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TMI Blog2021 (3) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 be sold either directly to industrial / institutional consumers or to distributors or dealers who in turn sell these goods to retail consumers. It is contended that such packages supplied by petitioner No.1 cannot be said to be retail packages. Since the goods manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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' category, the relief amount would be fifty percent of the tax dues. Accordingly, the amount payable in terms of the declaration was assessed at Rs. 38,23,630.50. Petitioners have furnished a statement mentioning the duty amount, pre-deposit made and tax dues less tax relief in the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 designated committee on 30.01.2020 on the ground of ineligibility clarifying that the said application could not be accepted under the 'arrears' category as the case had been remanded back to the competent authority for decision in the month of November, 2019; the date on which the declarant had filed its declaration i.e., on 15.01.2020, the issue had not yet attained finality, therefore, the declaration was rejected. 14.3. After referring to various provisions of the scheme, it is stated that the scheme was initially in force for the period from 01.09.2019 to 31.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers 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, the appeal was disposed of by setting aside the order-in-original and remanding the matter back to the adjudicating authority for a decision afresh. Therefore, though the appeal was finally heard on a date prior to 30.06.2019, on the date of consideration of the declaration not only no appeal was pending, there was no order-in-original as the initial order-in-original was set aside by the CESTAT. Therefore, all that remained was the show cause notice. If that be so, then the declaration of the petitioner under the litigation category was very much maintainable and rejecting the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appeal. The appeal was finally heard on 10.05.2019 i.e., before the cut-off date of 30th day of June, 2019. Therefore, it is evident that under section 125(1)(a), petitioner No.1 was not eligible to make a declaration under the litigation category because the final hearing in the appeal had taken place on or before 30.06.2019. 16.1. In so far rejection of the subsequent declaration of petitioner No.1 under the arrears category is concerned, he submits that the arrear amount had not been quantified following disposal of appeal by the CESTAT on 08.11.2019. In this connection, he has refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 levied. CESTAT noted that the adjudicating authority had passed the order-in-original cursorily and thereafter disposed of the appeal in the following terms:- "9. Limitation is to be decided on the facts of each case. The appellate authorities can only adjudge whether the facts have been appreciated properly and applied against established law. The adjudicating authority does not appear to have applied its mind to this essential aspect that has a bearing on the outcome of the process initiated by the show cause notice. In the circumstances, we consider it appropriate to set aside the impugned order and rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is Rs. 50 lakhs or less, then 70% of the tax dues; (ii) if the amount of duty is more than Rs. 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 exceeds the amount payable by the declarant as determined by the designated committee, the declarant shall not be entitled to any refund. 25.2. Section 125 deals with eligibility to make declaration. Sub-section (1) opens with the expression that all persons shall be eligible to make a declaration under the scheme except those excluded. In other words, section 125(1) has been worded in such a manner that eligibility is the norm and ineligibility is the exception. It says that all persons shall be eligible to make declarations except those who are excluded under clauses (a) to (h). Clause (a) says that a person who has filed an appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal 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 not be eligible under the litigation category but once the order in appeal is passed (which presumably is post 30.06.2019), the declarant can file a declaration under the arrears category provided the appeal has attained finality or further appeal period is over or that the declarant gives an undertaking that he would not file any further appeal. This would go to show that final hearing of the appeal on or before 30th day of June, 2019 is not the only decisive factor in determining eligibility. According to the Board, post 30.06.2019, the declarant can still make a declaration under the arrears category once the order in appeal is passed whereby the matter has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 eligible to file declaration under the litigation category. 31. In Thought Blurb Vs. Union of India, 2020 (10) TMI 1135, a Division Bench of this Court after examining the budget speech of the Hon'ble Finance Minister while introducing the scheme as well as considering the statement and objects of the scheme and the views expressed by the Board held that a liberal view is required to be taken to make the scheme successful. It was held as under:- "54. As discussed above, though the scheme has the twin objectives of liquidation of past disputes pertaining to central excise and service tax on the one hand and disclosure of unpaid taxes on the other hand, the primary focus as succinctl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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