TMI Blog2021 (3) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority did not apply its mind to the essential aspect of limitation which has a bearing on the outcome of the process initiated by the show cause notice. Therefore, the impugned order-in-original was set aside and the matter was remanded back to the original authority for a fresh decision on the point of limitation after granting an opportunity to the appellant (petitioner No.1 herein) to be heard on all the submissions made in the appeal - What therefore transpires from the above is that firstly, the order-in-original dated 16.06.2015 has been set aside. When the original order passed by the primary authority is set aside by the appellate authority, the legal consequence would be that the original order would cease to remain on record. It would stand erased from the record as if it was never passed. The second aspect is that the question of limitation was found to be the main point by CESTAT because it goes to the root of the demand. If this is upheld then the demand would not survive; but if it is negatived then the demand can certainly be assailed on other grounds since the order-in-original dated 16.06.2015 no longer subsists. This means that the petitioners have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion) Scheme, 2019 (briefly the scheme hereinafter) by respondent No.2 on 13.01.2020 and further seek a direction to the respondents to accept its application in terms of the said scheme under the category of litigation . Alternative prayer made is for a direction to the respondents to accept the subsequent application of the petitioner in terms of the said scheme under the category of arrears after quashing its rejection on 30.01.2020. 3. Case of the petitioners is that petitioner No.1 is a private limited company incorporated under the Companies Act, 1956 having its registered office at Byculla (East), Mumbai. Petitioner No.2 is the director of petitioner No.1. Petitioner No.1 (also referred to as the petitioner company ) is engaged in the manufacturing of cocoa products, chocolates and sugar confectionery. 4. Petitioners have stated that goods manufactured by petitioner No.1 are primarily in the nature of industrial inputs which are utilized by buyers who are manufacturers, hotels, ice-cream parlours and confectioners for their output products. These in turn are supplied by the buyers to their customers. Thus, supplies made by petitioner No.1 are in bulk quantity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... besides directing recovery of applicable interest and penalty as per the provisions of the Act. 8. Being aggrieved by the order-in-original dated 16.06.2015, petitioner filed appeal before the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai ( CESTAT for short) which was registered as Excise Appeal No.86805 of 2015. The appeal was heard by the CESTAT on 10.05.2019. By the order dated 08.11.2019, CESTAT set aside the order dated 16.06.2015 and remanded the matter back to the original authority for a fresh decision after granting an opportunity to the petitioners to be heard on all the submissions made before the CESTAT. 9. In the meanwhile, petitioners submitted declaration as per section 125 of the Finance (No.2) Act, 2019 through which the scheme was introduced. The declaration (also referred to as the application ) was made in the prescribed form on 12.12.2019 under the litigation category i.e., show cause notice pending as on 30.06.2019. According to the petitioner, under section 124 of the Finance (No.2) Act, 2019 in case of tax dues being more than fifty lakhs relatable to show cause notice pending as on 30.06.2019 under litigation categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise and Service Tax, Pune-II passed order-in-original dated 16.06.2015 confirming the demand of differential central excise duty amounting to ₹ 4,06,47,261.00 along with interest and penalty for the period from 01.12.2009 to 31.08.2014. Being aggrieved by the order-in-original, petitioner No.1 filed appeal before CESTAT. Appeal was finally heard on 10.05.2019. However, by the order dated 08.11.2019, CESTAT remanded the matter back to the adjudicating authority for fresh decision confining the adjudication to the ground of limitation only. 14.1. Petitioner No.1 made a declaration in terms of the scheme on 12.12.2009 for settlement of dues relating to the show cause notice dated 24.12.2014 under the litigation category. However, this declaration was rejected by the designated committee on 13.01.2020 on the ground of ineligibility clarifying that as per section 125(1)(a) of the Finance (No.2) Act, 2019, the appeal was finally heard by the CESTAT before 30.06.2019 rendering petitioner No.1 ineligible. 14.2. Petitioner No.1 filed another declaration in terms of the scheme thereafter on 15.01.2020 under the arrears category. This declaration was also rejected by the desig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litigation category. 14.7. In so far order of CESTAT is concerned, respondents have contended that CESTAT had remanded the matter back to the adjudicating authority for a fresh decision confining the decision only to the ground of limitation. Therefore, it would be erroneous to take the view that the matter is back to show cause notice stage. 14.8. Thus, designated committee rightly found petitioner No.1 to be ineligible and rejected its declaration. There being no merit in the writ petition, the same should be dismissed. 15. Mr. Shah, learned counsel for the petitioners has referred to both the rejection orders dated 13.01.2020 as well as 30.01.2021 and submits that on both counts respondents have fallen in error. The declaration under the litigation category was erroneously rejected on the ground of ineligibility by holding that as per section 125(1)(a) of the Finance (No.2) Act, 2019, the appeal filed by the petitioners before the CESTAT was finally heard before 30.06.2019. Referring to various provisions of the scheme more particularly to sections 124(1)(a) and 125(1) of the Finance (No.2) Act, 2019, he submits that as on the date of passing of the impugned order, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jyoti Plastic Works Private Limited Vs. Union of India decided on 05.11.2020 and contends that even in a situation which may not be strictly covered by the scheme, a reasonable and pragmatic approach has to be taken to ensure that the scheme is successful. 