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TMI Blog2017 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... wing Tobacco ('FCT') at its factory at 11/7, Mathura Road, Faridabad, Haryana. The FCT manufactured by the Petitioner is packed in various types of packing i.e. Pouches, P.P. Jars and Tins. Each of these packings is in various pack sizes. As per the Petitioner, the packing of FCT products was undertaken by it either manually or with the help of manually operated machines. FCT being excisable, the Petitioner avers that it was paying excise duty on the products of its manufacture. 3. There are three types of assessments under the provisions of the CEA. First, under Section 4 of the CEA, goods are assessed as per the transaction value i.e. the consideration received from the purchaser. The second method is under Section 4A of the CEA, which is based on the MRP of the products, provided the goods are excisable and there is a requirement of declaring their MRP under provisions of applicable laws. The third method is the method of deemed assessment, under Section 3A, which is based upon the 'capacity of production'. Under this method, the Excise Authorities do not go into the details of the actual production but the assessment is done on the basis of `presumed production'. 4. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 3A of the CEA, the capacity of production of a particular unit was to be determined on the basis of the number and nature of the packing machines. 6. The industry, by letter dated 2nd March, 2010, sought clarification with respect to applicability of the Notification No. 10/2010 and the CTU Rules. A clarification was thereafter issued by the Central Government on 5th March, 2010 by way of a circular. The circular sought to allay some apprehensions which were expressed by the industry. 7. Controversy thereafter arose as to the nature of machines used by the Petitioner in its manufacturing unit. The Petitioner filed a declaration on 5th March, 2010 claiming that it does not use any Form, Fill and Seal Machines (hereafter 'FFS machines') and that all manufacturing activities in its factory are undertaken with the aid of manual machines and tin packing machines. The Petitioner requested the authorities to seal all the packing machines used in packing of the notified goods. In response to this request, the officers from the Department visited the factory premises of the Petitioner and uninstalled 16 machines, which were covered under the Compounded Levy Scheme ('CLS'), as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 250,11,88,585/- 10. The Petitioner then approached the Settlement Commission under Section 32 E of the CEA with a prayer to admit the application and settle the SCN issued to it. The Settlement Commission then directed the application to be proceeded with under Section 32 F (1) on 2nd July, 2012 and called for a report from the Additional Commissioner under Section 32 (F) (3), which was submitted on 8th August, 2012 The Settlement Commission, after considering the same and after hearing the parties, by the impugned order dated 3rd September, 2012, by a 2:1 majority sent the matter to the adjudicating authority and did not entertain the application of the Petitioner. The said order, passed by the Settlement Commission, is challenged by way of the present writ petition. On 16th October, 2012, notice was issued by this Court and an interim order to the following effect was passed: "Issue notice. Notice is accepted by Mr. Mukesh Anand, Adv. for respondent No. 1 and Mr. Satish Kumar, sr. standing counsel for respondents No. 2 and 3. List on 10th December, 2012. Request is made for postponement of proceedings before the Commissioner. The same shall be considered reasonably since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not covered by the application". However, it can reject an application only under Section 32 L due to noncooperation. Mr. Tripathi also relies upon the minority view of the Settlement Commission to submit that there was in fact no major dispute between the parties and relies upon the following observations recorded therein: "Thus, there are no disputed facts in this case, nor any disputed question of fact and law as to the applicability of a provision of law." 13. Mr. Tripathi, thus, submits that the matter ought to be sent back to the Settlement Commission and not to the adjudicating authority. He also submits that the Petitioner would not be able to avail of the remedy before the Settlement Commission if the present petition is rejected in view of Section 32 O of the CEA and therefore it should be given a chance to approach the Settlement Commission. If the Settlement Commission again feels that this is not a fit case for settlement, the matter would in any case be send back to the adjudicating authority and no prejudice is thus caused to the Revenue. Respondents' Submissions 14. Mr. Sanjeev Narula, learned Senior Standing Counsel, appearing on behalf of the Revenue vehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are- "32E. Application for settlement of cases - (1) An Assessee may, in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled, in such form and in such manner as may be prescribed and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and such other particulars as may be prescribed including the particulars of such excisable goods in respect of 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...... 