IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 13830 of 2011 For Approval and Signature:
HONOURABLE MR.JUSTICE AKIL KURESHI HONOURABLE MS JUSTICE SONIA GOKANI ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
Whether this case involves a substantial question of law
4 as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
================================================= COMMISSIONER - Petitioner(s) Versus M/S JET GRANITO PVT LTD & 2 - Respondent(s) ================================================= Appearance :
MR DARSHAN M PARIKH for Petitioner(s) : 1, NOTICE SERVED for Respondent(s) : 1 - 3.
================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date :12 /1/2012 CAV JUDGMENT (Per : HONOURABLE MS JUSTICE SONIA GOKANI)
1. The petition is preferred by the Revenue challenging the final order of Settlement Commission dated 8.4.2011. The essence of objecting to the basis determined by the Settlement Commission is of an artificial increase of 10% in price for the next year and reduction of the weighted average MRP by 10% to arrive at MRP for 2007-08 in the following factual details:-
1.1 It is the case of the petitioner that the respondent No.1 is engaged in the manufacture of ceramic glazed and vitrified tiles holding Central Excise Registration for manufacture and clearance of such excisable goods. Central Excise Duty is leviable on ceramic tiles under Section 4A of the Central Excise Act ( hereinafter to be referred to as “ the Act”). The duty assessment is done on the basis of MRP affixed on the packages as per the provisions of Standards of Weights and Measures Act, 1976. The abatement of 45% from such MRP is for the purpose of determining the assessable value of ceramic tiles, as provided under the amended Notification No. 13/2002- CE(NT) dated 1.3.2002. It is also averred that as per the Notification No.6/2002-CE, as amended on dated 1.3.2002, those ceramic tiles which are manufactured without the use of electricity attract Central Excise duty at the rate of 8%, provided no Cenvat credit of the duty paid on inputs used, has been availed by the manufacturer. The respondent herein, after availing abatement of 45% of the MRP declared that the Central Excise Invoices, was clearing its excisable finished goods on payment of duty at 8% ad velorum on the value determined. It is averred further in the petition that the intelligence was gathered by DGCEI zonal unit that the respondent No.1 and others engaged themselves in large scale evasion of Central Excise Duty and other taxes by declaring only a part of the actual MRP and, thereby determining the lower assessable value for availing abatement of 45% on such lower MRP. Search operations were carried out at the premises of various manufacturers of tiles at Morbi as well as at the premises of several transporters, shipping companies, dealers, angadias etc. situated at different locations on different dates. Search parties were compelled to withdraw themselves on account of unruly and illegal behaviour of these persons. So much so that FIRs were required to be filed with the local police stations. This led DGCEI to conduct investigation by summoning documents and books of accounts as it was virtually impossible to carry out physical search of the premise as averred in the petition. The petitioner also mentions in detail information received by DGCEI and the modus operandi of manufacturers in order to evade tax liabilities. In short it is averred that all the parties, namely, the manufacturers, their dealers, distributors etc. are hands in glove and sale of such tiles to the ultimate consumer is being made by not disclosing actual MRP or sale value and differential value, over and above the value declared in the sale bills, was collected from the consumers in cash. This was essentially to evade value added tax on the tiles sold by them. It was revealed, as further averred, that during the detailed study while collecting discreet information with regard to this alleged racket that there was a large scale evasion of duty of excise tax, commercial tax, income tax and other local taxes. It was further revealed that selling of tiles without proper sales bills and collecting huge cash amount over and above the declared bill value has created parallel economy of black money, which is ruining the national exchequer. The possible amount of Rs.2000 crores according to petitioner exchanged hands as unaccounted cash and considering the magnitude of loss to the Government, this investigation was carried out.
2. DGCEI had twice conducted the search on 24.1.2008 and 18.3.2008 in the midst of heavy security of armed police considering the alleged unruly behaviours of the manufacturers and others. In the circumstances mentioned hereinabove, in case of the present respondent M/s. Jet Granito, no search was conducted and it was summoned for producing the documents on 1.5.2008 and the same were produced on 12.5.2008. It is also averred further that it was revealed from the material presented before the petitioner authority that it suppressed colour/designing, code numbers and varieties of tiles for the period from June, 2007 to March, 2008. This was allegedly done to evade the Central Excise Duty. Central Excise Invoices also did not reflect variety of tiles although they manufactured different shades, colours, designs and quality. In the meantime, all the manufacturers of Gujarat including the present respondent increased MRP of tiles manufactured by them and such enhancement of the MRPs for 1.4.2008 to 31.3.2009 was averred to have been done without making any change/quality/design of the tiles. This enhancement with effect from 1.4.2008 was indicative that prior to this date, respondent manufactured and cleared tiles of different varieties, colours, designs but in Central Excise Invoices it showed only general description of tiles. It is alleged therefore that the respondent indulged in large scale evasion of Central Excise Duty by way of gross under-valuation. This substantial increase in MRP without change in quality in post April, 2008 period was further vindicative of the intelligence of DGCEI, as per the version of petitioner.
