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Commissioner of Central Excise, Customs & Service Tax, Bhubaneshwar-I Versus M/s. Vedanta Aluminium Limited & Ors.

2016 (4) TMI 932 - CALCUTTA HIGH COURT

Maintainability - Whether the writ petition is maintainable - Offices of the writ petitioner is situated in Orissa and major part of the cause of action arose outside the jurisdiction of the Calcutta High Court - Held that:- the Additional Bench of the Commission at Kolkata, under the statutory rules, having jurisdiction over the entire eastern zone, which includes the State of Orissa, after hearing, had passed the order. The appellant had participated in the proceedings. Hence, keeping Article .....

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case settled,” and “before adjudication” , instead of filing a reply to the notice and having the case adjudicated, filed applications before the Commission for settlement. So the respondents opted for settlement before the Commission, - a statutory forum created for the said purpose. Thus having opted for settlement and having accepted the amount of excise duty payable by them, the respondents cannot now turn back and challenge the penalty imposed by filing a writ petition because it would mean .....

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her wholly or in part from the imposition of any penalty and fine” (emphasis supplied), the order of penalty cannot be severed from the order of prosecution. It is a composite order. The words “and also” make the order of prosecution and penalty inseverable. Since an order passed by the Commission is an agreement in a statutory form, the respondents, having been granted immunity from prosecution, cannot challenge the imposition of penalty only. Under the statute the order of penalty is not segre .....

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cepted only in part.”

Whether payment made pursuant to an order passed by the Commission can be conditional - Held that:- After order was passed by the Settlement Commission, the respondents had deposited the penalty, without prejudice to their rights available under the law. In our view since the respondents had filed applications for settlement admitting the allegations in the notice and having accepted immunity from prosecution and as the order is inseparable, such reservation of .....

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With CAN No. 8693 of 2015 - Dated:- 1-10-2015 - SOUMITRA PAL AND MIR DARA SHEKO, JJ For the Petitioner : Mr. R. Bharadwaj, Advocate, Mr. K.K. Maity, Advocate. For the Respondent : Mr. J.P. Khaitan, Senior Advocate, Mr. Agnibesh Sengupta, Advocate, Mr. Arunava Deb, Advocate. ORDER SOUMITRA PAL, J.:- This appeal, preferred by the Commissioner of Central Excise, Customs and Services Tax, Bhubaneshwar-I, Commissionerate, is directed against the judgment dated 8th May, 2014 passed in W.P. 20905 (W) o .....

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ional Bench, Kolkata, is set aside to the extent it purports to levy penalty on the petitioners. The concerned respondents shall forthwith, and in any case within two months from the date of receipt of a certified copy of this order, refund the penalty amount paid by and/or realized from the respective writ petitioners. (page 781 of the stay application). In this appeal the appellant has challenged the said judgment on principally on two grounds, - that this High Court had no jurisdiction to ent .....

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to the writ jurisdiction of this High Court. On merits, relying on the grounds of appeal, it was submitted that the impugned judgment proceeds as if it is an appeal from an order passed in adjudication. The question of evasion of duty was not the issue. Though the Settlement Commission did not go into the issue whether duty was leviable or not, the total approach of the learned Single Judge was that there was no liability to pay duty. As the same was accepted by the writ petitioner, the Commiss .....

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rit petition, instead of applying for settlement, the respondents/writ petitioners should have opted for adjudication before the Central Excise Officer who determines the amount of excise duty. Since under the Central Excise Act, 1944 (for short the Act ), there is a difference between adjudication and settlement, whereas in the former the Central Excise Officer, who adjudicates, has no jurisdiction to grant immunity from prosecution, - a power enjoyed by the Commission, and as the petitioner un .....

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cannot be accepted conditionally as it would make section 32K otiose. In the facts and circumstances as the respondents in their applications had admitted the allegations in the show cause notice, the learned Judge erred in holding that the allegations of fraud, suppression and misstatement are bald, totally vague and devoid of any particulars. In short, submission was that as it is evident from the notice that the respondents failed to file return and did not pay duty in time and as instead of .....

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under:- (1) Sun Pharmaceutical Industries Limited v. The Union of India & Others: 2007-(218)-ELT-0495-BOM, (2) Brindavan Beverages Pvt. Ltd. v. Commissioner of C. Ex., Meerut: 2009-(237)-ELT-0658-DEL and (3) the unreported judgment delivered on 6th July, 2015 in MAT 1856 of 2014 (Venky Hi-Tech Ispat Ltd. v. Customs and Central Excise Settlement Commission). Mr. J.P. Khaitan, learned senior advocate, on the point of maintainability submitted that since the Additional Bench of the Commission, .....

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g to him it is a case of valuation dispute and not of clandestine removal of goods. There was no motive to evade duty. Moreover, as section 32E does not speak of evasion of duty and when under section 32F the applicant makes a true and full disclosure, the Commission has to enquire and decide the matter. Submission was though a settlement under the Act is a package, however in appropriate cases Courts can examine the decision making process. If it is found that order passed is contrary to the pr .....

