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M/s. C.P. Re-Rollers Limited and Anr. Versus Union of India and Ors.

2016 (8) TMI 784 - CALCUTTA HIGH COURT

Whether in the earlier proceedings penalty was imposed on the appellants for concealment of particulars of their duty liability - clandestine despatch of finished goods without payment of duty - habitual in committing offence - Held that:- it is clear from the admission of the appellant no.2 in 2010 proceedings that there was concealment of particulars of duty liability which, by order dated 4th January, 2011 passed under section 32F(5), led to the imposition of penalty for concealment of duty l .....

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Commission being passed on January, 4, 2011.” In this regard it is noteworthy that the “Explanation” to section 32-O(1)(i), inserted by Finance (No.2) Act, 2014, laying down that “concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer” is in aid to and is evidently in consonance with the provisions contained in section 32-E(1) which provides “An assessee may, in respect of a case relating to him, make an application, before adjudication, .....

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before the appropriate authority - Held that:- it is evident that by order dated 27th August, 2014 the Commission had rejected that application for settlement for lack of jurisdiction. Hence, on 27th August, 2014, under Section 32F(1) the proceedings stood abated. Since the appellants cannot be without a remedy, the show cause notice dated 6th February, 2014 has to be adjudicated under the Act. Hence, the appeal is dismissed. The judgement of the learned Single Judge is hereby affirmed. Accordi .....

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ed against the appellant - M.A.T 974 of 2015 With CAN 7508 of 2015 - Dated:- 2-2-2016 - Soumitra Pal And Mir Dara Sheko JJ. For the Appellants : Mr. J.P. Khaitan, Senior Advocate, Mr. Sourav Bagaria and Mr. Niloy Sengupta. For the Respondents : Mr. Pradip Kumar Roy and Mr. K.K. Maiti. JUDGEMENT: Though this appeal was heard along with APO No. 187 of 2015 and APO No. 236 of 2015 as common questions of law are involved, for clarity, this judgment is delivered separately. 2. This appeal has been pr .....

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as under:- 9. The applicant has been penalised in an earlier case under an order issued under Section 32F(5) for concealing his duty liability. 11. The provisions of Section 32-O(1)(i) are absolutely clear. It categorically provides that where a penalty has been imposed on a person under Section32F(5), on the ground of concealment of particulars of his duty liability such a person is not entitled to apply for settlement under Section 32F in relation to any other matter. Further, as per the clari .....

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igible to come before the Settlement Commission. In terms of Section 32O(1)(i) of the Central Excise Act, 1944, without going into the merits of the case, both the application are outrightly rejected and dismissed. (Emphasis supplied) 3. Mr. J.P. Khaitan, learned senior advocate appearing for the appellant submitted that the Commission erred in rejecting the application for settlement holding it being barred by the provisions contained in section 32-O(1)(i) of the Central Excise Act, 1944 ( Act .....

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ission was the Explanation added to section 32-O(1)(i) cannot alter the situation. Neither the Commission found that the appellants did not fully and truly disclose facts regarding the issues to be settled in their application before the Commission nor the Commission discovered any additional duty liability. In short, as no concealment could be found and as repeated applications before the Commission is not a bar, the order of the Commission is illegal. Though there is a bar under section 32-O(1 .....

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ection 32-O(1)(i) would not have been incorporated. In the case of the appellant there was no finding that there was concealment of particulars of duty liability. Submission was the bar under section 32-O(1)(i) got diluted with the introduction of sub-section 2 to section 32- O with effect from 1st June, 2007 which was omitted from the statute book on 8th May, 2010. Alternatively, since the application for settlement was rejected by the Commission, under section 32F(1) of the Act, the proceeding .....

