IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 17314 of 2006 With SPECIAL CIVIL APPLICATION No. 17315 of 2006 With SPECIAL CIVIL APPLICATION No. 13797 of 2010 with SPECIAL CIVIL APPLICATION No. 13798 of 2010 For Approval and Signature:
HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================= 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 as 4 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 ?
========================================= SOMABHAI SHANKARBHAI PATEL - Petitioner(s) Versus UNION OF INDIA THR' SECRETARY & 1 - Respondent(s) ========================================= Appearance :
MR HASIT DILIP DAVE for Petitioner(s) : 1, MS SEJAL K MANDAVIA for Respondent(s) : 1 - 2.
========================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 29/10/2012 CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V.ANJARIA) All the above captioned four writ petitions were interconnected. As they involved similar facts and raised common issues, they all were heard together and are being decided by this common judgment.
1.1 Special Civil Application No. 17314 of 2006 and Special Civil Application No. 13798 of 2010 were filed by one M/s Jagat Textiles, a proprietary firm through its sole proprietor Babubhai S. Patel. Whereas, Special Civil Application No. 17315 of 2006 and Special Civil Application No. 13797 of 2010 were filed by another proprietary firm M/s Uma Textiles through its proprietor Darshana B. Patel Both were the firms engaged in manufacturing of the Cotton Yarn. The petitions arose from the orders passed by the Customs and Central Excise Settlement Commission (hereinafter referred to as ‘the Settlement Commission for sake of brevity ) under section 32-F(7) of the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’ for sake of brevity) and the subsequent related orders.
2. We heard learned advocate Mr. Hasit Dilip Dave for the petitioners in all four petitions, and Ms Sejal K. Mandavia for the Department appearing in all the petitions, at length.
Factual Profile
2.1 For convenience, the facts relating to the petitioner of M/s Jagat Textiles of SCA No. 17314 of 2006 and SCA No. 13798 of 2010 are set out in detail. It was found in the investigation that petitioner M/s Jagat Textiles had clandestinely removed manufactured goods of value of Rs. 3,37,80,147/- involving excise duty of Rs. 31,07,774/-. The Additional Director, Directorate General of Central Excise (Intelligence) issued show cause notice dated 25.05.2005 to the petitioner. At the stage of pendency of said show cause notice, the petitioner firm approached the Settlement Commission making an application under section 32E of the Act. The petitioner initially admitted the duty liability to the extent of Rs. 28,45,946/- , but ultimately the entire duty liability was admitted in writing. The petitioner had paid Rs. 6,99,180/- towards duty amount before issuance of the show cause notice. Thereupon, the Settlement Commission by its order dated 9.1.2006 settled excise duty for Rs. 31,07,774/- as was admitted by the petitioner.
2.2. The operative part of the said final order dated 9.1.2006 by the Settlement Commission reads as under :
“Central Excise Duty : The Central Excise duty in this case is settled at Rs.31,07,774/- since the applicant has already deposited Rs.28,49,180/-, the balance duty liability amounting to Rs.2,61,828/- shall be paid by the applicant within 30 days from the receipt of this order and compliance reported to the commission with e copy to the Revenue.
Interest : ….For its good conduct in the proceedings the Bench grants immunity from interest in excess of 10% per annum. For the last deposit of duty liability (Rs.3,15,000/-) on 13.12.2005 in terms of the Admission Order there being delay, interest @ 18% p.a. (Simple Rate) shall be paid by the applicant for the period beyond 30 days.
Penalty & Prosecution : In view of the full & true disclosure and co- operation with the proceedings before the Commission, the Bench grants immunity to the applicant from penalty and prosecution under the Central Excised Law. For the some reasons the Bench grants immunity from penalty and prosecution under the Central Excise Law to the co-applicant also.
8. The above immunities are granted under sub section (1) of 32 K of the Act. Attention is also invited to the provisions under sub section (2) and (3) of section 32 K ibid.”
2.3 After above order, the petitioner filed a Miscellaneous Application and prayed for total immunity from interest and penalty by submitting that due to financial constraints, it was not possible for him to pay the interest amount, and. The Settlement Commission rejected that application on 21.4.2006, holding that allowing the application would mean changing the very basis of the terms of settlement. The petitioner thereafter filed yet another application, which was dismissed on 30.06.2006. In the said order, the Settlement Commission also withdrew the immunities under section 32K(2) of the Act. Special Civil Application No. 17314 of 2006 prayed to set aside the aforesaid two orders dated 21.4.2006 and 30.06.2006, as well as the main order dated 9.1.2006 of the Settlement Commission.
