TMI Blog2015 (6) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) and settle it, then, we do not see how the Application could have been rejected or thrown out at the threshold. It is conceded that when the Petitioners approached the Settlement Commission and admitted their duty liability all that had happened and transpired was that they had received a show cause notice raising the claims and which they have admitted. In such circumstances, the other reason assigned in para 9.7 for rejecting the Application at the threshold cannot be sustained. We are of the view that the Commission would have to proceed in accordance with law. The issues raised in the show cause notice and which are before the Settlement Commission are not dealt with in the Central Board of Excise and Customs’ order dated 6th January, 2009 or in the Writ Petition which is pending before this Court. In such circumstances, we are of the view that the Commission erred in rejecting the Application made by the Petitioners on the ground that it is not admissible in terms of Section 32E of the Central Excise Act, 1944. The Settlement Commission would have been well advised in proceeding with the Application and passing a final order thereon. Such an approach of the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the Petitioners has been raised, the Petitioners then refer to the issue of availment of Cenvat credit. These are extensively set out in the Writ Petition. 4. It is then alleged that the Petitioners had also initiated proceedings under Rule 12AA of the Cenvat Credit Rules, 2004 and Rule 12CC of the Central Excise Rules, 2002. That is pertaining to a notice dated 6th October, 2008 and seeking to withdraw the facility of monthly payment of Central Excise duty on the goods manufactured and cleared by the Petitioners for three months and also direction to the Petitioners to pay Central Excise duty for each consignment at the time of removal of the goods without utilizing the Cenvat credit for payment of such Central Excise duty. 5. That is an aspect dealt with by the Petitioners from para 36 of the Writ Petition and they submit that an order was passed on 6th January, 2009 by the Member (Central Excise), Central Board of Excise Customs and which led to the Petitioners filing a Writ Petition being Writ Petition No. 74 of 2009 in this Court. There is an Interim Order passed on 16th January, 2009 by this Court and which is a restraint pertaining to Cenvat credit of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners argued in terms of the aforesaid pleas. However, by the impugned order, the Settlement Commission has held that the Application filed by the Petitioners (Applicants and Co-Applicants) in this case is not found admissible in terms of Section 32E of the Central Excise Act, 1944. The Commission, therefore, proceeded to reject it. 9. It is this rejection which is questioned in this Writ Petition and on several grounds. There is no Affidavit-in-Reply filed in this Writ Petition. We have heard Mr. Sridharan, learned Senior Counsel, appearing on behalf of the Petitioners and Mr. Jetly, learned Counsel, appearing on behalf of the Respondents on this short point and as to whether the Commission was justified in rejecting the Application. 10. Mr. Sridharan, learned Senior Counsel submits that the Settlement Commission s powers are those enumerated by the provisions of the Central Excise Act, 1944 and particularly Chapter V thereof. Section 31 contains the definitions and Mr. Sridharan, relied upon definition of the terms assessee as appearing in clause (a) and case as appearing in clause (c) of the section. Mr. Sridharan submits that by Section 32, the Customs and Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods under the Central Excise Tariff Act, 1985 (5 of 1986). (1A) Notwithstanding anything contained in sub-section (1), where an application was made under sub-section (1), before the 1st day of June, 2007 but an order under sub-section (1) of Section 32F has not been made before the said date or payment of amount so ordered by the Settlement Commission under sub-section (1) of Section 32F has not been made, the applicant shall within a period of thirty days from the 1st day of June, 2001, pay the accepted duty liability failing which his application shall be liable to be rejected. (2) Where any excisable goods, books of account, other 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. 11. Similarly, he places reliance on Section 32F which sets out the procedure on rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to him. The Application has to be made before adjudication. The Application is made to the Settlement Commission to have the case settled, in such form and in such manner as may be prescribed. The Application was containing a full and true disclosure of the duty liability which has not been disclosed before the Central Excise Officer having the jurisdiction, the manner in which such liability has been derived, the additional amount of Excise duty accepted to be payable by the Assessee 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, undervaluation, inapplicability of exemption notification of Cenvat credit. A show cause notice for recovery of duty issued by the Central Excise Officer and received by the Applicant Assessee alone will make the Application maintainable and the Assessee can invoke the powers of the Settlement Commission. There is only one embargo and that the Application under sub-section (1) shall not be concerning interpretation of the classification of excisable goods under the Central Excise Tariff Act, 1985. Further no Application ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not satisfied. It is in these circumstances that Mr. Jetly supports the order of the Commission and submits that the Writ Petition be dismissed. He has submitted that all the findings and which are directly referable to the powers of the Settlement Commission to throw out a case even at the preliminary stage indicate that this Court should not exercise its writ jurisdiction. The findings cannot be termed as perverse or vitiated by any error of law apparent on the face of the record. Therefore, the Writ Petition deserves to be dismissed. 