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TMI Blog2014 (8) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... n unaccounted purchases of raw materials, unaccounted production of finished goods, clandestine removal of finished products and evasion of Central Excise duty leviable thereon, the officers of the Director General, Central Excise Intelligence, New Delhi (DGCEI) simultaneously searched the factory and other related premises of the petitioner-firm as also the business premises of the buyers on 30 June 2009 and on subsequent dates. On the basis of the parallel invoices recovered from Unit-I; shortages detected in the stocks of finished goods and raw materials kept in both the Units; records recovered from the residential and office premises of Siddharth Dixit; and the documents recovered from M/s. Anand Sales, Kanpur, the department quantified the total duty evaded by both the Units during the period August 2006 to June 2009 as under:- Sr. No. Items M/s. Vinay Wires and Poly Products Pvt. Ltd., B-4, UPSIDC Industrial Area, Site-II, Rania, Kanpur Dehat (M/s VWPPPL-I) (Duty in Rs.) M/s. Vinay Wires and Poly Products Pvt. Ltd., C-2, C-5, UPSIDC Industrial Area, Site-II, Rania, Kanpur Dehat (M/s VWPPPL-II) (Duty in Rs.) TOTAL 1. Duty liability quantified on the basis of Parallel I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (v) Interest on Cenvat credit of Rs. 48,364/-; (vi) Imposition of penalty for clandestine clearance of goods with intent to evade payment of central excise duty under section 11 AC of the Act and rule 25 of the Central Excise Rules, 2002; and (vii) Imposition of penalty under rule 15(2) of Cenvat Credit Rules, 2004 read with section 11 AC of the Act." Penalty was also proposed to be imposed under rule 26 of the Central Excise Rules, 2002. The petitioners allege that the said search was conducted on the basis of information provided by an ex-employee who had given five files to the officers of the DGCEI who had planted them in the premises of the petitioner during the search operation. The petitioners also allege that the Director was detained in the office for 48 hours and mercilessly beaten up by the officers. A confessional statement was also taken from them under threat. As soon as the petitioner no.2 (the Director) was released on 2 July 2009, he retracted the statements through affidavits which he sent through speed-post to the DGCEI. On 10 November 2009, petitioner no.2 and one S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers with them and were planted in the premises during search operations and were shown to have been recovered from the premises of the petitioner. The evasion of duty except the duty liability of differential duty between the finished goods and the duty already debited showing the clearance of plastic granules as cash sales was specifically denied. In fact what was stated was that the net liability, in addition to the deposit of Rs. 30 lacs earlier deposited, worked out to Rs. 63,85,052/- which had also been paid. A prayer was also, accordingly, made for grant of immunity from penalty and prosecution. The Settlement Commission in accordance with the provisions of section 32-F issued notice to the applicants on 4 February 2013 and on receipt of a reply, passed an order dated 15 February 2013 for proceeding with the applications. Copies of the applications were then forwarded on 18 February 2013 to the Commissioner of Central Excise and Service Tax, Kanpur and the DGCEI for submission of their reports as was required under section 32-F. The DGCEI submitted its report on 16 April 2013. The Revenue reiterated the facts stated in the show cause notice and objected to the allegations ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch observed that the applicant has not accepted a substantial part of the duty liability. The applicant had contested much of the evidence collected by the Revenue and has alleged that the evidence has been fabricated and tampered with. The Revenue, on the other hand, has given detailed grounds to reassert its position regarding the investigation as well as quantification of duty liability. The Bench observed that this case involves complex questions of fact which would need a detailed appreciation of evidence on both sides. The Bench also observed that since the applicant has disputed the very basis of the investigation, the disclosure cannot be said to be complete and true. The Bench, therefore, observes that this case would be better settled through adjudication. In view of the above, the Bench order to send the case back to the adjudicating authority in terms of Section 32(F)(5) of the Act." Learned counsel for the petitioners placed emphasis on section 32-L which deals with the power of Settlement Commission to send a case back to the Central Excise Officer and submitted that since there is no allegation in the impugned order that the applicants had not co-operated with the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, under-valuation, inapplicability of exemption notification or CENVAT credit or otherwise 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; (c) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; and (d) the applicant has paid the additional amount of excise duty accepted by him along with interest due under section 11AB: Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Investigation) within fifteen days of the receipt of the report, to make or cause to be made such further enquiry or investigation and furnish a report within a period of ninety 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (1) of section 32-E, the Settlement Commission has to 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. After taking into consideration the explanation provided by the applicant, the Settlement Commission, shall either allow the application to be proceeded with or reject the application. Where an application is allowed to be proceeded with, the Settlement Commission shall call for a report along with the relevant records from the Commissioner of Central Excise having jurisdiction. On receipt of the report from the Commissioner, the Settlement Commission, may, if it is of the opinion that any further enquiry or investigation in the matter is necessary, direct, for reasons to be recorded in writing, the Commissioner (Investigation) to make or cause to be made such further enquiry or investigation and furnish a report to the Commission. Sub-section (5) of section 32-F then provides that after examination of the records and the report of the Commissioner of Central Excise and the report, if any of the Commissioner (Investigation), the Settlement Commission may pass such order as it thinks fit. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 32-E has been allowed to be proceeded with under sub-section (1) of section 32-F, the Settlement Commission has to settle the case by passing an appropriate order under sub-sections (5) and (8) of section 32-F and it cannot reject the application even if it finds that the application does not contain a full and true disclosure of the duty liability or that the case involves complex questions of fact which require detailed appreciation of evidence. 22. This submission of learned counsel for the petitioners cannot also be accepted. Under sub-section (1) of section 32-E, the applicant is required to make a full and true disclosure of his duty liability and merely because the Settlement Commission has, after considering the explanation offered by the applicant, allowed the application to be proceeded with under sub-section (1) of section 32-F, will not mean that the Settlement Commission has accepted that the applicant has made full and true disclosure of his duty liability because that is not the stage to make such an inquiry. It is clear from sub-section (3) of section 32-F that it is only when an application is allowed to be proceeded with that the Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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