TMI Blog2019 (5) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Settlement Commission in so far as it denies exemption to the Petitioner from payment of excise duty for processing of Polyvastra for the period extending from the years 1996 to 2002. In effect, the prayer in the Writ Petition is confined to a portion of the order of the Settlement Commission whereby the demand of excise duty in respect of the processing of Polyvastra was held to be valid by the Settlement Commission. The Petitioner cannot be permitted to approbate and reprobate - petition dismissed. - Writ Petition No.46479 of 2006 - - - Dated:- 14-3-2019 - Mr. Justice Senthilkumar Ramamoorthy For the Petitioner : Mrs.P.Jayalakshmi for M/s.K.Magesh For the Respondents : Mr.V.Sundareswaran CGSSC ORDER This Writ Petition has been filed praying for a writ of Certiorari and Mandamus to call for the records relating to the final order passed by the Second Respondent in Settlement Application No.S.A.(E)No.92-95 98-110 and 123 of 2004 SC in final order No.59/2006-C.Ex. dated 31.10.2006 and quash the same and to direct the Second Respondent to pass orders on the application submitted by the Petitioner de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s upon the Petitioner to show cause as to why the duty of ₹ 18,08,361/- should not be demanded under the said Act with interest and penalty. The show cause notice dated 02.08.2002 is in respect of the period July 2001 to February 2002 and calls upon the petitioner to show cause as to why the duty of ₹ 18,76,467/- should not be demanded under the said Act with interest and penalty. Likewise, the show cause notice dated 02.05.2003 is in respect of the period April 2002 to September 2002 and calls upon the petitioner to show cause as to why the duty of ₹ 12,20,801/- should not be demanded under the said Act with interest and penalty from the Petitioner. 5.Upon receipt of the show cause notices, the Petitioner made advance deposits of ₹ 60,00,000/- on 07.11.2003 and ₹ 44,43,063/- on 03.12.2004 (i.e. an aggregate sum of ₹ 1,04,43,063/-) and thereafter filed an application for settlement under Section 32-E of the Act. The application shows that the aggregate amount of duty involved in the case is ₹ 7,00,42,408/- and that the application relates to all the four show cause notices, which were adverted to earlier. On sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by an organization approved by KVIC whereas the processing of Polyvastra was admittedly done by the petitioner and not by MDP. On this basis, the Settlement Commission held that the exemption notification had been erroneously availed of by the Petitioner and that therefore the Petitioner was liable to pay the duty demanded in this regard. In this manner, after examining the duty demanded under various heads aggregating to a sum of ₹ 7,00,42,408/-, the Settlement Commission fixed the total liability of the applicant/the petitioner herein at ₹ 4,64,72,058/-. In view of the fact that the Petitioner had already paid a sum of ₹ 1,04,43,063/-, the petitioner was directed to pay the balance amount of ₹ 3,60,28,995/-. Keeping in mind the fact that the Petitioner had voluntarily applied for settlement, the Settlement Commission awarded simple interest at 10% per annum by waiving further interest and also granted waiver from penalty and prosecution. 8.The Order dated 31.10.2006 of the Settlement Commission is impugned(the Impugned Order) in this Writ Petition. By Order dated 30.11.2006 in M.P.No.1 of 2006, this Court granted an interim injunction re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not take the above mentioned observation in the Investigation Report into consideration while pronouncing the Impugned Order. 10.The learned counsel for the Petitioner also relied upon case law, namely, an un-reported Judgment of this Court in M/S.SAS ENGINEERING PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE in W.P.No.7604 of 2008 (the SAS Engineering case) wherein, by order dated 18.09.2018, this Court allowed the Writ Petition on the ground that the report of the Commissioner(Investigation) was referred to in the impugned order of the Settlement Commission but there was no discussion on the report while rejecting the application filed by the Petitioner. Two other Orders of this Court in GOLD SOAP COMPANY Vs. THE CUSTOMS AND EXCISE SETTLEMENT COMMISSION in W.P.(MD)No.11295 of 2009 (the Gold Soap case) and in BOND STORES PVT LTD., Vs. CUSTOMS AND EXCISE SETTLEMENT COMMISSION reported in 2011 (272) E.L.T. 366 (Mad.) (the Bond Stores case) were referred to and relied upon to support the contention that the orders of a Settlement Commission may be interfered with if the said orders did not take into account the findings of the preceding Investigation Report. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly favourable to the Petitioner. The learned counsel for the Respondents also relied upon the judgment of this Court in HI-DESIGN Vs. COMMISSIONER OF C.EX. PONDICHERRY reported in 2017 (346) E.L.T. 90(Mad.) wherein, after citing several judgments of the Hon'ble Supreme Court, this Court held that the Order of the Settlement Commission is conclusive and cannot be interfered with unless it is contrary to statutory provisions of the Act. 12.On the merits, the learned counsel for the Respondents submitted that the Petitioner is not entitled to avail exemption as per Notification No.8/96 because the KVIC certificate was obtained by MDP and not by the Petitioner. In this regard, the learned counsel for the Respondents referred to entry 52.10 of the exemption notification and contended that the benefit of the notification is only available to the organization approved by KVIC for processing of Polyvastra. He also compared and contrasted entry 52.09, which pertains to Khadi and is fabric - specific and not organisation - specific. In addition, the learned counsel for the Respondents submitted that an exemption notification is required to be construed strictly. In or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the denial of exemption under entry 52.09 of the exemption notification, which pertains to Khadi, was settled in favour of the Petitioner by holding in paragraph 22 that the applicant/petitioner herein is entitled to the benefit of the exemption under Notification No.8/96 in respect of Khadi fabric processed by them. It is also evident that the Petitioner has been provided immunity from penalty and prosecution and that the rate of interest has been fixed at the lower limit of 10% per annum. 15.Thus, it is clear that the Petitioner has derived substantial benefit by approaching the Settlement Commission. In the present Writ Petition, the Petitioner seeks to quash the Impugned Order of the Settlement Commission in so far as it denies exemption to the Petitioner from payment of excise duty for processing of Polyvastra for the period extending from the years 1996 to 2002. In effect, the prayer in the Writ Petition is confined to a portion of the order of the Settlement Commission whereby the demand of excise duty in respect of the processing of Polyvastra was held to be valid by the Settlement Commission. 16.Accordingly, this Court is of the view that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, accepted the submission of the applicant/the petitioner herein with regard to exemption under entry 52.09(i.e., exemption in respect of Khadi fabrics). The conclusion, in this regard, in paragraph 22 of the Impugned Order, records the fact that revenue did not dispute the fact that there is no system of KVIC approving each consignment of the fabric. As regards exemption under entry 52.10, the Investigation Report categorically stated that the Hon'ble Commission should take an appropriate decision because it is a matter that requires the application of principles of jurisprudence(Observation 7(2) at page 120 of the typed set of documents of the Petitioner). Thus, it cannot be said that the Settlement Commission disregarded the Investigation Report. 17.As regards the merits of the claim for exemption under entry 52.10 of Notification No.8/96, it is clear from the notification that the exemption is organization specific. In this regard, it is relevant to extract entry 52.10 which reads as under:- Poly Vastra, that is to say, any cloth containing cotton and polyester woven on handloom from yarns hand-spun in India and certified as Poly Vastra by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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