The prerequisite for the Settlement Commission to entertain an application is a 'full and true' disclosure of duty liability; failure to provide such disclosure, especially when the case involves complex factual adjudication regarding clandestine production, justifies the rejection of the application by the Commission.

O R D E R: (As per the Hon’ble Sri Justice Narsing Rao Nandikonda)

Heard Ms. Mamatha, learned counsel representing M/s. CKR Associates, learned counsel for the petitioners and Ms. Pravallika, learned counsel representing Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appearing for the respondents.

2. This Writ Petition is filed under Article 226 of Constitution of India seeking to call for the records relating to Order No.6/2008-C.Ex. in C.No.V/15/37-39/2007-SC dated 28.02.2008 passed by respondent No.1 and set aside the same and consequently direct respondent No.1 to admit the application and consider the case of the petitioners under the provision of Chapter V of Central Excise Act, 1944.

3. The brief facts of the case are that the petitioners are manufacturers of MS ingots. They were operating under the Compounded Levy Scheme w.e.f. September 1997, which was introduced for sectors such as induction furnaces, steel re-rolling mills etc., with the object of levying and collecting excise duty based on the annual production capacity of the manufacturer, as determined by the jurisdictional Commissioner after considering Rule 3 of the Induction Furnace Annual Capacity Determination Rules, 1997, the annual capacity of production was required to be determined. In the present case, the Commissioner of Central Excise determined the intrinsic capacity of the petitioners plant as 2.4 MTs and accordingly fixed the duty liability at Rs. 4,00,000/- per annum.

4. The Compounded Levy Scheme, as provided under the Central Excise Act, 1944 r/w. the erstwhile Central Excise Rules, 1944, was withdrawn w.e.f. 31.03.2000. Thereafter, the petitioners took over M/s. Giridhar Ispat Private Limited and continued clearing the MS ingots on payment of duty under the regular assessment procedure as declared by them. It is relevant to mention that, at the time of takeover, the intrinsic capacity of the plant was only 2.4 MTs.

5. It is further submitted that for the manufacture of MS ingots, they had been procuring MS Scrap from several parties. All receipts of raw material into the factory were properly accounted in the statutory Form-IV Register, and Central Excise duty was paid at the time of clearance of MS ingots from the factory.

6. A Show Cause Notice dated 04.04.2005 was issued to the petitioners by the learned Commissioner of Customs & Central Excise, Hyderabad-IV alleging the clandestine production and removal of MS ingots during the period from April, 2000 to 03.09.2001. It is alleged in the said show cause notice that the petitioners had produced 19,497.733 MTs of various raw materials like MS Scrap, Sponge Iron, PCM Jams, Silico Manganese etc. which was not accounted a major portion of the same in the Raw Material Inward Registers and Form IV Raw material accounts by using the name of Shakti Steels, a proprietary concern with Shri Munnalal Agarwal who is also the Managing Director of petitioner No.1, and procured raw materials without proper accounting under kutcha slips and the said production of the goods was deliberately suppressed.

7. The said cause notice called upon the petitioner to show cause as to why a sum of Rs. 2,00,36,154/- towards the duty, payable on 12,223.418 MTs of ingots and 399.401 MTs of Runners and Risers valued at Rs.12,21,41,994/- and Rs.30,84,020/- respectively, removed by them without payment of d