3. In the aforementioned premise, a show cause notice was issued to the respondent on 30.9.2009 working out the duty at Rs.44,43,031/- with proposed penalty on the Director of the respondent company.
4. Application was filed by the respondent before the Settlement Commission where it admitted the duty liability of Rs.3,56,422/- and interest thereon of Rs.97,497/- and the same was paid. After the submission of Revenue, the respondent made amendment in its original proposal (application) and increased its duty liability to Rs.21,31,941/- with interest of Rs.7,40,438/- and paid entire amount with interest.
On the basis of such admission as also after the submissions of the parties Settlement Commission decided the dispute by passing following operative order:-
“19. In the foregoing discussions, the case is settled under sub- section (5) of Section 32F of the Act under the following terms and conditions:-
“Central Excise Duty: The differential duty in this case is settled at Rs.32,61,792/- (Rs.32,14,631/- + Rs.47,161/-) (Rupees Thirty Two Lakhs Sixty One Thousand Seven Hundred and Ninety Two Only). The applicant has already deposited Rs.21,31,941/- and the same has been confirmed by the Revenue. The balance shall be paid within 30 days under intimation to the Revenue and Secretariat of the Commission.
Interest: The applicant shall calculate the interest liability on the duty amount settled above. The applicant has already deposited Rs.7,40,438/- ( Rupees Seven Lakhs Forty Thousand Four Hundred Thirty Eight Only) towards interest liability as confirmed by the Revenue. The balance shall be paid within 30 days under intimation to the Revenue and Secretariat of the Commission. The Revenue is given the liberty to check the interest calculation for its correctness and realize extra amount, if any, as per law.
Fine & Penalty: The goods which have been cleared by the applicant during the disputed period (01.06.2007 to 31.03.2008) are not available for confiscation. Hence no redemption fine is leviable in this case. Taking the facts and circumstances of the case into consideration, the Bench grants immunity from penalty in excess of Rs.30,000/- ( Rupees Thirty Thousand Only) to the applicant under the relevant provisions of the Act invoked in the SCN dated 30.09.2009. The Co-applicant is granted immunity from penalty in excess of Rs.10,000/-(Rupees Ten Thousand Only).
Prosecution: The applicant and the co-applicant are granted immunity from prosecution under the Central Excise Act, 1944 in so far as this case is concerned.
21. The above immunities are granted under Section 32K(1) of the Act. Attention of the applicant and co-applicant is also drawn to the provisions of sub Section (2) and (3) ibid.
22. This order of settlement shall be void in terms of Section 32F(9) of the Act if the Settlement Commission subsequently finds that it has been obtained by fraud or misrepresentation of facts.
23. All concerned are informed accordingly.”
5. It is averred in the petition that the full demand of duty liability is not on the basis of actual price (MRP) at which the goods were sold to the dealers and the intelligence gathered by the Revenue was with regard to the small percentage of sale and the same cannot be made the basis for calculation of additional duty liability, particularly, in absence of actual MRP and more particularly when the invoices did not reflect the colours, designs etc. of the tiles. Under such circumstances, the only alternative available was to take weighted average of each variety or group of tiles cleared after March, 2008 when the prices were revised. The weighted average, thus, was taken to give more reliable basis, as the accepted weighted average MRPs were arrived at by the petitioner on the basis of actual MRP declared by the respondent with effect from 1st April, 2008. It erroneously ignored the evidence regarding pricing of other well known manufacturers and further erred in allowing without any scientific base, a very high reduction of 10% from this MRPs arrived at on weightage average basis towards notional price revision considering the inflation and other cost escalation factors. The said basis was completely unscientific and this hypothetical and artificial increase in price in the next year and thereafter reduction of the weighted average MRP to arrive at the post MRP period for the year 2007-08 is challenged in the present petition.
6. It is also contended that such a stand of the Settlement Commission would have a cascading effect in as much as, at the same point of time, the price would go in negative if the period becomes longer. Resultantly, petitioner has challenged the impugned order of the Settlement Commission.
