TMI Blog2017 (10) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... co machine, Commission is not examining the aspect of consumption of electricity, raw material etc., would paid into insignificance is not borne out by close perusal of the Rules, more specifically Rule 6(iii), who has by way of employment of language i.e. ‘operating machine’, the said would presupposes that there is merely an existence of machine in the factory would in own strength is not making authority entitled to count the machine capacity for slapping the duty and word ‘operating machine’ would receive to take into consideration only the operating machine and even there is a specific plea that machine was not operating, it was bounden duty casted upon to clarify and examine the material placed on record and said material are available or not in that regard, the commission has to give its findings. The matter is required to be remanded back to the Settlement Commission for its reconsideration - petition allowed by way of remand. - Special Civil Application No. 16871 of 2016 - - - Dated:- 12-10-2017 - S.R. Brahmbhatt and A.G. Uraizee, JJ. Shri Deven Parikh, Senior Advocate with Harshal M. Shah, Advocate, for the Petitioner. Shri Devang Vyas, ASG and Sudhir M. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the petitioners on 27-12-2012 with the jurisdictional Deputy Commissioner declaring two pouch packing machines and one such machine was sealed in December, 2012 and has since never been used. The petitioner thus using one machine for year and as same started giving troubles, they thought it fit to purchase a secondhand machine and accordingly, secondhand machine was brought into factory in August, 2014 and both the machines were used alternatively. 4.3 The fact that two machines were used together from August, 2014 is clear from sales figures for the said period as compared to the earlier sales figures as well as their production report as per statutory R.G.1 register and even the Electricity consumption bears out the fact that in September, 2014 when both the machines were used, electricity consumption was higher. It is stated that once the new machine was found usable, the old machine was sealed on 30-9-2014 and has never been re-used. 4.4 That the premises of the petitioners were checked by preventive officers of the central excise on 3-9-2014 and at that time, they found two machines installed and this was a period which the petitioners were trying to ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner invited Court s attention to the order impugned in this petition and submitted under the instructions that the petitioner is ready and willing to deposit the amount of rupees 3 Crores and odd which is imposed, without prejudice to the rights and contention of the petitioner to contest the orders in question. Notice for final disposal returnable on 20th October 2016. In the meantime and till the returnable date the amount in question shall be deposited. This deposit would be without prejudice to the rights and contentions of the petitioner and the order impugned shall remain stayed. This would not preclude the investigation, if any. The factum and the documents indicating clear thereunder that one pouch packing machine had only been working for the month of September, that has not been appreciated, which is contrary to the provision of Section 32F (5) of the Central Excise Act, 1944. Direct Service permitted. 6. Learned Counsel appearing for the petitioner submitted that the Settlement Commission has failed to deal with various submissions made by the petitioners before it and the authority has not dealt with or have not been brushed aside the submissions made befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the sole reliance on the statements can hardly be a just consideration of the matter. It is submitted that provisions of Section 9D of the Central Excise Act provided that statements recorded by the department are only relevant in certain circumstances and when such statements cannot be tested by cross-examination, they can be relevant only under the circumstance pointed out in Section 9D. In aforesaid context, the Commission has failed to appreciate that third party statement could not be held reliable inasmuch as the proprietor of the unit has never accepted the same. 11. Learned counsel for the petitioners further submitted that the Commission failed to consider the provisions of Rule 18 of the Chewing Tobacco Rules which provide that if date of installation cannot be provided, the same must be taken to be first day of April of the relevant financial year. It is submitted that the Commission has clearly misread and misinterpreted the said provisions. The petitioners have also tried to settle the matter based upon the installation dated as 1-4-2014, the Commission has even disallowed the same. 12. Learned counsel appearing for the petitioners also submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed to have been installed from the first of April of the year in which the same found operational. The petitioners were prepared even for this additional liability. The Commission has not duly dealt with this submission and has gone by the very linguistic approach that the rule only applied if the unit is registered. This would mean that if a person who is not registered himself for years on end, his liability would only remain in the year in which he is visited. As against that, a person who is actually registered will not get advantage of the said rule. It is submitted that this rule is clearly applicable in all cases where the date of installation cannot be ascertained. It is prayed that even on this count, the matter may be remanded to the Commission. 16. Learned Counsel appearing for respondent no. 2 submitted that the duty of ₹ 300.02 lakhs short paid by the petitioner is liable to be recovered from the petitioner under Section 11A(4) of the Central Excise Act, 1944 along with interest on the said amount in terms of Section 11AA of the Central Excise Act, 1944. Since the petitioner evaded duty by reason of fraud, suppression of facts from the respondent/departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the case may be, who shall allow the addition or installation, as the case may be, under the physical supervision of Superintendent of Central Excise. The petitioner failed to comply with the aforementioned rule with the sale intention to evade the central excise duty on the value of the notified goods manufactured from this extra undeclared pouch packing machine. 19. Learned Counsel appearing for respondent no. 2 submitted that during the course of investigation, all these statements recorded and investigation completed but they never made any dispute on this fact. As such it is evidently proved that the petitioner have never declared about the installation of this extra/third machine in their factory premises since last week of October, 2013 to the Central Excise Department with the intention to evade the payment of Central Excise duty at the appropriate rate per packing machine in the manner as prescribed under Rule 9 of the said Rules and consequently failed to follow the provisions contained under 2010 Rules. 20. Learned Counsel appearing for respondent no. 2 submitted that it is amply clear on the basis of evidences emerging from the statements of Rajubhai Panchal, Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g speed as per the details given in table under Rule 5 i.e. the capacity of production of PPM per month for chewing tobacco for different RSP is dependent on the maximum packing speed of PPM. Once the capacity of production of the machines per month is determined, Central Excise duty is payable as per Notification No. 16/2010-C.E. on the said capacity of production per month. 