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2019 (7) TMI 622

..... ustoms duty in case the same has been paid and recovered from the Assessee on account of earlier non-levy or short-levy, by reason of fraud, collusion, wilful misstatement or suppression of facts - Approach to Settlement Commission - HELD THAT:- The effort of the Assessee in the present case seems to be taking away what was given by it under the order of the Settlement Commission under another law. In other words, what was paid under the Customs Act resulting in a binding order passed by the Settlement Commission is sought to be scuttled by the proceedings under the Central Excise Act,1944. It is precisely these kinds of loopholes, which were sought to be checked and plugged by the Parliament, by enacting the provision of Section 127-J of the Customs Act,1962. What is intended by making the order of the Settlement Commission to be conclusive is that both the parties, namely, the Assessee and the Revenue, are for ever bound and to remain within the four corners of the orders of the Settlement Commission and this is the specific negation of re-opening of any proceedings under the Act (The Customs Act,1962) or under any other law for the time being in force (including the Central Exci .....

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..... t to the Assessee under Rule 9 (1) (b) of the Cenvat Credit Rules,2004. 2. The facts, leading to the filing of this Appeal, in brief, are as under. 3. The Assessee imported ''Product Screen Separator Drive'' (second hand machinery) goods from M/s.SH Chemical Co.Ltd., South Korea, at a declared assessable value of ₹ 13,93,827/- (based on Invoice C&F value of US $ 29463). The Customs Authorities, upon checking, found that the said goods were undervalued and, accordingly, served a Show Cause Notice on 07.02.2007 on the Assessee, demanding additional Customs Duty of ₹ 18.00 lakhs along with confiscation of the goods and imposition of penalty under Section 112 of the Customs Act,1962. The Assessee contended before the authorities that the goods in question were second hand and the same were supplied 'free of cost' by their related party in South Korea and only the packing and logistics costs were borne by the importer-assessee, which were reflected in the Invoice produced. 4. The Assessee, at the state of Show Cause Notice itself, straightaway approached the Settlement Commission, constituted under Chapter XIV-A of the Customs Act, 1962, for settl .....

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..... he impugned order before us, which was passed on 13.03.2018. Hence, the Assessee has preferred this Appeal before this Court. 8. Mr.S.Jaikumar, learned counsel for the Appellant-Assessee, urged before us that the claim of Cenvat Credit under a different enactment, namely, Cenvat Credit Rules,2004, framed under the Central Excise Act,1944, in respect of Customs Duty paid under the Customs Act,1962, was not prohibited by the provisions of the Customs Act,1962, and merely because the Appellant-Assessee approached the Settlement Commission, constituted under the provisions of the Customs Act,1962, it neither amounted to admission of any guilt, fraud or misstatement on the part of the Assessee nor the customs duty paid by the Assessee under the orders of the Settlement Commission could be held to be disentitled to the Cenvat Credit in terms of Cenvat Credit Rules,2004, under the Excise Law. 9. The learned counsel drew our attention particularly to Rule 3 Sub-clause (7), which stipulates that a manufacturer or purchaser of a final product shall be entitled to take credit of the additional duty leviable under Section 3 of the Customs Tariff Act equivalent to the duty of excise specified u .....

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..... allegations of fraud, collusion and misstatement about the undervaluation of the goods imported by the Assessee from its related party in South Korea. According to him, even though second hand machinery was imported, no price against that was shown to have been paid in the Invoice and only freight and packing costs were shown in the Invoice. It was only upon adjudication and verification by the authorities of the Department, the imposition of customs duty on the import of the said machinery was accepted by the Assessee without any contest, by approaching the Settlement Commission under the provision of Section 127 of Chapter XIV-A of the Customs Act,1962. He further submitted that merely because the Assessing Authority, in pursuance of the Show Cause Notice, was not allowed to give any findings with regard to fraud, collusion, misrepresentation or suppression of facts, it does not entitle the Assessee to claim Cenvat Credit under Rule 9 (1) (b) of the Cenvat Credit Rules,2004, later on, of the Duty so paid under the orders of the Settlement Commission. He also submitted that the order of the Settlement Commission at the stage of Show Cause Notice resulted in a Final Order in favou .....

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..... ing in force (including the Central Excise Act,1944, or the Cenvat Credit Rules made thereunder). 15. If what the learned counsel for the Assessee contended was to be allowed as claimed, the very purpose of settlement of dispute, in which the Assessee succeeded in not allowing the authorities to arrive at any adverse findings of fact as the Settlement Commission was approached at the initial stage of Show Cause Notice itself and also got immunities from penalty and prosecution and all thus would be defeated, will undo what was achieved for settling the dispute between both the parties, by invoking Chapter XIV of the Customs Act,1962, for settlement of the dispute. 16. The provision of Chapter XIV-A of the Customs Act,1962, providing for settlement of disputes by the Settlement Commission is an independent Code and while it is provided to enact a remedial forum for putting an end to disputes in a quicker and more peaceful manner, it gives several advantages to the Assessees and the disputing parties mainly in the form of immunity from penalty and prosecution, which rigor of law would have been otherwise applicable to the Assessee besides the determination of disputed amount of duty .....

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..... ven Rule 9 (1) (b) of the Cenvat Credit Rules,2004, prohibits the credit of excise duty or customs duty in case the same has been paid and recovered from the Assessee on account of earlier non-levy or short-levy, by reason of fraud, collusion, wilful misstatement or suppression of facts, also has considerable force. 20. The contents of the Show Cause Notice in the present case, would clearly reveal that the case of the Revenue against the Assessee in the said Show Cause Notice was that of misstatement of facts and suppression of facts as well as misrepresentation of the assessable value of the goods to the extent of ₹ 49,02,861/-, which was declared only at ₹ 13,93,827/-. Merely because the said Show Cause Notice did not result in any Final Order at the instance of the Assessee itself, it does not mean that there was no case of fraud or misrepresentation or wrong declaration on the part of the Assessee. Therefore, even on the applicability of Rule 9 (1) (b) of the Cenvat Credit Rules,2004, we find that the denial of Cenvat Credit to the Assessee in the present case independently was also justified. 21. Viewed from any angle, we do not find any merit in the contention ra .....

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