7. On issuance of the notice to the other side it has chosen not to respond to the same nor has it independently challenged the order of Settlement Commission and, therefore, the Court has deemed it appropriate to hear learned counsel Mr. Darshan Parikh for the petitioner and adjudicate the matter on the lines of averments made by the Revenue.
8. At the outset, it is required to be noted that in case of one another manufacturer M/s. Suzlon Ceramics, the petitioner Revenue had challenged the order by way of petition i.e. Special Civil Application No. 4935 of 2011, where the manufacturer also had challenged the order of Settlement Commission by a cross petition being Special Civil Application No. 9381 of 2011 and by a common judgment, this bench has allowed the petition of the Revenue by giving certain specific directions to the Settlement Commission. The material point of difference in both these petitions decided earlier is that the order of the Settlement Commission also was not acceptable to the manufacturer and in the wake of its challenge, immunity was granted to party manufacturer whereas in the instant case, the respondent, as mentioned hereinabove, has neither challenged the order of the Settlement Commission independently nor has it contested the present petition. In any manner, therefore, the immunity granted to the respondent from prosecution would be available for the present respondent.
9. Heard learned counsel Mr. Darshan Parikh for the Revenue who has seriously challenged the order of the Settlement Commission dated 8.4.2011 passed under Section 32F (7) of the Act. It is submitted by the learned counsel Mr. Darshan Parikh that the reduction of 10% per year as has been done by the Settlement Commission would lead to absurdity of the figure as there would be a substantial reduction of 50% at the end of 5 years and if that year wise reduction is further extended, effect would be of getting a negative sum eventually. He also further urged that it would not only have cascading effect as there are 200 other manufacturers who are waiting on the fence, but, the same would lead to a chaotic situation for the Revenue. He urged this Court to consider the fact that though DGCEI needs to investigate in the allegation of large scale evasion of the tax and duties, the officials were not permitted to do so by the manufacturers, their employees etc. This very attitude, on the part of the manufacturers, which included the petitioner, requires to be deprecated severely and in the wake of these glaring facts, deduction of 10% as is done by the Settlement Commission is, in no manner found sustainable from any angle. It is also the say of the Revenue that only theoretical basis is adopted by the Settlement Commission and thereby he has travelled outside his jurisdiction.
10. It is further contended by him that as the question proposed in this petition is similar to the one decided by this Court in Special Civil Application No. 4935 of 2011 and Special Civil Application No. 9381 of 2011, on the lines of the order passed in those petitions, necessary directions be issued to the Settlement Commission in this matter as well.
11. At the outset, it is required to be mentioned that the provision of Settlement Commission was brought on the statute book with laudable objective. Revenue also emphasized that the Settlement Commission is a premier Alternative Dispute Resolution body whose approach is to resolve disputes through consensus between two conflicting parties. This mechanism allows tax payers to come forward clean by disclosing truly its income but, this mechanism cannot work dehors the objectives and intent of statute
12. The challenge here is to the order of the Settlement Commission, which has allegedly travelled beyond its jurisdiction. At the outset, the decision of the Apex Court in the case of Paul Industries (India) vs. Union of India reported in 2004(171) E.L.T. 299(S.C.) as well as judgment given in the case of Union of India vs. Ind-Swift Laboratories Ltd. reported in 2011(265) E.L.T. 3(S.C.) require specific mentioning.
In the case of Paul Industries (India) vs. Union of India (supra), the dismissal of writ petition by the High Court challenging the correctness of the original order passed by the Settlement Commission was at large before the Apex Court, wherein it held that the High Court was obliged to go into the question whether the original order passed by Settlement Commission was in accordance with the law or not. In the matter before the Apex Court, the Settlement Commission did not take into consideration the value of lowest transaction while passing the original order of fixing the duty, the Apex Court held that it was a pure question of law and the High Court was not justified in not going into the merits of the original order and, therefore, it remitted the matter back to that Court.
In the case of Union of India vs. Ind-Swift Laboratories Ltd.(supra), the Apex Court held that so far as the findings of fact recorded by the Commission or the question of facts are concerned, the same is not open for examination either by the High Court or the Supreme Court and the High Court cannot substitute its opinion by holding thus:-
"21. An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far findings of the fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court. In the present case the order of the Settlement Commission clearly indicates that the said order, particularly, with regard to the imposition of simple interest @ 10 per cent per annum was passed in accordance with the provisions of Rule 14 but the High court wrongly interpreted the said Rule and thereby arrived at an erroneous finding.
