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2019 Supreme(Del) 2519
IN THE HIGH COURT OF DELHI AT NEW DELHI
DHIRUBHAI NARANBHAI PATEL, C. HARI SHANKAR, JJ.
Commissioner, Central Excise, Customs & Service Tax, Sonepat & Ors. - Petitioners
Versus
Amit Decorative Plywoods Pvt. Ltd. & Ors. - Respondents
WP(C) 822 of 2015
Decided On : 19-11-2019
For the Petitioners: Mr. Satish Aggarwala, Sr. Standing Counsel.
For the Respondents:Mr. Sudhir Malhotra, Advocate.
Headnote:
The Settlement Commission has no jurisdiction to act as an adjudicating authority and cannot undertake an analysis of evidence. The Settlement Commission cannot reject the evidence in the form of computer printouts, which were borne out by the statements of the personnel of Respondents No.1 and 2, including Manish Kedia and Raghunath Prasad Kedia, as well as by the statements of buyers of the clandestinely removed finished products.
Fact of the Case:
The Show Cause Notice 6. As already noted hereinabove, the Show Cause Notice, dated 16th January, 2013, which stands settled by the impugned Final Order of the Settlement Commission, alleged clandestine removal of finished excisable goods, and undervaluation thereof, by Respondents No.1 and 2. These allegations were, in turn, founded on the following evidence/assertions:
Finding of the Court:
49. We are, therefore, unable to sustain the impugned Final Order, or the findings of the Settlement Commission, as reflected in the paras 24.1 to 24.4 thereof. In our opinion, the Settlement Commission fell into serious error of jurisdiction, in settling the case arising from the Show Cause Notice, dated 16th January, 2013 supra, for an amount of Rs. 11,80,12,105/-, along with interest, as it has chosen to do.
Issues: Whether the Settlement Commission has jurisdiction to act as an adjudicating authority and undertake an analysis of evidence.
Ratio Decidendi: 31. In Picasso Overseas v. Director General of Revenue Intelligence, [Judgement dated 3rd August, 2009, in WP (C) 4401/2007], this Court held, inter alia, as under (in the context of parallel provisions, figuring in the Customs Act, 1962): “The expression “power to perform the function of an office of Customs,” as stated in Section 127F(2) of the Act, has to be read in accordance with the scheme of Chapter XVA and its object. Thus, it would mean that the Settlement Commission is to basically look at the evidence and call for such evidence in order to determine whether the Settlement Commission should or should not accept the additional custom duty which the applicant, says is acceptable to him. ***** (i) The expression “settlement” is in contradistinction to “adjudication” The very scheme of the provisions of Chapter XVA is settlement and not adjudication. ***** 11. We now refer to provision of Section 127F sub-Section (2) which has been relied upon by the counsel for the respondents. This provision states that Settlement Commission has the power to perform the function of an officer of customs under the Act, in relation to the case. We feel that these words as found in sub-Section (2) must be read in accordance with the scheme of Chapter XVA and its object and on so reading the aforesaid words used in sub-Section (2) we find that they are basically to give finality to the order of the Settlement, Commission as an order under the provision of the Act and similar to what an Adjudicating officer does. In fact, the expression “exclusive jurisdiction to exercise the power and perform the function of any officer of customs” is basically to look at the evidence and call for such evidence in order to determine whether the Settlement Commission should or should not accept the additional custom duty which the petitioner says is acceptable to him. The aforesaid expression, therefore, appearing in Section 127F(2) has to be read in the context, of the scope and the object of the Settlement Commission being to settle the matter by accepting the duty amount in and around the figure which the petitioner feels acceptable to him................” (Italics and underscoring supplied) The above extracted passages, therefore, clarify that the conferment, on the Settlement Commission, of the “powers of a Customs officer,” or the “powers of the Central Excise Officer” would not, ipso facto, result in the Settlement Commission metamorphosing into an adjudicating authority. The “powers of a Central Excise Officer,” or the “powers of the Customs officer,” conferred on the Settlement Commission, are so conferred to further its aims and objectives, i.e. to further the process of settlement, and assess whether there has, or has not, been full and true disclosure of liability by the applicant before the Settlement Commission. The Settlement Commission does not, by the conferment of such power, become a parallel adjudicating authority, adjudicating the Show Cause Notice.