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relied on the annual report of the appellants as it was not part of the records. As immunity from prosecution is a separate limb in the order of the Commission and revenue neutrality is the basis of the judgment and the learned Single Judge has given adequate reasons for waiver of penalty, it need not be inferred with. Mr. Khaitan has relied on the following judgments in support of his submission which are as follows:- 1) Municipal Council, Ratlam v. Shri Vardichan: (1980) 4 SCC 162; 2) Jyotendr .....

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y Glass Ltd. v. Union of India: 2005 (180) ELT 5 (Del.); 10) Commissioner of C. Ex., Pune v. Coca-Cola India Pvt. Ltd.: 2007 (213) ELT 490 (SC); 11) Viva Herba Pvt. Ltd. v. Union of India: 2010(260) ELT 168 (Bom.); 12) Swasthik Tobacco Factory v. Cus. & C. Ex. Settlement Commission: 2012 (281) ELT 674 (Mad.) and 13) Nirlon Ltd. v. Commissioner of Central Excise, Mumbai: 2015 (320) ELT 22 (SC). The issues to be considered are i) Whether the writ petition is maintainable, ii) Whether the order .....

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e Calcutta High Court. However, the Additional Bench of the Commission at Kolkata, under the statutory rules, having jurisdiction over the entire eastern zone, which includes the State of Orissa, after hearing, had passed the order. The appellant had participated in the proceedings. Hence, keeping Article 226(2) of the Constitution in mind, as a part of the cause of action had arisen within the territorial limits of the Calcutta High Court, the learned Single Judge was justified in holding that .....

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not applicable as it was a judgment on a statutory appeal from CESTAT, whereas in the case in hand, the authorities had participated in the proceedings before the Commission at Kolkata which had passed the impugned order. So far as the merit of the case in concerned, evidently notice dated 11th October, 2010 was issued. Admittedly the respondents after receiving the said notice instead of giving reply within the time as stipulated therein, on 20th December, 2010 had filed applications under sect .....

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oceedings, Commission recording its satisfaction and considering the facts and circumstances, settled the case under section 32F of the Act by passing an order, the relevant portion of which is set out hereinunder:- Central Excise duty: The Central Excise Duty in this case is settled at ­66,64,19,436. This amount has already been deposited by the applicant, the same is ordered to be appropriated by the Commissioner within 30 days from the date of receipt of this order. Interest: The applican .....

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and to the coapplicants Shri Rajesh Mohata from penalty as is in excess of ­5,00,000 (Rupees five lakh only), Shri TPK Patro from penalty as is in excess of ­5,00,000 (Rupees five lakh only), Shri P.S Reddy from penalty as is in excess ­5,00,000 (Rupees five lakh only), and Shri Purushottam Kumar Choudhury) from penalty as is in excess of V5,00,000 (rupees five lakh only) under the provisions invoked in the SCN. The amounts of penalty should be paid within 15 days from the date of re .....

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espondents had admitted the allegations in the show cause notice and had also accepted the duty demanded and the entire liability in the notice, can the penalty imposed by the Commission be challenged. The answer has to be in the negative for the reasons set out hereinafter. It is to be noted that settlement means an official agreement that ends an argument between two people . (Oxford Advanced Learners Dictionary). In the case in hand in view of the provisions in section 32E(1) of the Act, the .....

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because it would mean arguing the case on merit which under section 33 of the Act can only be dealt with and decided by an adjudicating authority. Had there been adjudication and had duty liability been established, under section 11AC the respondents might have faced prosecution from which the Commission had granted immunity. Further as to whether the order directing imposition of penalty is severable or not, the answer can be found from the statute and the impugned judgment. Since section 32K .....

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osition of penalty only. Under the statute the order of penalty is not segregable. As the order of penalty and prosecution cannot be segregated, either the applicant accepts the order in its entirety or the settlement fails. Admittedly a package, an order passed by the Commission, should be read as a whole. It is to be noted that the learned Judge even while holding penalty being segregable and unsustainable held It is true that ordinarily the settlement comes as a package and composite tax stat .....

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passed by the Settlement Commission, as evident from the letters dated 17th October, 2011, the respondents had deposited the penalty, without prejudice to their rights available under the law. In our view since the respondents had filed applications for settlement admitting the allegations in the notice and having accepted immunity from prosecution and as the order is inseparable, such reservation of rights is unacceptable. It is against the scheme of the Act which shall make section 32K(2) otio .....

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he duty demand proposed therein. The applicants are not raising the issue of time bar in the interests of settlement though majority of the demand is time barred. 57. The applicants submit that while they are admitting the entire liability as proposed in the show cause notice, the applicants pray to adjust the amount of ₹ 66,64,49,436 already deposited by them against the admitted duty liability. , (emphasis supplied) (page 598 of the stay application), - however, the learned Single Judge .....

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ce the respondents had admitted the allegations in the notice, the demand of duty and the entire liability proposed therein, the learned Single Judge erred in holding that the allegations are bald and vague and there was no suppression. Perusing the judgment under challenge, we find that the learned Single Judge had proceeded as if the Court was adjudicating matter and thus erred in passing the order setting aside the levy of penalty. So far as the judgments relied on behalf of the respondent ar .....

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