22. so far as the second issue with respect to interest on Rs.50 lacs is concerned, the same being a factual issue should not have been gone into by the High Court exercising the writ jurisdiction and the High Court should not have substituted its own opinion against the opinion of the Settlement Commission when the same was not challenged on merits."
13. In light of these decisions, question proposed in present petition since appears to be, in essence, a question of law rather than a question of fact, this Court shall have to interfere with the findings of facts recorded by the Settlement Commission and for answering the disputed question of law only those facts which are necessary to be touched shall be examined as has been done in earlier petitions and instead of independently giving the findings, since the question raised in the present petition is identical to the one raised in earlier petition, it would be apt to reproduce the findings from the earlier petition which are necessary and relevant.
“ As the question appears to be essentially more a question of law than the question of fact, for answering the disputed question raised before this Court by both the sides, it would be pertinent to reproduce, at this stage, the provisions of Central Excise Act. Section 4A of the Central Excise Act reads as under:- "Section 4A. Valuation of excisable goods with reference to retail sale price.-(1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act,1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section(2) shall apply.
(2) Where the goods specified under sub-Section(1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.
(3) The Central Government may, for the purpose of allowing any abatement under sub-section(2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.
(4) Where any goods specified under sub-section(1) are excisable goods and the manufacturer-
(a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules and other law as referred to in sub-section(1); or
(b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section."
19. These provisions are meant for valuation of the excisable goods with reference to the retail sale price. What is required of a manufacturer is to declare the retail price of the goods which are governed by Notification in the Official Gazette specifically the retail sale price declared on excisable goods less the amount of abatement as may be declared by the Government by Notification in the Official Gazette. Thus in other words, after deduction of the abatement, as may be declared by the Government, on the excisable goods, the reference to the value will be retail sale price of such goods.
In the event of any clandestine removal of such excisable goods by the manufacturer without declaration of the retail price of such goods on the package or if the sale price is declared, which is not the actual sale price of such goods, or if there are events of tampering with or altering retail sale price on the package of such goods, the authority is empowered to ascertain the retail sale price of such goods in a prescribed manner.
20 For the purpose of this Section, retail sale price is the price at which excisable goods in the packed form is sold to the ultimate customer and that should be inclusive of all taxes, freight, transport charges, commission, etc. Thus, it is important to have retail sale price on the packed goods which is sold to the customer and for all practical purpose that should be inclusive of all the taxes and charges and such a price is the only consideration for the purpose of sale to the customer and would have bearing on duty to be collected.
It is also vital to note here that in the event of clandestine removal, where the sale price of such goods on the package is not declared or the same is tempered with or obliterated, Retail Sale Price needs to be ascertained for which rules have been made, known as the Central Excise ( Determination of Retail Sale Price of Excisable Goods) Rules, 2008 notified by Central Board of Excise & Customs vide Notification No. 13/2008-CE(NT) dated 1.3.2008, have come into being. These rules have substituted earlier notification No.54/96 of 1996 dated 31.10.1996 and Rule 4 of these rules read as thus:-
"Rule 4. Where a manufacturer removes the excisable goods specified under sub-section(1) of Section 4A of the Act,-
(a) without declaring the retail sale price on the packages of such goods; or
(b) by declaring the retail sale price, which is not the retail sale price as required to be declared under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or rules made thereunder or any other law for the time being in force; or
(c) by declaring the retail sale price but obliterates the same after their removal from the place of manufacture, then, the retail sale price of such goods shall be ascertained in the following manner, namely:-
(i) if the manufacturer has manufactured and removed identical goods, within a period of one month, before or after removal of such goods, by declaring the retail sale price, then, the said declared retail sale price shall be taken as the retail sale price of such goods:
(ii) if the retail sale price cannot be ascertained in terms of clause (i), the retail sale price of such goods shall be ascertained by conducting the enquiries in the retail market where such goods have normally been sold at or about the same time of the removal of such goods from the place of manufacture: Provided that if more than one retail sale price is ascertained under clause (i) or clause(ii), then, the highest of the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods."