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tion 32F(5), the question of applicability of section 32M does not arise at all. Mr. Khaitan has relied on the following judgments in support of his submission:- Hoosein Kasam Dada (India) Limited v. State of Madhya Pradesh: 1983 ELT 1277 (S.C); Jyotendrasinjhi v. S.I. Tripathi: 1993 ITR (201) 611; Cosmic Dey Chemical v. Collector of Central Excise, Bombay: 1995 (75) E.L.T. 721 (S.C.); K.C. Builders v. Assistant Commissioner of Income-Tax: 265 ITR 562(SC); Amrit Foods v. Commissioner of Central .....

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settlement stated that corrective measures had been taken and undertook such irregularities would not occur in future. Thereafter, the matter was settled at ₹ 8,05,019 being the Central Excise duty equivalent to the demanded amount and full immunity was granted from penalty and prosecution. In 2011 the appellants were found indulging in clandestine removal of goods. The appellants again filed application for settlement. The Commission finding that the offence was repetitive in nature passe .....

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2011 imposing penalty for evasion of duty, the order of the Settlement Commission dated 27th August, 2014 that it had no jurisdiction to entertain the applications for settlement as it is barred by section 32-O(1)(i) of the Act, is just and proper. Therefore, the learned Single Judge was justified in dismissing the writ petition by upholding the order passed by the Commission. Moreover, the argument of the appellant with regard to the introduction of subsection (2) to section 32-0 with effect f .....

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ood abated under section 32F(1) and (iii) If so, whether the appellants are entitled to have their case adjudicated before the appropriate authority. 6. Before dealing with the issues, it is appropriate to refer to section 32-O(1)(i) and sub-section 2 of section 32 which are as under:- 32-O. Bar on subsequent application for settlement in certain cases.- [(1)] [Where, [***]]- (i) an order of settlement passed under sub-section (7) of section 32F [, as it stood immediately before the commencement .....

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relation to any other matter. 7. Sub-section 2 to section 32-O, inserted with effect from 1st June, 2007 and omitted with effect 8th May, 2010 is as under:- (2) Where an assessee has made an application under sub-section(1) of section 32E, on or after the 1st day of June, 2007 and if such application has been allowed to be proceeded with under sub-section (1) of section 32F, such assessee shall not be entitled to apply for settlement under section 32E in relation to any other matter: Provided t .....

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manufacture and surreptitious removal of finished excisable products without discharging Central Excise duty and without adhering to the requisite statutory provisions, a search was conducted in the factory, office and related premises. On completion of investigation show cause notice dated 6th February, 2014 was issued demanding excise duty of ₹ 8,94,200/- for removal of finished goods and the appellant was directed to show cause why penalty should not be imposed. The show cause notice pr .....

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ling upon them to reply as to why the applications should not be rejected since they were ineligible to apply under section 32-O(1)(i) of the Act as by order dated 4th January, 2011 passed by the Commission, on an earlier application filed by the appellants, penalty was imposed on them for clandestine removal of finished goods. Though the appellants did not submit written reply, they appeared and submitted that earlier penalty was not imposed on them for concealment of duty liability and thus th .....

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r settlement and the Commission had passed an order dated 4th January, 2011, the relevant portion of which is an under:- 11. The Bench notes that in the earlier case settled under order no. F- 28/CEX/2005-SC(KOL) dt. 21.11.2005, Shri Chawla, the co-applicant in that case and the co-applicant in this case as well, had informed the Bench that corrective measures had already been taken while assuring that such type of irregularity would not occur in future. The said case was settled at C.E. duty &s .....

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s case is settled at ­33,44,227. This amount is ordered to be appropriated by the Commissioner from the amount of ₹ 35 lakh lying in deposit, within 30 days from the date of receipt of this order. Interest: The amount of interest ­62,876 should also be appropriated by the Commissioner from the balance of ­35 lakh lying in deposit after appropriating the amount of C.E. duty mentioned above, within 30 days from the date of receipt of this order. Penalty- Taking into account of fa .....

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ppropriation of C.E. duty and interest should be appropriated by the Commissioner within 30 days from the date of receipt of this order towards penalty against the applicant. Payment of the remaining amount of penalties by the applicants and appropriation thereof should be done by the Commissioner within 30 days from the date of receipt of this order. Prosecution - The Bench grants immunity to the applicants from prosecution under the Act and Rules made hereunder in so far as this case is concer .....

