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2015 (10) TMI 373 - ALLAHABAD HIGH COURT

2015 (10) TMI 373 - ALLAHABAD HIGH COURT - 2016 (334) E.L.T. 331 (All.) - Challenge to the order of Settlement Commission - power of the commission to remand the case back - scope of Section 32-F - Held that:- In the case of Vinay Wire and Poly Product P.Ltd. Vs. Dir. General of Central Excise [2014 (8) TMI 253 - ALLAHABAD HIGH COURT] Division Bench of this Court considered the provisions of Section 32-F and 32-L of the Act and held that a plain reading of provisions of sub-sections (5) and (8) .....

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Section 32-L can be exercised, if it finds that any person who has made an application for settlement under Section 32-E, has not co-operated with the Settlement Commission in the proceedings before it. This power given to the Settlement Commission under Section 32-L does not and cannot take away the powers conferred on the Settlement Commission under sub-section (5) and (8) of Section 32-F.

The specific instances of clandestine removal of goods, discrepancies of value recorded in th .....

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the assessee. - Writ Tax No. - 538 of 2015 - Dated:- 30-9-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani, JJ. For the Petitioner : Pankaj Bhatia,Amit Awasthi, Gopal Verma For the Respondent : A. S. G. I. ,Ashok Singh, Sr. S. C. ,C. B. Singh ORDER ( Per: Surya Prakash Kesarwani,J. ) 1. We have heard, Sri Pankaj Bhatia, assisted by Sri Gopal Verma, learned counsel for the petitioners and Sri Ashok Singh, learned counsel for the respondents. 2. Petitioners have filed thi .....

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sed by the Settlement Commission is contradictory to the provision of Section 32-F of the Central Excise Act, 1944 (hereinafter referred to as the 'Act'). The Settlement Commission has committed manifest error of law in remanding the matter which is against the principles of law laid down by Delhi High Court in the case of Asahi India Safety Glass Limited Vs. Union of India 2005(180) E.L.T. 5(Del.), Bombay High Court in the case of JSK Industries Pvt. Ltd. Vs. Union of India in Writ Peti .....

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inay Wire and Poly Product P.Ltd. Vs. Dir. General of Central Excise 2014(307) E.L.T. 438 and the judgment of Madras High Court in the case of Vela Smelters (P) Ltd. Vs. Customs and Central Excise, Commissioner of Central Excise, Additional Director General, 2014 CJ (MAD) 361. 5. Briefly stated the facts of the present case are that the petitioners are engaged in the manufacture of PVC Sheeting, PVC flooring and coated cotton fabrics, and are registered with the respondents-Department. On 13.4.2 .....

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Excise duty of ₹ 4,72,925/- was found. Certain raw materials were also found in excess during the search. Two private ledgers and two writing pads (kachcha records) were recovered from the briefcase found in the official cabin of Sri S.G. Gupta, Executive Director of the petitioner which were resumed. On scrutiny of these ledgers and writing pads, it was revealed that it contained entries of transactions related to clandestine removal of finished goods. On the basis of preliminary scrutiny .....

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to show cause as to why duty amounting to ₹ 4,72,926/-, 3,98,60,686/-, 7,18,514/- and Cenvat Credit of ₹ 42,904/- be not demanded under Section 11- A of the Act and penalty be imposed under Rule 25 of the Central Excise Rule 2002 read with Section 11 AC of the Act. Penalty was also proposed to be imposed on Sri S.G. Gupta, Executive Director and Sri Arvind Goyanka, Director, under Rule 26 of the Rules. 7. The petitioners moved a Settlement Application under Section 32-E of the Act. .....

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ory in nature inasmuch as they accepted the documents marked with 'R' representing clandestine clearances of goods and on the other hand they stated that they do not accept the charge of clandestine clearances of all the goods. Settlement Commission came to the conclusion that once the petitioners accepted part of the information given in the private record, they cannot simply brush aside the other information. The Commission found the claim of the petitioners to be an afterthought. It a .....

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enue, several of them stated that they were purchasing goods from the petitioner and the records of such sales were found in the kachcha records and either no invoices in their name were found in the statutory records or the statutory invoices showed a smaller value. It was also noticed that statutory invoices were issued in the name of non existing buyers. The specific instances of clandestine removal of goods, discrepancies of value recorded in the invoices and those recorded in the private re .....

