By TIOL News Service

ALLAHABAD, OCT 01, 2015: THE petitioners are engaged in the manufacture of PVC Sheeting, PVC flooring and coated cotton fabrics, and are registered with the Department. A search was conducted by the Officers of the Central Excise Department at the factory premises of the petitioners and certain records were resumed. Physical verification of stock was also carried on in which excess / shortage of finished goods/ raw materials was found. A show cause notice dated was issued to the petitioners requiring them to show cause as to why duty should not be demanded and penalties imposed. The petitioners moved a Settlement Application under Section 32-E of the Act. During the course of hearing of the application the petitioners accepted the allegations in the show cause notice only for those documents in the seized records which were marked as 'R' on the ground that only these documents pertain to the petitioners' company. They claimed that the other invoices do not pertain to the petitioners' company but are the private business record of Sri S.G. Gupta, Executive Director.

The Settlement Commission found that the averment of the petitioners are contradictory in nature inasmuch as they accepted the documents marked with 'R' representing clandestine clearances of goods and on the other hand they stated that they do not accept the charge of clandestine clearances of all the goods. Settlement Commission came to the conclusion that once the petitioners accepted part of the information given in the private record, they cannot simply brush aside the other information. The Settlement Commission also found that the stand taken by the applicant and the Department are at huge variance inasmuch as the petitioners merely accepted 10% of the demand and has contested the evidence collected by the Revenue without any convincing explanation. Accordingly, the Settlement Commission sent the case back for adjudication. The Petitioner challenged the order before the High Court in this Writ Petition.

After hearing both sides, the High Court held:

+ A plain reading of the provisions of sub-section (5) and sub-section (8) of Section 32-F of the Act makes it clear that the Settlement Commission, after considering the facts and evidences and after hearing the parties, pass such order as it thinks fit on the matters covered by the application and also any other matters relating to the case not covered by the application but referred to in the report of the Commissioner of Central Excise and Commissioner (Investigation) under subsection (3) or sub-section (4). The order passed by it under sub-section (5) shall provide for the terms of Settlement including any demand by way of duty, penalty or interest, the manner in which any sums due under the settlement shall be paid and all other matters to make settlement effective and in case of rejection contain the reasons therefor. An order of Settlement Commission shall be void if it is subsequently found by the Settlement Commission that it was obtained by fraud or misrepresentation of facts. From the perusal of the impugned order of the Settlement Commission, it is found that the order contains sufficient reasons for rejection of the case.

+ Power given to the Settlement Commission under Section 32-L can be exercised, if it finds that any person who has made an application for settlement under Section 32-E, has not co-operated with the Settlement Commission in the proceedings before it

+ There is no error of law in the findings recorded by the Settlement Commission in the impugned order. The impugned order is within the four corners of the provisions of Section 32-F of the Act.

Accordingly, the High Court dismissed the Writ Petition.

(See 2015-TIOL-2274-HC-ALL-CX)