TMI Blog2018 (9) TMI 1715X X X X Extracts X X X X X X X X Extracts X X X X ..... RETE CONSTRUCTIONS VERSUS THE UNION OF INDIA [2017 (5) TMI 98 - ANDHRA PRADESH HIGH COURT], where it was held that the term “before adjudication” as contained in Section 32E(1) refers to the adjudication by the competent authority bearing a date. The assessee has to file the settlement application before that date. In the present case, there was no adjudication pending before the authority as on 23-6-2017. The adjudication upon disposal had been dispatched on 21-6-2017. In other words, on 23-6-2017 i.e. the date on which the settlement application was received, there was no adjudication pending. Hence the question of invoking provisions of Section 32E of the Central Excise Act, 1944, does not arise - In this case, the adjudication order was passed on 21-6-2017 with dated signature of the adjudicating authority, Commissioner, Service Tax, and was despatched on that day i.e. 21-6-2017. Therefore, the application for settlement filed on 23-6-2017 is not maintainable before the Settlement Commission under Section 32E(1) of the Central Excise Act, 1944. The Commission finds that the case in respect of the present application has been filed after adjudication. Thus, this case does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices. The premises of the applicant was searched by the SIV Officers on 8-11-2013 in presence of two independent and Shri Ashoke Kumar Ghose, G.M. (F A) and authorized signatory of the applicant and recovered incriminating records / documents. 1.5 During investigation, on examination of facts and evidences, it has been alleged that the activity of the applicant fall under category of Mining Services and the contention of the applicant that their activity is within the ambit of clause (f) of Section 66D of the Act is not correct on the following grounds - (i) The applicant incorporated under the Companies Act, 1956 and each JVC is incorporated as a separate company under the Companies Act, 1956 and thus the applicant and JVCs are independent juridical persons. In the instant case, the applicant is the service provider and the JVCs are recipients. (ii) The mining lease of the coal block is granted to the JVC and the JVC has rightly obtained Central Excise Registration and correctly pays Central Excise Duty on production of coal and thus the applicant is not the manufacturer but is a service provider to the JVCs. (iii) The service provided by the applicant to the JVCs is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Sections 68 and 70 of Chapter V of the Act as amended. 2.1 In the application for settlement 23-6-2017, the applicant has admitted ₹ 5,95,358/- as additional liability of Service Tax out of total ₹ 352,42,66,549/- demanded in the two Show Cause Notices and ₹ 3,17,075/- as interest payable thereon and paid the same before approaching to Settlement Commission. 2.2 For the amount not admitted by the applicant they argued that the kind of service being provided by the applicant is a service by way of carrying out a process amounting to manufacture. The service by way of carrying out any process amounting to manufacture has been included in the Negative List under Section 66D of the Act. Therefore w.e.f. 1-7-2012 the applicant stopped paying Service Tax. However, the company is in receipt of the above mentioned notices to which the department arbitrarily demanded amount of ₹ 352,42,66,549/which is not tenable in law apart from the amount admitted by the applicant. The applicant has admitted ₹ 5,95,358/- which is a part of the processing charges reflected in the invoice raised on one of the customer namely Karnataka EMTA Coal Mines Limited is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus it is clear that they have not received the Adjudication Order before filing the application for settlement to the Hon'ble Commission. The application for settlement was filed before the Hon'ble Settlement Commission on 23rd June, 2017. Shri Sinha therefore humbly prayed that their case may kindly be accepted and allowed to be proceeded with. Shri Sinha in support of his argument referred to a number of case laws wherein it has been clearly stated that if the assessee is not served with the Adjudication Order and if the assessee files the application to the Settlement Commission before receiving the Adjudication Order, then the case may be allowed to be proceeded with. Shri Sinha referred to a case of Income Tax Settlement Commission where it has been specifically ordered by the Settlement Commission that application can be made to the Settlement Commission before the Adjudication Order is served on the assessee, even if the Adjudication Order was passed. He relied upon a judgment of Hon'ble Bombay High Court also (Vishnu Steels v. UOI - 2014 (299) E.L.T. 292 (Bom.). Based on these judgments, he humbly submitted before the Settlement Commission to allow their app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s intimated on 16-8-2017 that the SCNs in this case has been adjudicated vide Order-in-Original No. 0809/COMMR/ST-II/KOL/2017-18, dated 21-6-2017. Further, the jurisdictional Commissioner has also informed that the order was dispatched on 21-6-2017, vide speed Post No. EW5091923941N, dated 21-6-2017. 