16. Opposing the prayer of the petitioners, Mr. Kantharia, learned counsel for respondent Nos.2 and 3 has referred to the averments made in the reply affidavit of the respondents and submits that rejection of both the declarations by the designated committee is legal and valid. Designated committee has acted strictly in conformity with the Finance (No.2) Act, 2019 and rightly rejected the declarations of the petitioners. Referring to section 125(1)(a) of the Finance (No.2) Act, 2019, he submits that a person who had filed an appeal before the appellate forum and such appeal had been finally heard on or before 30th day of June, 2019 would be ineligible to make a declaration under the scheme. In so far petitioners are concerned, the show cause notice was issued on 24.12.2014. This resulted in passing of order-in-original by the Principal Commissioner on 16.06.2015. This was challenged by petitioner No.1 before CESTAT by filing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al No.86805 of 2015. The appeal was finally heard by the CESTAT on 10.05.2019. However, by order dated 08.11.2019, CESTAT set aside the order-in-original dated 16.06.2015 and remanded the matter back to the original authority for a fresh decision after hearing the petitioners. While according to the respondents, CESTAT had confined re-hearing by the original authority upon remand to the question of limitation only, petitioners have contended that CESTAT had set aside the order-in-original and thereafter had remanded the matter for de novo decision. 22. Before we dilate on provisions of the scheme and the first declaration filed by petitioner No.1, we may examine the order passed by CESTAT. 23. From a perusal of the order dated 08.11.2019, it is seen that in the appeal, petitioner No.1 had challenged the order-in-original on the ground of erroneous computation in determining duty liability resulting in higher duty liability; impropriety in imposition of penalty etc. However, at the time of hearing, it was primarily argued that the show cause notice dated 24.12.2014 was barred by limitation. Therefore, the duty liability etc. beyond the period of limitation could not have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since we are examining the first declaration of petitioner No.1, we may confine our analysis to only the relevant portions of the scheme having a bearing on the said declaration. Section 124 of the Finance (No.2) Act, 2019 deals with reliefs available under the scheme. Section 124(1)(a) says that subject to the conditions specified in sub-section (2), the relief available to a declarant under the scheme where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice is pending as on 30th day of June, 2019 shall be calculated in the following manner:- (i) if the amount of duty is ₹ 50 lakhs or less, then 70% of the tax dues; (ii) if the amount of duty is more than ₹ 50 lakhs, then 50% of the tax dues. 25.1. As per sub-section (2), the relief calculated under sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit shall be deducted when issuing a statement indicating the amount payable by the declarant. However, as per the proviso if the amount of pre-deposit exceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this stage, we may also point out that the Board has prepared a set of Frequently Asked Questions (FAQs) on various aspects regarding applicability of the scheme. Question No.5 of FAQs and the answer thereto read thus:- Q5. I have filed an appeal before the appellate forum [Commissioner (Appeals) / CESTAT] and such appeal has been heard finally on or before the 30th day of June, 2019. Am I eligible for the Scheme? Ans . You are not eligible to make a declaration under the Litigation category. However, once the order in appeal is passed, you can file a declaration under the arrears category provided the appeal has attained finality or the appeal period is over or you give an undertaking to the department that you will not file any further appeal in the matter. This will also be subject to the completion of the due process of review of the order in appeal by the department. 28.1. The question is that if the declarant had filed an appeal before the appellate forum and such appeal was finally heard on or before 30th day of June, 2019; whether the declarant would be eligible to make a declaration under the scheme? The answer given is that while the declarant would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion which arises in the present case is not covered by the eligibility exclusions under sub-section (1) of section 125 or under any of the provisions of the scheme. This is so because though the appeal of petitioner No.1 was heard by CESTAT on 10.05.2019 (which was certainly prior to 30.06.2019), it was finally disposed of subsequently on 08.11.2019. While disposing of the appeal, CESTAT set aside the order in original dated 16.06.2015 and remanded the matter back to the adjudicating authority for de novo decision on the show cause notice dated 24.12.2014 firstly by confining to the point of limitation. Therefore, though the appeal was heard on 10.05.2019, by the subsequent order of CESTAT dated 08.11.2019 the said hearing held on 10.05.2019 was rendered redundant reverting the petitioner back to the stage of show cause notice at the stage of adjudication. This was the position when petitioner No.1 filed its declaration under the litigation category and which facts were available on record when the designated committee decided the said declaration on 13.01.2020. If petitioner No.1 was at the stage of show cause notice with no fresh adjudication order then certainly it would be elig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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