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er Section 14 of the Act with respect to question Nos. 9,10 and 11. 10. After considering the application in detail, the Settlement Commission held in paras 32 to 37, 43 and 44 as under: 32. The Bench has gone through the application filed and considered the rival submissions made orally as well as in writing both by the applicant and the Revenue. The Bench observes that this is a case of alleged clandestine clearance, under valuation, shortage of finished goods and shortage of raw material used .....

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ine clearance of all the goods, but on the other hand they have accepted the fact that the invoices marked with 'R' pertain to the applicant firm and are clandestine clearances. The averments of the applicant are contradictory in nature. They have not even any reason for their non acceptance of the genuineness of the invoices in the private record other than those marked with 'R'. Further, the plea that only invoices marked with 'R' pertain to the applicant firm was not t .....

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the private record, he cannot simply brush aside the other information at a later stage. The claim that all the private records other than those found with an 'R' in the private account of their executive Director, is an afterthought and this aspect was not informed to the investigating officers during the giving of statements. Shri Gupta in his statement has accepted that the cash in his private ledger was part of the sale proceeds of the goods and differential amount of under valued g .....

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the impression that there was clandestine clearance of goods which were not entered in the statutory records. The applicant did not object to the accuracy of the stock taking at the time of search, hence the present objections appear to be an afterthough. The applicant has argued about the decreasing quantum of electricity used by them. Since this argument is offered in defence it is for the applicant to substantiate his case. However, the applicant apart from making this statement has not offer .....

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in other names. Statutory invoices were issued in the names of non existing buyers. The Bench observes that the Revenue in the SCN have cited specific examples of clandestine removal of goods, discrepancy in values recorded in invoices and those recorded in private records against the same invoice numbers, instances of use of parallel invoices. None of these allegations in the SCN has been explained. The applicant has also claimed that the private records pertained only to private dealings of Sh .....

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f their duty demand without convincing explanations. From these facts, it can be inferred that there is no true and correct disclosure by the applicant. 36. Further, the Bench observes that in this case the stand of the applicant and the department are at huge variance. For an issue to be settled by the Commission there has to be convergence and agreement on fundamental facts which is lacking in this case. 37. The Bench observes that Settlement Commission is a forum where the applicant/applicant .....

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forum where a dispute is settled in the interest of both the parties within the framework of law. This principle has clearly been enunciated by the Hon'ble High Court of Bombay in the case of Amrut Ornaments reported in 2014 (305) ELT 365 (Bom.), by the Hon'ble Delhi High Court in the case of Union of India Vs. Dharampal Satyapal as reported in 2013(298) ELT 653 (Del) , by the Hon'ble Allahabad High Court in the case of Vinay Wire Product P Ltd., Vs. Dir. General of Central Excise I .....

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ion. Therefore the Bench observes that the case is not one that can be settled in this forum. In view of the complex issues of fact raised by the rival parties to the case, it would be more appropriate that the case is adjudicated by the proper Officer after appreciation of facts and evidence now produced before the Commission by the applicant. 44 The Bench, by virtue of the powers vested in it in terms of Section 32L(1) of the Central Excise Act, 1944, sends the case back to the Adjudicating au .....

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of the Act makes it clear that the Settlement Commission, after considering the facts and evidences and after hearing the parties, pass such order as it thinks fit on the matters covered by the application and also any other matters 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). The order passed by it under sub-section (5) shall provide for the term .....

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order contains sufficient reasons for rejection of the case. 13. In the case of Vinay Wire and Poly Product P.Ltd. Vs. Dir. General of Central Excise (supra) Division Bench of this Court considered the provisions of Section 32-F and 32-L of the Act and held that a plain reading of provisions of sub-sections (5) and (8) of Section 32-F makes it clear that the Settlement Commission has to pass such order as it thinks fit and it has the power not only to provide the terms of the settlement but also .....

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e proceedings before it. This power given to the Settlement Commission under Section 32-L does not and cannot take away the powers conferred on the Settlement Commission under sub-section (5) and (8) of Section 32-F. After interpreting the provisions, the Division Bench in Vinay Wire and Poly Product P.Ltd. (supra) held in para 17 as under: "This submission cannot also be accepted. The Settlement Commission has given good and cogent reasons for sending the case back to the adjudicating auth .....

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ll and true disclosure and that complex questions of fact, which required appreciation of evidence, were required to be settled through adjudication. A fair amount of discretion has to be given to the Settlement Commission in cases where matters are placed before it for Settlement keeping in mind the well settled principle that Settlement is not akin to adjudication. Unless it is established that the discretion has been exercised in an arbitrary or perverse manner or that it is not based on rele .....

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