Final Decision: 54. The writ petition is, accordingly, allowed, with the following directions: (i) The respondents are directed to file their response to the Show Cause Notice, if any, before the appropriate adjudicating authority, within four weeks of pronouncement of this judgment in Court. No extension of time shall be granted, to them, for the said purposes. (ii) In case the authority, to whom the Show Cause Notice was made returnable, has changed during the time that has lapsed since the date of issuance of Show Cause Notice, the designation and address of the competent authority shall be made known, by the petitioners, to learned counsel who has represented the respondents in this writ petition, within 2 days from the date of pronouncement of this judgment. Else, the reply to the Show Cause Notice shall be filed before the authority to whom the respondents have been directed to show cause, therein. (iii) Consequent on receipt of the replies, if any, from the respondents, to the Show Cause Notice, dated 16th January, 2013, the adjudicating authority is directed to proceed to adjudicate the Show Cause Notice with all due expedition, and attempt to conclude the proceedings as early as possible and, in any event, within a period of six months from the date of pronouncement of this judgment. (iv) Needless to say, the principles of natural justice shall be scrupulously followed by the adjudicating authority, and an opportunity of personal hearing shall also be extended to the respondents. (v) The amounts deposited by the respondents with the petitioners shall be retained by the petitioners and shall remain subject to the outcome of the adjudication proceedings. If, on the conclusion of adjudication, any amount is found refundable, such refund shall abide by the provisions governing refund, as contained in the law, including the principles of unjust enrichment, if applicable.
JUDGMENT :
C. HARI SHANKAR, J.
1. These proceedings emanate from a Show Cause Notice, dated 16th January, 2013, issued by the Directorate General of Central Excise Intelligence (Petitioner No. 2 herein and referred to, hereinafter, as 'the DGCEI') to the respondents, whereby it was alleged that Respondents No.1 and 2 (M/s. Amit Decorative Plywoods Pvt Ltd and M/s Amit Densified Doors Pvt Ltd) had indulged in clandestine removal and undervaluation of goods manufactured by them. The Show Cause Notice required the respondents to show cause as to why -
(i) Central Excise duty (hereinafter referred to as 'duty'), of Rs. 11,43,09,554/-, evaded on goods cleared clandestinely, either without payment of duty or on short payment of duty, during the period 1st April, 2010 to 15th July, 2012, be not demanded and recovered, under Section 11A(4) of the Central Excise Act, 1944 (hereinafter referred to as 'the Act'),
(ii) interest, on the said amount, be not demanded from them under Section 11AA of the Act,
(iii) penalty be not imposed on them under Section 11AC of the Act and Rule 25 of the Central Excise Rules, 2002 (hereinafter referred to as 'the Rules'),
(iv) redemption fine, in lieu of confiscation of the excisable goods, clandestinely removed by Respondents No.1 and 2, during the period 1st April, 2010 to 15th July, 2012, valued at Rs.107,56,15,784/-, be not imposed under Section 34 of the Act, as the goods themselves were not available for confiscation,
(v) the amount of Rs. 70,00,000/-, deposited by Respondents No.1 and 2 be not appropriated towards the aforesaid duty liability,
(vi) duty of Rs. 10,32,559/- be not demanded, and recovered, from Respondents No.1 and 2, under Section 11A of the Act, on the goods found short in the factory premises of Respondent No.1, which appeared to have been clandestinely removed,
(vii) duty of Rs. 26,86,992/-, on goods allegedly clandestinely removed by Respondents No.1 and 2 and seized from the godown, be not demanded from them under Section 11A of the Act,
(viii) the goods, valued at Rs. 2,17,39,417/-, allegedly manufactured and clandestinely removed by Respondents No.1 and 2, and seized from the godown on 19th July, 2012, be not confiscated under Rule 25 of the Rules,
(ix) excisable goods, valued at Rs. 21,09,928/-, seized from the premises of Respondent No.1, be not confiscated under Rule 25 of the Rules, as they appeared to have been stored for the purpose of clandestine clearance without payment of duty, and redemption fine be not charged thereon, as the said goods had already been provisionally released to Respondent No.1, and
(x) cash of Rs. 58,50,000/-, seized at the residence of the directors of Respondents No.1 and 2, and cash of Rs. 10,70,000/-, seized from the office premises of the said respondents, be not confiscated under Section 121 of the Customs Act, 1962, as made applicable to Central Excise by virtue of Notification 68/63-CE dated 4th May, 1963, as the said amount appeared to represent sale proceeds of plywood, clandestinely removed from the factories of Respondents No.1 and 2.
2. Additionally, the Show Cause Notice required the remaining respondents to show cause against imposition of penalty, under the Rules, for having aided and abetted Respondents No. 1 and 2 in the aforesaid contraventions.
3. Instead of proceeding to adjudication of the aforesaid Show Cause Notice, the petitioners chose to have the matter settled, by moving the Customs, Central Excise and Service Tax Settlement Commission (hereinafter referred to as 'the Settlement Commission'), under Section 32E of the Act. Vide Final Order dated 2nd September, 2014, the Settlement Commission settled the case, on condition of payment of duty, by Respondents No. 1 and 2, of Rs. 1,56,11,930/-, along with interest of Rs. 44,17,956/-, and penalties of
(i) Rs. 5 lakhs each by Respondents No. 1 and 2,
(ii) Rs. 2 lakhs by Respondent No. 3,
(iii) Rs. 1 lakh each by Respondents No. 5, 6 and 13,
(iv) Rs. 50,000/- each by Respondents No. 4, 7, 8, 9,
