TMI Blog2005 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... judication of the case as if no application is filed for settlement. 2. Brief facts of the case leading to the filing of the instant writ petition are as under: The petitioner is a company incorporated under the Indian Companies Act, 1956 and it is the case of the petitioner that it established a small scale unit for the manufacture of P or P Medicaments. It started commercial production since January 1998. The officers of Central Excise, Anti Evasion Wing searched the factory-cum-office premises of the petitioner and taken over certain records. A search was also conducted at the depot premises of M/s. Arsa Pharmaceuticals (P) Ltd., which, according to the petitioner, is buyer of the petitioner's products, whereas, according to the Revenue, it is the petitioner's sole distributor. Certain records were seized from the premises of M/s. Arsa Pharmaceuticals (P) Ltd. The petitioner was served with a show cause notice dated 9-3-2004 alleging that the petitioner indulged in clearance of P or P Medicaments without cover of Central Excise duty paid invoice and without accounting for in the stock registers. A demand was raised of Rs.13,64,684/- and a further demand in the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Settlement Commission, it was contended, has overlooked the fact that the allegations in the show cause notice (for short 'SCN') are yet to be substantiated by the Revenue and even before that stage the application has been rejected. 5. Sri A.Rajasekhara Reddy, learned Senior Standing Counsel for Central Government sought to sustain the impugned order for the reasons contained therein. It was further submitted that the orders being conclusive, the validity thereof has to be examined in the light of the limited scope of judicial review. It was strenuously urged that the petitioner failed to make true and full disclosure of their duty liability, which is a condition precedent for entertaining the application and, therefore, the impugned order does not warrant interference. 6. Before we deal with the rival contentions, a brief look at the relevant provisions of the Central Excise Act would be appropriate. 7. Chapter V containing Sections 31 and 32 has been inserted with effect from 1-8-1998 in the Central Excise Act, 1944 by the Finance Act 2 of 1998. 8. Under definition Section 31, any proceeding pending under the provisions of the Act has been defined a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant record from the Commissioner and if it forms the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner (Investigation) to make or cause to make further enquiry or investigation and furnish a report on the matters covered by the application and any other matters relating to the case. After examination of the records and report of the Commissioner under sub-section (1) and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (6) and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may pass such order as it thinks fit on the matters covered by the application and any other matters relating to the case not covered by the application but referred to in the report of the Commissioner under sub-section (1) or sub-section (6). Every order passed under sub-section (1) shall provide for the terms of the settlement including any demand by way of duty, penalty or interest, the manner in which any sums due under the settlement shall be paid and all other matters to make settlement effective. Power has been conferred und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 32N, any amount specified in an order of settlement passed under sub-section (7) of Section 32F can be recovered and penalty for default in making such payment can be imposed and recovered in accordance with the provisions under Section 11 by the Central Excise Officer. The proceedings before the Settlement Commission shall be deemed to be judicial proceedings within the meaning of Sections 198 and 228 and for the purpose of Section 196 of IPC (Section 32P). 10. The scheme of the provisions contained in Chapter V discloses that they are intended to afford an opportunity to an assessee to seek pecuniary settlement of any or all the violations of the Act by him and to seek exemption both from penalty under the Act and under the penal law. It is for an assessee to voluntarily make an application to the Settlement Commission and thereby voluntarily submit to its jurisdiction and to have the matter settled through Settlement Commission. The decision of the Settlement commission is final and conclusive of the matters stated in the order. However, power has been conferred on the Settlement Commission either to proceed with the application or to reject such application includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d submissions, we find that the applicant has not budged an inch from their earlier stand, although the Revenue has accepted certain duplications and clerical errors in computation of duty liability to the extent of Rs.1,46,325/-. One of the mandatory conditions for admission of the case for settlement is truthful disclosure of the entire duty liability, which is not forthcoming in this case." It was noticed by the Settlement Commission that Annexure A to the SCN reveals the clearances made by the petitioner to ARSA and recorded in the note book No.67 recovered under panchanama dated 17-7-2001. It was further noticed by the Settlement Commission that applicant - petitioner admits the clearances mentioned in Annexure A with reference to quantities but it is not admitting the value thereof on the plea that all were physician's samples containing two tablets per strip. It was further noticed by the Settlement Commission that although the physician's samples appear to have been indicated as 'PS', in some of the entries contained in the note book, others do not have such indication. The petitioner was given opportunity to satisfy the Settlement Commission of the duty liability wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of samples (S)/Physician samples (PS) between 06-01-2000 to 01-02-2000. However, in the Annexure D enclosed to the notice in respect of few entries the price of samples is adopted, and in respect of others the Normal Sale price is adopted for valuation. The applicant submits that they are samples (marked "S")/Physician samples (marked "PS") supplied free of cost to ARS, without invoice and account which are meant for free distribution, to improvise the market for the products which are only one year old in the market. In his answer to question No.10 of the statement Shri C.N.Ramesh, MD of ARSA categorically mentions this fact. Hence, the applicant has re-valued adopting samples price for all entries and the total value works out to Rs.12,87,349/- involving a duty of Rs.2,05,976/- only." (emphasis supplied) What is relevant under Section 32E of the Act is that the applicant should make - (i) a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon the reports submitted by the Commissioner of Central Excise dated 3-6-2004 and 20-9-2004. If the petitioner wanted the reports, it was required to make an application under Section 32J. It does not appear that any such application was made under Section 32J by the petitioner and it was refused copies of the said reports. Reliance of the petitioner on the judgment of the Supreme Court in M/s.R.B.S.D.Pd F.N. Das v. Settlement Commission is misplaced. In that case, the Commissioner had tendered his objections and the Settlement Commission rejected the application for settlement without hearing the applicant. The applicant applied to the Commission to recall its order since it had been passed without given him an opportunity of hearing. During the pendency of that application, Finance Act, 1979 came into force and sub-section (1)A to Section 245D was inserted which empowered the Settlement Commission to overrule the objections of the Commissioner. The applicant, thereupon, applied to the Settlement Commission to permit him to contest the objections of the Commissioner under the proviso newly inserted. The Settlement Commission rejected the application inter alia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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