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e point physical stock taking report dtd. 26.09.08 supported by documentary evidence. A.5 I have to check my records before giving any proper reason for the same. I admit that some clearances of our finished goods have been done in the past by my staff without my knowledge, without cover any duty paying documents, without payment of duty. However, being one of the Directors of the company, I am not disowning the responsibility of such clearnaces and the same may be considered to have been done u .....

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loss, wrong recording of stock entries, scrap cutting, pilferages, etc. Q.3 Mr. Chawla against the restriction imposed under the Notification 32/2006 CE-(NT) dated 30.12.2006 where in the grounds of appeal you have solemnly affirmed in the Writ preferred what you have stated in your answer to question no.2 Do you stand by this? Ans: Yes, what ever we have stated earlier today and in the Writ we on behalf of the company stand by what I have stated. Q-4 Mr. Chawla do you have any thing more to say .....

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that penalty was imposed on the appellants for concealment of particulars of their duty liability which had been taken note of and discussed exhaustively in the order dated 27th August, 2014 passed by the Commission, we are of the view that the learned Single Judge was justified in holding that An element of mens rea was fastened to this petitioner company upon the order of the Settlement Commission being passed on January, 4, 2011. In this regard it is noteworthy that the Explanation to sectio .....

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containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction,…. (Emphasis supplied). Thus as the Explanation to section 32-O(1)(i) is consistent with the statutory intent in section 32-E(1) and is clarificatory in nature, it cannot be interpreted to be not in tune with section 32- E(1). Therefore, as the bar under section 32-O(1)(i) was always in vogue, the submission in this regard on behalf of the responde .....

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sequently, after notices to show cause dated 24th June, 2010/7th July, 2010 was issued, the appellant on 16th August, 2010 had filed an application for settlement of the dispute relating to duty for the period 20th September, 2008 to 25th September, 2008 which was disposed of by order dated 4th January, 2011, as noted. Again for the dispute relating to the period July, 2012 to April 2013 which is covered by show cause notice dated 6th February, 2014, applications were filed on 27th June, 2014 wh .....

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einbefore, there is an important aspect which cannot be lost sight of. It appears from the order dated 4th January, 2011 that in 2005 proceedings were initiated against the appellants for clandestine removal of goods. The appellants admitted about such clandestine removal and informed the Bench that corrective measures had already been taken while assuring that such type of irregularity would not occur in future. On such assurance, though duty was settled at ₹ 8,05,019, immunity was grante .....

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tly even after the assurance given in 2005, the appellants were found to be indulging in clandestine removal of goods without payment of duty. Even thereafter, it appears as the appellants indulged in manufacture and surreptitious removal of goods, notice to show cause dated 6th February, 2014 was issued and thereafter applications for settlement were filed which were dismissed by order dated 27th August, 2014. It is apparent from the conduct of the appellants that they have neither any regard t .....

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asthan Spinning & Weaving Mills, in Jai Jagadamba Malleable(P) Ltd. (supra) and in Union of India v. Asahi India Safety Glass (supra) are not applicable. Since it has not been brought to the notice of the Court that the order of the Commission is vitiated by bias, fraud and malice and as the learned Single Judge has rightly passed the impugned judgment, the principles of law laid down in Jyotendrasinjhi (supra) are not applicable to the facts of the case. As we find that the learned Single J .....

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ined in the demand and may contend that a lesser amount of additional duty is payable than demanded. (page 194 of the stay application) and as the Explanation to section 32-O(1)(i) introduced clarifies the law, the judgments in Hoosein Kasam Dada (supra) and in the Life Insurance Corporation v. R. Suresh (supra) are not relevant. As the appellants after having undertaken not to indulge in irregularities, had subsequently had gone back and indulged in concealing particulars of duty liability and .....

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