prove their case, the applicant had requested the Commissioner to allow cross examination of 13 persons who tendered statements or furnished other information before the Investigating Officers. At the same time, Revenue cannot be deprived of its right to cross examine the witnesses including deposition of the authors of the documents relied upon by the applicant/ noticee when Revenue doubts authenticity thereof. Further, in respect of the defense contention about returned goods verification enquiry from the third party documents like Bank/ transporter records may be necessary. Since Revenue has made out their case on the basis of alleged non-accountal of catechu purchased (which is not a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is made. This definition is new, having been substituted w. e. f. 01.06.2007 and would, therefore, govern the present case because the application for settlement has been made on 01.08.2011. The proviso to the clause is not relevant for our purpose. The condition to be satisfied before an application is made to the Settlement Commission is that some proceeding for the levy, assessment and collection of excise duty should be pending before an adjudicating authority. Section 2 (a) defines adjudicating authority as any authority competent to pass any order or decision under the Act, but excluding the Central Board of Excise and Customs, Commissioner of Central Excise (Appeals) or the Customs, Excise and Service Tax Appellate Tribunal . Going back to Section 32E, sub-section (1) thereof provides that an assessee may in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled and such application should be in the prescribed form and manner 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 lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of communication. 41. On receipt of the report from the Commissioner of Central Excise the Settlement Commission is empowered to order a further inquiry or investigation, if it is found necessary, after reasons are recorded by the Settlement Commission. Thereafter it is open to the Settlement Commission to have the matter investigated by the Commissioner (Investigation) and direct a report to be filed within a particular time period. Such report shall relate to the matters covered by the settlement application and any other matter relating to the case. 42. Sub-section (5) provides for passing of the order of settlement. After taking into account the records received from the Commissioner of Central Excise and the report of the Commissioner (Investigation) and after hearing both the sides and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case but not covered by the application, which is referred to in the report of the Commissioner of Central Excise or Commissioner (Investigation). This order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or fine under the Act with respect to the case covered by the settlement. 47. The Wanchoo Committee report provided for settlement of huge tax disputes and immunity from criminal proceedings by a Commission to be constituted by the Central Government, when approached without objection from the Income Tax Department. These recommendations were made in the Chapter titled Black Money and Tax Evasion . In partial implementation of the report, Chapter XIX-A was introduced into the Income Tax Act, 1961 by the Taxation Laws (Amendment) Act, 1975. In the Central Excise Act, Chapter V providing for a Settlement Commission to settle cases was inserted by Act 21 of 1998 w. e. f. 01.08.1998. 48. It has been held in several judgments that the primary condition for approaching the Settlement Commission is that the application shall contain a full and true disclosure of the duty liability and the manner in which it was derived. There are identical provisions in the Income Tax Act relating to the Settlement Commission proceedings. In Ajmera Housing Corporation (supra) the Supreme Court held that disclosure of full and true particulars of undisclosed income and the manner in which such incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Intelligence) and Another [W.P. (C) No.1495/2007 and W.P. (C) No.4401/2007] decided on 03.08.2009 by a Division Bench of this Court, the point directly arose for consideration. The issue posed before this Court was: ..can the settlement commission substitute itself for the adjudicating officer and arrive at a decision on highly contentious issue requiring detail and complex investigation for arriving at an adjudication of such facts . In paragraph 9 the following principles were set out: - (i) The Settlement Commission cannot substitute itself for the adjudicating officer by deciding complicated and highly disputed or contentious questions and issues of facts themselves, because the expression settlement is used in the Customs Act in contra-distinction with adjudication and the very scheme of the settlement provisions is to settle and not adjudicate. (ii) All the provisions make it abundantly clear that what is required of the Settlement Commission is a decision when there are terms of settlement agreed to by the applicant and a duty liability which is accepted by him; he could not be fastened with the liability which he never intended as accepted to be payable by him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant has not accepted any procurement of unaccounted catechu or any clandestine manufacture of excisable goods therefrom without payment of applicable duty. The applicant has also asserted that all the quantity of excisable goods have been duly reflected in the returns filed with the Central Excise Officer. According to the dissenting member this does not satisfy the requirement of a full and true disclosure. All that the applicant has stated is based on a presumption and even the admission of duty on the basis of 2000 kg of catechu is also a presumption by default and what has been stated by him is merely that the person who made the entry (S. N. Gupta) is no more and, therefore, a presumption could be drawn that the catechu relating to that entry have been procured and not accounted for and used in the clandestine manufacture and clearance of goods on which the duty liability comes to Rs. 81,75,625/-. The dissenting member found this to be unacceptable as a full and true disclosure of the duty liability. There was no admission by the applicant about the unaccounted purchase of 2000 kg of catechu or the clandestine manufacture of the goods out of the same. 54. The other reason w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deponents of the statements relied upon by the applicants, when the Revenue doubts the very authenticity thereof. For instance, the ledger accounts, transport documents and third party documents such as bank statements, etc. have to be put to strict proof by the revenue since these documentary evidences were not adduced in the course of the investigation but were produced before the Commissioner (Investigation) in the course of the proceedings before the Settlement Commission. According to the dissenting member, the apprehension of the revenue that the applicants had sufficient time to manipulate their records to accommodate all the entries which they could not adduce in the course of the investigation, cannot be brushed aside as unfounded. The authenticity of the documentary evidence can be proved only after necessary verification and this would involve strong rival positions the resolution of which would be beyond the scope of the proceedings before the Settlement Commission as it would impinge on the adjudicatory proceedings. The statements made under Section 14 of the Central Excise Act, as noticed by the minority opinion, have not been retracted by the concerned persons. