An amount paid as 'redemption fine' under the pressure of legally untenable departmental directions, which contravene the provisions of a settlement scheme, is refundable as an involuntary deposit and is not hit by the non-refundability provisions applicable to the settlement scheme itself.

Dr. AJAYA KRISHNA VISHVESHA

This appeal is directed against the impugned order dated 29th November, 2022 passed by the learned Commissioner (Appeals) through which he rejected the appeal preferred by the appellant and upheld the Order-in-Original passed by the Adjudicating Authority.

1.1. The facts of the case in brief are that the appellant is engaged in the manufacturing of batteries falling in Chapter 85 of the First Schedule of the Central Excise Tariff Act, 1984 . On the basis of intelligence, an inquiry was initiated against the appellant / claimant and during the course of investigation, it has been found that turnover of the appellant / claimant exceeded Rs. 1.5 Crores per annum. However, to remain under SSI exemption limit of Rs. 1.5 Crore, they sold Batteries without bills under ‘chits’ and after dispatch, they used to destroy such chits. The appellant / claimant manufactured and cleared clandestinely Batteries without obtaining Central Excise Registration, without issuing bills / invoices and without payment of Central Excise Duty during the period from 01.04.2010 to 26.03.2013. Therefore, Show Cause Notice dated 27th March, 2015 was issued by the Assistant Commissioner, Central Excise Division, Rajkot-1 proposing confiscation of goods valued at Rs. 38,24,205/- along with applicable penalty. The second Show Cause Notice dated 16th September, 2013 was issued by Commissioner, Central Excise, Rajkot proposing recovery / demand of Central Excise Duty amounting to Rs. 98,89,979/- along with applicable interest and penalty. The above mentioned Show Cause Notices were adjudicated vide a combined order dated 29th March, 2016. In the said order, confiscation of the seized goods with an option to redeem the same on payment of redemption Fine of Rs. 10,00,000/- within 30 days of receipt of order and penalty of Rs. 2,50,000/- was imposed on the claimant. The demand of Rs. 98,89,979/- on the clandestinely cleared goods by the claimant was confirmed along with penalty of Rs. 98,89,979/-. An amount of Rs. 8,00,000/- paid by the claimant during investigation has been appropriated against the duty demand.

1.2 Being aggrieved from the above order, the appellant preferred appeal before the CESTAT. Meanwhile, the appellant applied for the SVLDRS (Scheme). The department vide letter dated 22nd October, 2019 informed the appellant that their application covers waiver of the redemption fine, which has not been covered under SVLDRS, 2019. Therefore, their application is liable to be rejected under the provisions of the said scheme. Thereafter, the appellant filed two separate applications in reference to both the Show Cause Notices. The department vide letter dated 8th November, 2019 informed the appellant that as the scheme does not cover waiver of redemption fine, the application dated 24th October, 2019 is liable for rejection. Later, the appellant vide their letter dated 6th December, 2019 submitted that they have paid redemption fine of Rs. 10,00,000/- on 3rd December, 2019 and requested to issue Form SVLDRS 3 in reference to their application dated 24th October, 2019. The department vide letter dated 9th December, 2019 informed the appellant that the designated committee has issued SVLDRS-3 in reference to their application in the systems on 6th December, 2019 and after due payment being made by the appellant the discharge certificate in Form SVLDRS -4 has been issued. Further, application ARN LD2410190000041 dated 24th October, 2019 has been rejected being a duplicate one.

1.3 Subsequently, in pursuance of the judgment of Hon’ble High Court of Gujarat in the case of M/s Synpol Products Pvt Ltd and ors. in SCA no. 21744/2019, the