TMI Blog2017 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... n that a settlement is unlikely. The powers of the Settlement Commission under Section 32L (1) of the CEA to send the matter to the adjudicating authority, if the applicant does not cooperate with the Settlement Commission, is in addition to the powers under Section 32F (5) of the CEA. If in a settlement proceeding, any party refuses to cooperate with the authority, which is dealing with the dispute, it cannot expect it to proceed further. In any Alternate Dispute Resolution mechanism namely mediation, conciliation etc., cooperation of the parties is a pre-requisite and an essential condition. Thus, Section 32 L of the CEA merely states the obvious i.e. if there is noncooperation, the matter would be sent to the adjudicating authority. In any process of settlement, it cannot be expected that the Settlement Commission would force any party into a settlement. 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 Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir 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. According to the Petitioner, it is subjected to assessment under Sections 4 and 4A of the CEA. By Notification No.10/2010-CE (N.T.) (hereinafter referred to as Notification No. 10/2010 ) dated 27th February, 2010, the Central Government notified that FCT manufactured with the aid of the packing machines and packed in pouches, would be notified goods to be assessed as per Section 3A of the CEA. The said Notification No.10/2010 reads as under: G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby specifies,- (i) unmanufactured tobacco, bearing a brand name, falling under tariff heading 240I of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and (ii) chewing tobacco falling under tariff item 2403 99 10 of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 per Section 3A of the CEA. The three machines, subject matter of the dispute currently, were not sealed. According to the Petitioner the Department felt that same were not covered under the CLS. 8. The Department however issued a letter dated 8th March, 2010 wherein it notified to the Petitioner that the FFS machines, notified under the CTU Rules, would cover tin packing machines. This position was disputed by the Petitioner and hence several visits were made by the Department officials to inspect the machines. Several letters were exchanged. Finally, the Anti-Evasion Staff of the Department visited the Petitioner s unit on 21st May, 2010, and commenced a detailed investigation. Relying upon the Notification No.10/2010 and the CTU Rules, a show cause notice ( SCN ) was issued on 21st July, 2011 to the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 this Court had issued notice. Dasti under signature of the Court Master. The said order continues till date. Petitioners Submissions 11. Mr. Parag Tripathi, learned Senior Counsel appearing on behalf of the Petitioner, submitted that the Tribunal has committed a fundamental error while rejecting the application of the Petitioner for settlement. Mr. Tripathi submits that the majority view of the Tribunal clearly came to the conclusion that There is no suppression of facts regarding the nature and working of three machines on the applicant s part . Thus, the Petitioner in its application has crossed the initial threshold of full and true disclosure as required under Section 32 E of the CEA. According to Mr. Tripathi, once thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 vehemently submits that the stand of the Petitioner is wholly untenable, inasmuch as, the Petitioner is wanting to go back to the Settlement Commission only to seek acceptance of the application filed by it. In the event that the Settlement Commission does not agree with the Petitioner, it would then seek adjudication and hence the entire purpose of going back to the Settlement Commission is going to be defeated. Mr. Narula submits that the Petitioner is only willing to go by the minority view of the Tribunal which has held that the Petitioner is liable to pay only ₹ 4,08,77,436/- crores of the duty. 15. Mr. Narula thereafter submits that owing to the stand of the Petitioner and the delays already caused, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, 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 the Settlement Commission under sub-section (4), and after giving an opportunity to the applicant and to the Principal Commissioner of Central Excise or Commissioner of Central Excise having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such orders as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in report of the Principal Commissioner of Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 only entertain only those who evade tax. Thus, this Court rejects and sets aside the finding of the Settlement Commission that these are meant for errant tax evaders who resort to concealment of facts relating to their transactions in statutorily prescribed records. To mend their such misdemeanor, these provisions have been incorporated in the law. 20. However, that does not bring to an end the further examination of the impugned order. The Court is required to examine the contents of the principal finding of the Settlement Commission that the issue is one which requires adjudication. The Settlement Commission has given a categorical fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 Commission in Union of India v. Dharampal Satyapal Ors. 2013 (298) ELT 653 (Del) (hereafter Dharampal Satyapal ) where it was held as under: 49. The other principle which has been set down in several judgments of this Court is that the Settlement Commission is not a substitute for adjudication proceedings before the central excise authorities and where complex issues of fact and law are involved for which a detailed inquiry is necessary, settlement proceedings cannot act as a proper substitute for the adjudication proceedings. In Picasso Overseas and Others v. Director General of Revenue (Intelligence) and Another [W.P. (C) No.1495/2007 and W.P. (C) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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) of Section 32F, the Settlement Commission, after examination of the records and the report of the Commissioner of Central Excise and the report, if any, of the Commissioner (Investigation) and after giving opportunity to the applicant and to the Commissioner of Central Excise to be heard, has to pass such order as it thinks fit on the matters covered by the application. Under sub-section (8) shall provide for the terms of the settlement and in case of rejection contain reasons therefore. Thus, on a plain reading of the provisions of sub-section (5) and (8) of Section 32F, it is clear that the Settlement Commission has to pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsolute 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 the matter to the adjudicating authority. Any other interpretation to the contrary, defeats the fundamental purpose for constitution of the Settlement Commission namely speedier resolution. 28. This Court has not embarked upon an enquiry as to the nature of the machines of the Petitioner Whether they constitute `packing machines' as defined in Notification No.10/2010 or the CTU Rules. This is an issue which now needs to be adjudicated by the adjudicating authority. The Court has been shown the technical reports on record and some of the findings of the minority view to contend that the issue is not as technical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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