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice which, in the present case, is Rs. 245.56 crores. They are also agreed that if the case involves a detailed adjudication into complex facts and issues of duty liability, the proper forum would be the adjudicating officer and not the Settlement Commission. It is only in the application of these principles to the facts of the case that there is disagreement between the members, the Chairman and one member constituting the majority holding that the applicant has made a full and true disclosure of the duty liability and the case also does not involve any adjudication, and the lone dissenting member taking the view that on the facts of the case there was no full and true disclosure of the duty liability and further that the case involves adjudication and not settlement. 58. Taking the question of full and true disclosure first it seems to us that the majority opinion has rested its case on the fact that the Commissioner (Investigation) appointed by the Settlement Commission to investigate and report on the contents of the settlement applications could not find fault with the disclosure made by the applicants. The majority opinion rightly posed the question to themselves that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cants did not file any revised applications upwardly revising the quantity of the catechu or the additional duty. This, with respect, shows the skewed consequences of distinguishing a judgment in total disregard of its ratio. The majority opinion has placed reliance on the judgment of the Bombay High Court in UOI Vs. Hognas India Ltd. (supra), in which proceedings for settlement of customs case were distinguished from proceedings of settlement of income tax case and it was held that in every customs case there is a show cause notice and it is only thereafter that a person can approach the Settlement Commission and the issue of the show cause notice does not in any way take away the voluntary nature of the settlement application; in fact, it was held that there cannot be any voluntary application before the Settlement Commission in the Customs Act. In that context the High Court observed that an application under the Customs Act before the Settlement Commission can be made even if the show cause notice alleges fraud. Relying on the observation made in a different context, the majority opinion has proceeded to observe, rather startlingly, that even in a case involving fraud an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instance of the revenue, it cannot be stated that the case is complex. The dissenting member has however met this finding effectively by pointing out in the quote extracted earlier that this is not the complete picture on the basis of which complexity of facts and law and the need for adjudication was put forth by the revenue. He has noticed that both the revenue and the assessee are to be accorded the right of cross-examination and this procedure is not conducive for a settlement of the case and it properly belongs to the domain of adjudication by the adjudicating authority. We are inclined to agree with this view taken by the dissenting member as against the rather simplistic view of the issue taken by the majority. The majority of the Settlement Commission have expressed the opinion that the question of adjudication would arise where there is a huge gap between the duty demanded in the SCN and the amount of duty admitted by the applicant and the applicant does not accept the amount of duty, which appears to the Commissioner, as payable by him, on looking at the evidence produced by both the sides during the proceedings before the Commission. The amount of duty admitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for the applicant to produce all the evidence in its possession before the central excise authorities while submitting its reply to the show cause notice. The fundamental rule of law is that every litigant is to adduce his entire evidence at the earliest point of time. The applicant did not do so. Further, they produced the documentary evidence before the Commissioner (Investigation) who gave a clean chit to them by accepting the evidence. Surprisingly, the majority opinion has not found fault with this procedure. There was a sufficiently long gap of time between the investigation proceedings and the settlement proceedings. The applicants undeniably had not only the time to prepare the documentary evidence, but they also had the motive. This should have prima facie raised suspicion in the minds of the Settlement Commission. However, the members constituting the majority did not consider it fit to ponder over this question and preferred to rest content with the report of the Commissioner (Investigation) who accepted the documentary evidence not adduced earlier, to whom also somehow this did not appear unusual or irregular. The majority dealt with this matter in para 52 of its opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its factory, the most natural thing to do was to place them before the investigating authorities or the adjudicating authorities in an attempt to clear themselves of the charge of clandestine manufacture of goods and consequent evasion of excise duty. It is true that there should be evidence to prove that the documents are not genuine or authentic and it may also be true that in the absence of such evidence the Settlement Commission was right in presuming their genuineness or authenticity. However, the revenue cannot be found fault for raising the issue of the authenticity of the documentary evidence on grounds of delay in submitting them, when the applicant had everything to gain by submitting them in the course of the investigation or the adjudication, but did not. The genuineness or the authenticity of the documentary evidence is a contentious issue which the adjudicating authority is more suited to examine as he is vested with all powers including the power to refer the documents to handwriting experts. The mere fact that the Settlement Commission is also vested with such powers cannot transpose the proceedings, which are essentially the proceedings in the domain of adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence was required to connect the seized cash with the clandestine sales. One would be inclined to think that the seizure of the unaccounted cash substantiates the charge of clandestine manufacture and removal of goods. 63. We have earlier referred to judgments of this Court wherein it has been held that a case involving complexity of issues both of facts and law and disputed questions of fact for which detailed enquiry is necessary ought to be referred to the adjudicating officer by the Settlement Commission, to be taken up from the stage at which the matter was before the adjudicating officer, which is before the filing of applications before the Settlement Commission. The present case clearly appears to us to be eminently a case for adjudication and not for settlement. The decision making process adopted by the majority of the Settlement Commission is flawed; and to that extent interference under Article 226/227 is necessary and justified. We are not to be understood as having said anything on the merits or demerits of the case. That has to be examined by the adjudicating authority under the Central Excise Act in accordance with law and the provisions of the Act. We are qui ..... 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