14. With the assistance of the Counsel appearing for both sides we have perused the Writ Petition and the relevant Annexures including the impugned order. We have also perused Chapter V of the Central Excise Act, 1944. 15. The Chapter V came to be introduced by Act 21 of 1998 with effect from 1st August, 1998. There was a substitution by Act 22 of 2007 and with effect from 1st June, 2007. The term case was defined and earlier as well as post the substitution. The terms assessee and case read as under : assessee means any person who is liable for payment of Excise duty assessed under this Act or any other Act and includes any produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the rival submissions, the Division Bench in paras 11 to 16 held as under : Background Legislation : 11. As early as 1992, in the Budget speech, the Finance Minister had proposed setting up of Settlement Commission for Customs and Central Excise disputes. But, such provisions were actually introduced only in the Finance Bill of 1998. The stated objective was that the door to settlement with errant tax payer should be kept open keeping in mind the primary objective to raise revenue. There has to be room for compromise and settlement. A rigid attitude would inhibit a one-time tax evader or unintending defaulter from making a clean breast of his affairs and unnecessarily strain the investigation resources of the Government. The settlement machinery is thus meant for providing a chance to a tax-evader who wants to turn a new leaf as recommended by the Direct Taxes Inquiry Committee, popularly known as Wanchoo Committee. 12. Keeping the aforesaid objective in mind, the Settlement Commission is constituted under Section 32 of the Act vide Notification No. 40/99-C.E. (N.T.), dated 9th June, 1999. The various provisions of sections in Chapter V provide details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. (Emphasis supplied) (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 instalments, if the assessee furnishes adequate security for the payment thereof. (5) Where 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 Excise and Customs from time to time on the amount re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in mind and the scheme framed, any assessee can make application to the Settlement Commission containing full and true disclosure of his liability which was not disclosed by him before the Central Excise Officer. The applicant is expected to deposit additional amount of Excise duty admitted to be payable by him as per his own calculations. Sub-sections (1) to (5) of Section 35F is a stage prior to determination of controversy on merits. At the stage of making application, the question of determination of liability by the Settlement Commission does not arise. The provision contemplates a voluntary act on the part of the applicant. Under these circumstances, the amount of additional duty admitted contemplates voluntary admission on the part of the applicant itself. As already stated above, sub-section (3) of Section 35F is absolutely clear and includes no ambiguity. As long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. The intention of the legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia reported in 2004 (169) E.L.T. 13 (Bom.) held that the Settlement Commission being exercising the very same power which can be exercised by the adjudicating authority it can, while deciding the Application, direct payment of interest on the duty liability. Thus it is not as if the powers of the Settlement Commission are in any way restricted or curtailed. The Division Bench in this case noted that the Commission was justified in directing the Petitioners to pay interest. That is how in para 19 of the judgment in this case the Settlement Commission s powers to levy interest was upheld and the Petition was dismissed. 20. In another decision of this Court in the case of Union of India v. Hoganas India Ltd. reported in 2006 (199) E.L.T. 8 (Bom.) the powers of the Settlement Commission under the Customs Act came to be discussed and what we find and relevant for our purpose is that the Division Bench observed that the disputes take long time to get resolved and resultantly the Government revenue suffers. The following observations of the Division Bench are pertinent : 41. One cannot forget that since the disputes take longer time to get it resolved, the revenue of the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l kinds of settlement claim applications with the liberty to reject the same even at the preliminary stage, depending upon the nature and circumstances of the case and the complexity of the case. Therefore, it is not the case that the Settlement Commission is forced to entertain and accept all settlement applications. After the scrutiny it may or may not entertain the same. It is one thing to say that the Settlement Commission does not have the jurisdiction at all to look at the claim which is not pertaining to the short levy due to misclassification or otherwise, whereas it is another thing to say that the Settlement Commission has jurisdiction to entertain all kinds of applications and it has jurisdiction to reject the same even at the preliminary stage. 43. The following observations of the Hon ble Supreme Court in Paragraph No. 8 of its judgment in the case of R.K. Garg v. Union of India - (1981) 4 Supreme Court Cases 675 - are very apt in the above context, which read as under :- The Court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification or otherwise of goods. These are the essential requirements for making an application under Section 127B of the Customs Act, which are also clear from the wording of the very section as well as from the particulars to be given in the Form prescribed by the Department, as we have indicated herein above. 