32F. Procedure on receipt of an application under Section 32E - (1)........ to (4) ........... (5) After examination of the records and the report of the Principal Commissioner of Central Excise or Commissioner of Central Excise received under subsection (3), and the report, if any, of the Commissioner (Investigation) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication being passed, under Section 32 F (3), a report is called for along with the relevant records from the Principal Commissioner or Commissioner of Central Excise. Upon receipt of the report and after an examination of the records and the report, the Settlement Commission, after hearing parties, may `pass such order as it thinks fit in the matters covered by the application and any other matter relating to the case not covered by the application.' Thus, it is clear that the powers of the Settlement Commission are wide and are meant to effectively settle the disputes before it. 19. Coming to the first submission of the Petitioner viz., the finding in the impugned order that since there is full and true disclosure by the applicant before the Settlement Commission, and that the applicant is not a tax evader, its application cannot be entertained. This finding of the Settlement Commission does not have any basis and is unsustainable. No forum whether adjudicatory or conciliatory can hold that its jurisdiction can be invoked only by those who fail to disclose fully and truly all material facts. Forums of this nature are created for quicker settlement of disputes and not to on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commission, before adjudication to settle the case, disclosing his duty liability which has not been disclosed by him before the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as to the applicability of a provision of law, like the one in hand wherein the issue centres around the applicability of whether Section 4 or Section 4-A of the Central Excise Act. Though the assessee has admitted the short levy on dough and paid the duty thereof, since he is raking up the plea that he is eligible to claim benefits under Section 4-A of the Central Excise Act instead of Section 4, that point goes out of the jurisdiction of the Settlement Commission, since it has not been vested with the power to decide such a question of direct assessment. By such an act, the Settlement Commission has usurped the jurisdiction of the adjudicating authorities and as has been rightly commented on the part of the Revenue, by the impugned order, the Settlement Commission has set a bad precedent". 22. This Court has also considered the role of the Settlement C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact or law or a mixed question requiring adjudication, then the Settlement Commission, may, depending on the facts of each case, refer the matter to the adjudicating authority, more so in a situation where it is of the opinion that a settlement is unlikely. 24. The second contention of the Petitioner that the Settlement Commission can reject an application and send the matter to the adjudicating authority, if and only if the applicant has not cooperated with the Settlement Commission as per Section 32 L of the CEA, is incorrect. The powers of the Settlement Commission to pass `such orders as it thinks fit' in Section 32 F (5) of the CEA, are so broad so as to confer the Settlement Commission with wide powers. Such orders would include the orders to refer the matter back to an adjudicating authority where the Settlement Commission feels that the dispute involves a mixed question of fact and law or that it is unable to decide the factual disputes between the parties owing to the technical nature of the disputes. 25. This Court is in agreement with the following observations of the Allahabad High Court in Vinay Wire (Supra): "20. As noticed hereinabove, under sub-section (5) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny party into a settlement. In the context of indirect taxation, the Settlement Commission, constituted under Section 32 of the CEA, and in the case of direct taxation, the Settlement Commission, constituted under Section 245B of the Income Tax Act, 1961, is an ADR mechanism, which provides for speedier resolution of disputes, provided the applicant comes clean and make a full and true disclosure of material facts and also cooperates with the Settlement Commission. If the Settlement Commission is of the opinion, for any reason whatsoever, that the dispute is one which cannot be settled, the Settlement Commission has the absolute discretion not to waste any further time on the matter and to immediately, with utmost alacrity, refer the matter to the adjudicating authority. 27. The power of granting immunity from prosecution and penalty, vested with the Settlement Commission, is a consequence being provided to any applicant before the Settlement Commission, only to ensure the speedier disposal and resolution of the disputes and is not a tool for delaying adjudication. Whenever the Settlement Commission comes to the conclusion that the dispute cannot be resolved by it, it must refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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