21. It would be also relevant at this stage to make a mention of notification No.13/2002-CE(NT) dated 1.3.2002 which is a notification in exercise of the powers conferred under Section 4A for allowing the abatement of 45% from MRP for determining the assessable value of Ceramic tiles. Ceramic tiles manufactured without availing Cenvat credit paid on input and manufactured in a factory without electricity attracted Central Excise duty at 8%. It can be thus seen that the petitioner Suzlon Ceramics was clearing its excisable finished goods on payment of 8% ad valorem duty at the value determined by them after availing abatement of 45% of the MRP declared in their Central excise invoices. From the rival contentions it is noticed that large scale clandestine removal was noted by the Department, by the manufacturers of ceramics, which included present petitioner, evading the Central Excise Duty and other taxes by declaring only a part of actual MRP. Resultantly, it had the effect of determining the lower assessable value after availing the abatement of 45% on such MRP. Since it was not possible for the DGCEI to conduct the coordinated search operations in the wake of severe resistance as mentioned hereinabove, the documents were called for.”
As is apparent from record in the present petition also, the Commission though was of the opinion that the weighted average of MRP which is the price adopted by the Revenue provided a good basis if the same falls within the principle of valuation laid down under section 4A(4) of the Central Excise Act read with Valuation Rules under Notification No.13 of 2008. The Commission observed thus:-
“17. The additional duty liability on the above basis has been worked out and the same is set out in Tables I & Table II below. Table I represents the additional duty liability by giving a reduction of 10% on the weighted average MRP followed by the Revenue in the various categories of tiles to work out the duty demanded in the SCN. In all these cases the admitted liability was lower. Table II gives details of goods (clearance) where the duty liability admitted by the applicant were found to be higher than the liability calculated on the reduced MRP as worked out above. In these cases obviously the admitted liability has been accepted for settlement.
TABLE I Cases where admitted duty liability is lower ( i.e. 01.06.2007 to 31.03.2008) (Figures in Brackets in Column 4 represent the weighed average MRP adopted by Revenue for raising the demand) Table-II Cases where admitted duty liability is higher ( 01.06.2007 to 31.03.2008) (Figures in brackets in Column 4 represent the weighted average MRP adopted by Revenue for raising the demand) 18. The total duty liability to be settled accordingly works out to Rs.32,61,792/- ( Rs.32,14,631/-+ Rs.47,161/-). This figure falls between the amount demanded in the SCN and the admitted duty liability. The Bench considers that the duty liability worked out as above is the most reasonable and it is the best possible in the given facts and circumstances of the case where the actual data in the prices are not available.”
The order under challenge on the said issue concludes thus :-
“19. The Bench has carefully considered the plea for the applicant and the co-applicant for immunities. Is is the admitted position that the actual data of MRP have not been made available in this case and there has been deliberate duty evasion by way of undervaluation and cash transaction. However, the applicant has been very cooperative in the settlement proceedings and has been very flexible in revising the admitted liability. It is also noted that the case has been substantially built up by the Revenue on the basis of data of documents voluntarily submitted by the applicant. The Bench is therefore, inclined to take a lenient view as far as the request for immunities are concerned.”
14. It emerges thus from the record that the officers of the petitioner department conducted the search of premises of the dealers, manufacturer, angadias etc. and also recorded the statement on the basis of which it issued the show cause notice leaving differential duty of Rs.44,43,031/- including demand of additional interest and penalty.
15. It appears thus to have admitted, initially, liability only to the tune of Rs.3,56,422/- and interest of Rs.97,497/-. However, subsequently, when the Revenue made its stand clear, it enhanced the said liability to Rs.21,31,941/- with interest of Rs.7,40,438/. According to the Revenue, the respondent No.1 has not made full admission of the duty liability by not disclosing the actual MRP and the goods were sold to the dealers in the period under challenge. Therefore, only alternative with the Revenue was to work out the weighted average of each variety of grade of tiles cleared after 2008 when the prices were revised. It is noted by the Revenue that invoicing pattern gave details of the tiles cleared after March, 2008 and weighted average of one year, therefore, was the best possible alternative available with the Revenue.
16. It is evident from the order of the Settlement Commission discussed above that it was although conscious of the fact that there is no disclosure made of the actual selling price on the ground that there was no record maintained and the details which were voluntarily submitted by the respondent also did not indicate that such record containing data on actual price realization was present, the Settlement Commission insisted on actual sale price by merely referring the same as an ideal situation. However, on account of absence of requisite information, it did note that work out of actual sale price was not feasible. Settlement Commission also was aware of the objections on the part of the Revenue to the revised duty liability accepted by the respondent on the ground that it did not represent the whole range of transaction. Thus it could be noted that the Settlement Commission though on one hand was convinced that the respondent had not made available the actual data of MRP before the Commission and had also deliberately evaded duty by way of undervaluation of cash transaction and despite having been conscious of the strong case of the Revenue only on the ground that the respondent had been cooperative and had accepted the duty liability and also had come-forth for the settlement proceedings, it worked out a formula, as rightly pointed out by the petitioner Revenue, which was foreign to the law existed then.