21. In another decision and which was rendered by the Hon ble Supreme Court in the case of Rexnord Electronics and Controls Limited v. Union of India Others reported in (2008) 12 SCC 156 = 2008 (224) E.L.T. 184 (S.C.) the Hon ble Supreme Court has held that the Settlement Commission did not have any jurisdiction to waive the amount of interest payable under the bond. Therefore, all that we wish to emphasize in all such matters is that there could be a partial admission of the demands of the Department and there could be a contest in relation to others. 22. The later Division Bench Judgment and which is essentially being relied upon namely, in the case of Indorama Synthetics (India) Ltd. v. Union of India reported in 2013 (290) E.L.T. 208 (Bom.) al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a demand in respect of three issues and which is admitted. The fourth issue relating to inadmissible Cenvat credit has not been placed before the Commission. The matter is kept pending before this Court and which makes the present Application not admissible. 24. The findings of the Settlement Commission proceed on the footing that the Petitioners cannot dispute their liability to pay interest and in terms of Section 11AA of the Central Excise Act, 1944. We do not see any justification for making such observations and when the Bench was not inclined to admit the Application. If at the threshold the Bench was required to comment on the demand of interest and made by the Department and justify it with reference to a legal provision, then, that only means that the Commission had the power to entertain the arguments of both sides even with regard to this contested claim of interest. It is not as if it was prohibited from enquiring in to the same. It is not the argument of the Petitioners either before the Commission or before us that when they dispute the claim of the Department of interest on the duty demanded and admittedly paid that the Commission could not have considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and made by the Department. The demand in the show cause notice for payment of duty, interest and penalty can be comprehensively raised. If that can be raised and the show cause notice is composite or comprises of all such issues, then, we do not see how in the facts and circumstances of the present case, the Commission could have refused to adjudicate it. The reliance placed by Mr. Sridharan on Section 32F in this regard is well placed. That section contemplates as to how on receipt of an Application under sub-section (1) of Section 32E, the Settlement Commission should proceed. It should 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 consideration of his explanation the Settlement Commission shall within the period specified in sub-section (1) of Section 32F allow the Application or reject it. If the Application is allowed or deemed to have been allowed to be proceeded with under sub-section (1), then the further steps have to be taken and in terms of sub-section (3), (4) and (5). The powers of the Settlement Commission in terms of sub-section (5) include hearing of the case either in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t receipt of inputs. There, it was the stand of the Petitioners that though the Application mentions the same or the claim in relation thereto, yet they do not desire to proceed before the Settlement Commission for adjudication of the demand which is disputed and the matter should go before adjudicating authority. The Bench in that regard has held that the Petitioners cannot split the issues raised in the show cause notice and seek settlement of certain issues while claiming the liberty to approach the adjudicating authority on other issues. That is held to be impermissible. We do not fault the Commission in this regard. 28. Para 9.6 of the impugned order sets out the reasons for which the Application made by the Petitioners is termed as truncated. The Application was not truncated as held by us. But it was the stand of the Petitioners which resulted into the Settlement Commission being required to go into the merits of the show cause notice in relation to the claims of interest but not the illicit availing of Cenvat credit. The show cause notice squarely raised this aspect and it was not open for the Petitioners in the given facts and circumstances so also in view of Chapter V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement Commission and admitted their duty liability all that had happened and transpired was that they had received a show cause notice raising the claims and which they have admitted. In such circumstances, the other reason assigned in para 9.7 for rejecting the Application at the threshold cannot be sustained. We are of the view that the Commission would have to proceed in accordance with law. The issues raised in the show cause notice and which are before the Settlement Commission are not dealt with in the Central Board of Excise and Customs order dated 6th January, 2009 or in the Writ Petition which is pending before this Court. 31. In such circumstances, we are of the view that the Commission erred in rejecting the Application made by the Petitioners on the ground that it is not admissible in terms of Section 32E of the Central Excise Act, 1944. The Settlement Commission would have been well advised in proceeding with the Application and passing a final order thereon. Such an approach of the Commission in the given facts and circumstances defeats the object and purpose of approaching the Commission with an Application for settlement of the case. 32. In such circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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