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2015 (11) TMI 601 - CALCUTTA HIGH COURT

2015 (11) TMI 601 - CALCUTTA HIGH COURT - 2015 (325) E.L.T. 300 (Cal.) - Validity of order of settlement commission - Imposition of penalty - Suppression of facts - whether the Central Excise Settlement Commission erred in imposing penalty without quantifying the penalty and fine in full - Held that:- Appellants admittedly short paid duty by suppressing facts. Applications were filed disclosing fully and truly the duty liability. Section 32K, inter alia, speaks of immunity wholly or in part from .....

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ts disclosed that the whole amount of duty evaded was ₹ 1,09,92,429/-. Hence, the appellants were liable to pay an equal amount of penalty, that is ₹ 1,09,92,429/-. As section 32 K empowers the Settlement Commission to reduce penalty and fine and to grant immunity from prosecution, a power a central excise officer does not possess under regular adjudication, the Commission had passed the order imposing a total penalty of ₹ 52 lakhs, being a ‘part’ of the total penalty, and wavi .....

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ara Sheko, JJ For the Petitioner : Mr. Farook Rezzaque, Senior Advocate, Mr. S. Haque And Mr. A.K. Upadhyay For the Respondent : Mr. Rajarshi Bhardwaj, Mr. Subir Saha, Mr. R.N. Das, Senior Advocate And Mr. K.K. Maity. ORDER Soumitra Pal, J.:- This appeal has been preferred by the writ petitioners against the judgment dated 25th August, 2014, passed in W.P. no. 8711(W) of 2014 (Venky Hi-Tech Ispat Ltd. and Ors. -vs- Customs and Central Excise Settlement Commission and Ors.) whereby the learned Si .....

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, 1944 (hereinafter referred to as the Act ) and the Rules framed thereunder. Mr. Farook, learned senior advocate, relying on the grounds of appeal submitted that since applications were filed before the Commission under section 32E of the Act making full and true disclosure of the duty liability and section 32K of the Act postulates that penalty may be waived either wholly or in part and as without quantifying the penalty such imposition was made, the imposition of penalty on the company and on .....

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bstantial amount of interest on the admitted amount of duty, the Commission should have allowed abatement of duty already paid on the removal of goods under section 4 of the Act. According to him, non-consideration of these vital aspects of the case by the learned trial Judge has resulted in manifest injustice and, therefore, the impugned judgment is liable to be set aside. Since the provisions contained in section 32K have not been followed, section 32M of the Act is not applicable. In support .....

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nnot turn back and challenge the penalty imposed as too excessive. Had there been adjudication and duty liability been established, the appellants, who had admittedly made willful mis-statement under section 11 AC(1)(a), would have been liable to pay penalty equal to duty and would have faced prosecution. However, after having received the show cause notice, the appellants opted for settlement. Once the appellants had opted for settlement admitting the duty liability of ₹ 1,09,92,429/-, th .....

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of ₹ 15 lakhs each were also imposed on its two directors payment of which was a condition precedent for immunity from prosecution. Relying on the judgment in Indorama Synthetics (India) Ltd. - vs- Union of India : 2013-(290)-ELT-0208-BOM it is submitted that since settlement is a package in a statutory form, the appellants cannot now opt out after accepting a part of the order. Mr. R.N. Das, learned senior advocate appearing for the Commissioner of Central Excise, Bolpur Commissionerate, .....

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, the matter cannot be reopened by way of remand. The question which requires consideration is whether the Central Excise Settlement Commission erred in imposing penalty without quantifying the penalty and fine in full. In order to appreciate the issue, it is necessary to set out the relevant portions of sections 32E and 32K of the Act, which are as under : Section 32E. Application for settlement of cases.- (1) An assessee may, in respect of a case relating to him, make an application, before ad .....

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which he admits short levy on account of misclassification, under-valuation, inapplicability of exemption notification of 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 be .....

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d with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his duty liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act and also either wholly or in part from the imposition of any penalty and fine under this Act, with respect to the case covered by the settlement : (Emphasis supplied) The facts are that on 9th February, 2011, the officers of the Director .....

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- and interest and penalty. The appellants were also directed to show cause why the penalty of ₹ 75 lakhs, voluntarily paid during investigation, should not be appropriated towards duty liability and other dues. The directors of the company were also called upon to show cause why penalty should not be imposed upon them under Rule 26 of the Central Excise Rules, 2002. It is noteworthy that apart from ₹ 75 lakhs paid before issuance of show cause notice, the appellants on 9th March, 20 .....

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licants had co-operated fully during the settlement proceedings, recording its satisfaction, passed the order under challenge. The Commission found that the appellants did not deserve full immunity from penalty as they had indulged knowingly in clandestine activities and removal of goods without payment of duty. The short question is since section 32K speaks of waiver either wholly or in part from the imposition of any penalty and fine under this Act, with respect to the case covered by the sett .....

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