24. Learned Counsel appearing for respondent no. 2 submitted that Rule 6 of 2010 Rules mandates that the manufacturer of notified goods shall declare in form 1 the details of number of PPM available in the factory, installed in the factory and the number of packing machines which the manufacturer intends to operate in his factory of production of pouches. This rule inter alia also casts obligation on the manufacturer to declare the description of goods, manufactured, brand names, RSP, details of manufacturer of PPM, identification number of PPM, date of purchase of PPM and the maximum packing speed of PPM. 25. Learned Counsel appearing for respondent no. 2 submitted that Rule 6(6) of 2010 Rules mandates that if the manufacturer wishes to make any subsequent changes with respect to any of the parameters w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular period or other factors like electricity consumed to determine the duty liability under the 2010 Rules. 28. Learned Advocate appearing for respondent submitted that instant case involves evasion of central excise duty by the petitioner by not declaring one undeclared extra pouch machine (PPM) which was purchased delivered, installed and made operational in the last week of October, 2013 at the premises of the petitioner i.e. M/s. Hasmukh Tobacco, Ahmedabad. Thus, the petitioner has concealed the fact from the department of having one extra pouch packing machine (PPM) was purchased, delivered installed and made operational in the last week of October, 2013 at their factory premises and all the aforementioned transactions were made in cash which were not recorded in the books of account with the mala fide intention to evade Central Excise duty and therefore, the petitioner has contravened the provisions of 2010 Rules. 29. Learned Advocate appearing for respondent submitted that the Settlement Commission has appreciate the material facts of the case and has also taken into consideration the circumstances emerging in the course of investigation and carefully evaluated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther that the Settlement Commission, if it is satisfied that the circumstances exist for not filing the returns referred to in clause (a) of the 1st proviso to sub-section (1), may after recording the reasons therefor, allow the application to may such application : Provided also that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending with the Appellate Tribunal or any Court : Provided also that no application under this subsection shall be made for the interpretation of the classification of excisable goods under the Central Excise Tariff Act, 1985 (5 of 1986). [(1A)****] [(2)****] (3) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed. (4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant. Section 32F. Procedure on receipt of an application under section 32E. - (1) On receipt of an application under sub-section (1) of section 32E, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (5) without such report. (5) After examination of the records and the report of Principal Commissioner of Central Excise or the Commissioner of Central Excise received under sub-section (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 order 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 the report of Principal Commissioner of Central Excise or the Commissioner of Central Excise and Commissioner (Investigation) under sub-section (3) or sub-section (4). (6) An order under sub-section (5) shall not be passed in respect of an application filed [****] after nine months from the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time before the expiry of two years from the date of the receipt of communication that the settlement became void. Section 32G. Power of Settlement Commission to order provisional attachment to protect revenue. - (1) Where during the pendency of any proceeding before it, the Settlement Commission is of the opinion that for the purpose of protecting the interests of revenue it is necessary so to do, it may, by order, attach provisionally any property belonging to the applicant in the manner as may be prescribed. (2) Every provisional attachment made by the Settlement Commission under sub-section (1) shall cease to have effect from the date, the sums due to the Central Government for which such attachment is made are discharged by the applicant and evidence to that effect is submitted to the Settlement Commission. Section 32-I. Powers and procedure of Settlement Commissions. - (1) In addition to the powers conferred on the Settlement Commission under this Chapter it shall have all the powers which are vested in a Central Excise Officer under this Act or the rules made thereunder. (2) Where an application made under section 32E has been allowed to be proceeded with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of settlement to be conclusive . - Every order of settlement passed under sub-section (5) of section 32F shall be conclusive as to the matters stated therein and no matter covered by such order shall save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. Section 32P. Proceedings before Settlement Commission to be judicial proceedings . - Any proceedings under this Chapter before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228, and for the purposes of Section 196 of the Indian Penal Code (45 of 1860). Thus, bare reading of the provisions stated hereinabove would clearly indicate that the power of the Settlement Commission is essentially probing into the extinguishing circumstances that has been pleaded and examined the material placed before it by the assessee and came to its own conclusion, which is not an adjudicatory powers to access the less power to examine and give its findings qua the fact of the assessee which would indicate that Settlement Commissioner has applied its mind to the aspect pleaded and circumstances plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of language i.e. operating machine , the said would presupposes that there is merely an existence of machine in the factory would in own strength is not making authority entitled to count the machine capacity for slapping the duty and word operating machine would receive to take into consideration only the operating machine and even there is a specific plea that machine was not operating, it was bounden duty casted upon to clarify and examine the material placed on record and said material are available or not in that regard, the commission has to give its findings. 36. We are of the view that matter is required to be remanded back to the Settlement Commission for its reconsideration and accordingly, it is ordered that matter is required to be remanded back to the Settlement Commission for the purpose of its decision on the aspect of operating machine . The machine, which was said to have been there in a factory is operative or not is required to be decided and for that purpose, we are remanding the matter back to Settlement Commission. It would be open to the authority to come to its own conclusion. The money, which is paid by way of interim arrangement, was to remain with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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