5.2 During the hearing the representative of the Commissioner has informed that the order was delivered by the Postal Authority to the applicant on 24-6-2017. Therefore, the Commissionerate had held that the adjudication order was passed prior to filing of the settlement application and accordingly, it is not maintainable under Section 32E(1) of the Central Excise Act, 1944. The applicant, however, stated that they have received the adjudication order on 24-6-2017 and since they have sent the application for settlement on 23-6-2017, their application should be proceeded with. They have further stated as on the date of application i.e. 23-6-2017, they were not aware of any adjudication order and therefore, their application may be treated to have been filed before adjudication of the case. 5.3 The Commission has perused the documents relating to the adjudication order. It has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat an assessee can make an application for settlement before adjudication (emphasis supplied). 8. The expression before adjudication appearing in Section 32E of the Central Excise Act, 1944, has been explained by the Hon'ble High Court of Judicature at Hyderabad reported in 2017 (351) E.L.T. 207 (A.P.). 9. The case before Hon'ble High Court was the following :- 7. The issue arising for consideration in this writ petition is very simple and lies in a narrow compass. Section 32E of the Central Excise Act, 1944 enables an assessee to make an application to the Settlement Commission before adjudication . In the on hand, the Order-in-Original bears the date 24-12-2016. But it was served on the petitioner on 18-1-2017 as seen from the acknowledgement. Another copy sent by speed post was received by the petitioner on 25-1-2017. 8. Therefore, the contention of the petitioner is that since they made a request on 27-12-2016 itself to defer the adjudication to enable them to go before the Settlement Commission, much before the order of adjudication was served on them, the Order-in-Original is liable to be set aside. It is the contention of the learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was not maintainable. But the Third Member held the application to be maintainable, on the basis of the decision of the Delhi High Court in Qualimax Electronics Private Limited v. Union of India [2010 (257) E.L.T. 42], In Qualimax Electronics Private Limited, the Delhi High Court held that a literal construction of the words before adjudication may lead to the danger of adjudicating authorities pre-empting the assesses from approaching the Settlement Commission, either by hastily passing orders of adjudication at the last minute or by back dating the orders. Therefore, instead of taking either the date reflected in the order of adjudication or the date on which the order was actually served on the assessee, the Delhi High Court struck a via media by holding that the application before the Settlement Commission could be filed till such time the order of adjudication was signed and the one way process of sending it to the assessee is put in motion either directly or indirectly through some other agency. In other words, the Delhi High Court avoided taking both extreme positions. If an order of adjudication had been signed and there was proof of dispatch, irrespective of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court in Ankush Khullar v. Union of India - 2015 (327) E.L.T. 37 (P H), the order of adjudication denudes the Settlement Commission of its jurisdiction to entertain an application. Therefore, in as much as the order of adjudication bears the date 24-12-2016, the request made by the petitioner on 27-12-2016 and the service of the copy of the order of adjudication upon the petitioner on 18-1-2017 or 25-1-2017 will not enable the petitioner to exercise the right under Section 32E(1). 22. As a matter of fact the petitioner has not approached the Settlement Commission even till date. But the letter dated 27-12-2016, the petitioner merely requested the 4th respondent not to pass an order of adjudication, so that he could go before the Settlement Commission. At least if the petitioner had made an application on 27-12-2016 before the Settlement Commission claiming ignorance of the order of adjudication dated 24-12-2016, he may be entitled to raise all the legal issues, which we have discussed in the preceding paragraphs. But even till date the petitioner has not made any application before the Settlement Commission. But admittedly the order of adjudication has been served at lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case. Hence the ratio of judgment laid down by M/s. Vishnu Steels is not also applicable in the present case. 9.5 In M/s. Qualimax Electronics Pvt. Ltd., the Hon'ble Delhi High Court held that the date of receipt of an order-in-original is not of any significance for the purpose of Section 32E of the Central Excise Act, 1944, since the Settlement Commission can only proceed to settle the case which is pending adjudication on the date the settlement application is received. 9.6 In the present case, there was no adjudication pending before the authority as on 23-6-2017. The adjudication upon disposal had been dispatched on 21-6-2017. In other words, on 23-6-2017 i.e. the date on which the settlement application was received, there was no adjudication pending. Hence the question of invoking provisions of Section 32E of the Central Excise Act, 1944, does not arise. 10. In this case, the adjudication order was passed on 21-6-2017 with dated signature of the adjudicating authority, Commissioner, Service Tax, and was despatched on that day i.e. 21-6-2017. Therefore, the application for settlement filed on 23-6-2017 is not maintainable before the Settlement Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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