17. Under similar set of facts this Court in the earlier petitions i.e. Special Civil Application No. 4935 of 2011 and Special Civil Application No.9381 of 2011, by a common order concluded the issue in the following manner:-
26. Admittedly for the period for which the MRP was being worked out was from 19.4.2007 to 15.2.2008. At the relevant point of time, the Central Excise Rules, 2008 were not in existence. But at the same time, instead of going as per the provisions of the law the notional price revision of 10% for subsequent period, for arriving at MRP for the relevant period, and in the name of practical approach for the subsequent period, has made reduction in the weighted average MRP by the factor of 10% is wholly unacceptable and, therefore, as rightly submitted by the learned advocate for the Revenue, the possibility cannot be ruled out that eventually this reduction could bring weighted average MRP to nil and it would result into ridiculous preposition. As the policy adopted by the Settlement Commission is neither legal nor in any manner conducive to the object of the Act and as the same is challenged by both the sides and as fallacy of reasoning had been well made out, we are of the firm opinion that this entire basis cannot be sustained and the same needs to be set aside. In this premise, the order of the Settlement Commission shall have to be quashed in these proceedings.
We are conscious of the decision of the Apex Court given in case of Union of India vs. Ind-swift Laboratories Ltd. (supra) that findings of facts recorded by the Commission or questions of facts are concerned, the same are not open to examination by the High Court. However, the same can be interfered with when order is contrary to the provision of the Act. Having found the order of Settlement Commission contrary to the settled principles and provisions of law, the same is being interfered with.
27. Of course, the Court shall not substitute its reasonings nor will it enter into the arena meant for the Settlement Commission on the basis of materials presented by both the sides so as to work out detailed calculations for settling of rival claims of the parties. It would be sufficient to quash the order and direct the Settlement Commission to adjudicate the issue by following directions of this Court ..........
18. At the cost of reiteration, it needs to be mentioned that the entire action on the part of the respondent of approaching the Settlement Commission subsequent to the issuance of the show cause notice was not a voluntary act and as is rightly pointed out by the Revenue after carrying out the search by DGCEI, all the manufacturers of the tiles revised the rates and increased the MRP of tiles without making any changes in the quality/design of tiles for the period prior to 1.4.2008. Gross undervaluation of MRP and evasion of taxes are duly established by the petitioner and in such circumstances, when weighted average of MRP of tiles was worked out by the petitioner for the duty short paid by the respondent due to such undervaluation, the method adopted by the Settlement Commission for arriving at the MRP for the relevant period is not at all found conducive or scientific. Resultantly, this is a case of quashing the order of Settlement Commission and remanding the same back for reconsideration, on the very line as was done in earlier petition. Accordingly this petition is allowed with following directions:-
(1) The impugned order of the Settlement Commission passed on 8.4.2011 is hereby quashed. Both the parties are directed to approach the Settlement Commission within 8 weeks of receipt of this judgment.
(2) The petitioner shall produce the actual details of MRP(Maximum Retail Price) of subsequent years.
(3) MRP of subsequent years, if is not available, as the Settlement Commission also noted in its order, MRP of similar quality shall be produced by the petitioner. Similar formula, as is given under Rule 4A of Central Excise Rules, 2008 shall be worked out by the Settlement Commission to arrive at MRP.
(4) On arriving at such MRP the differential duty shall be worked out on Revised MRP from 1.6.2007 to 31.3.2008 and on the basis thereof, the interest & fine shall be also worked out for being levied on the petitioner, if found necessary by the Commission.
19. It is being further clarified that unlike in previously adjudicated petitions, respondent herein has chosen not to challenge the decision of Settlement Commission. Nothing observed hereinabove shall influence the Settlement Commission in adjudicating the issue presented before it independently, and also pass necessary order with regard to fine etc. if the Commission so deems it fit.
20. Consequently immunity otherwise available from the prosecution under the Central Excise Act shall continue in case of the present respondent, who has neither challenged the impugned order of the Settlement Commission nor has challenged the present petition objecting to such conclusion. Rule is made absolute to the above extent with no order as to costs.
(Akil Kureshi, J. ) (Ms. Sonia Gokani, J. ) sudhir