2.4 M/s Uma Textile, the petitioner of Special Civil Application No.
17315 of 2006 was given show cause notice on 24.06.2005 on the allegation of suppression of actual production and clandestine removal of the goods. In the notice, duty demand to the tune of Rs. 8,44,329/- was raised. The petitioner had already deposited Rs. 3,25,000/- out of the total duty. The Settlement Commission settled the duty at Rs. 8,44,229/- by order dated 23.01.2006 and directed the balance Rs. 5,19,329/- to be paid within 30 days. The immunity from interest payment as well as the immunity from penalty and prosecution were granted by the Settlement Commission in the same way as was granted in the case of petitioner of Special Civil Application 17314 of 2006. M/s Uma Textiles also filed a Miscellaneous Application pleading inability to pay interest on the ground of financial crunch, which was dismissed by the Settlement Commission on 26.05.2006 and in its case also the immunities came to be withdrawn. In the writ petition, the said order dated 26.5.2006 as well as the original order dated 20.1.2006 were sought to be set aside
2.5 This Court dismissed both the above petitions by identical oral orders dated 13.06.2007 passed in each. The relevant portion of the order is reproduced hereinunder.
“ On that application, order dated 26th May 2006 has been passed by the Settlement Commission. In that order, the Commission has taken the view that, as the petitioner has not cooperated and has not paid the interest as directed, the immunities under Section 32K(2) of the Central Excise Act, 1944 granted in the settlement order dated 20th January 2006, stand withdrawn and the matter was sent back to the Department.”
When the facts as above are not in dispute, we see no justification to interfere with the impugned order. After the final order of the Settlement Commission, if the petitioner has not cooperated as per the settlement and she is not prepared to pay interest as directed, as a result, the immunities were withdrawn, the matter remains at the stage, which was prior to the Settlement Commission.”
3. The second round began hereonwards. By placing reliance on the observations in the aforementioned order that “The matter remains at the stage, which was prior to the Settlement Commission”, both the petitioners again approached the excise authorities below wanting to agitate the original show cause notices dated 25.05.2005 and 24.06.2005, and requested the adjudicating authority to consider their contentions and adjudicate. According to the petitioners, in view of the observation by the court, their matters stood revived to be at the stage of show cause notice as if no settlement application was ever moved and that therefore the show cause notices would require adjudication on merits. M/s. Jagat Textiles by its letter dtd. 27th September, 2006 requested that as the issue in respect of other unit i.e. Shree Uma Textiles was the same, both the show cause notices may be adjudicated together.
3.1 As regards the contention of the petitioners that the matters were revived at the stage prior to the stage of Settlement Commission order, the adjudicating authority was of view that since the central excise duty was already settled by the Settlement Commission under sec. 32F(7), and that the order was conclusive in view of section 32M, the order settling duty was in force and after withdrawal the immunities under section 32K(2), what remained to be adjudicated was interest and penalty part only. It was the reasoning of the adjudicating authority that the order of the Hon'ble High Court was being misinterpreted. The authorities dealt with the matter in that way.
3.2 The adjudicating authority passed a common order dated 29.02.2008 and in case of M/s Jagat Textile, it imposed penalty of Rs. 31,07,774/- under section 11AC of the Act read with the relevant Rules, equivalent to the duty amount. In case of the other petitioner M/s Uma Textiles, equivalent penalty of Rs. 8,44,329/- was imposed. A personal penalty of Rs. 5,00,000/- was imposed on the proprietor - Shri Babubhai Patel. By corrigendum order dated 12.06.2008, recovery of interest was provided in the original order portion under section 11AB of the Act on the amount of duty already settled by the Settlement Commission. It was observed by the authority that Shri Babubhai S. Patel, Power of Attorney Holder of M/s Shree Jagat Textiles was the main person in the activities of both the units.
3.3 Against the aforesaid Order-In-Original (OIO), the petitioners preferred appeals which came to be dismissed by the Appellate Commissioner on 31.12.2008. Thereafter the Tribunal dismissed the appeals by common order dated 12.07.2010.
3.4 The Tribunal granted stay on 22.6.2009 and directed the petitioner to deposit 100% penalty amount as a precondition of stay. The petitioners failed to comply with the said requirement. They preferred SCA No. 7515 of 2010, which was withdrawn for filing a modification application. The modification application was disposed of by order dated 24.08.2009 by the Tribunal, wherein the Tribunal directed the petitioner to deposit 25% of the penalty amount alongwith interest within six weeks. The petitioner deposited 25% penalty amount and filed another modicaition application seeking to dispense with the condition of pre-deposit of interest amount. The Tribunal dismissed the said modification application and also dismissed the appeal for non compliance of provision of section 35F of the Act, by order dated 12.07.2010. This common order was impugned in the aforementioned SCA No. 13798 of 2010 as well as SCA No. 13797 of 2010 with alternative prayers to set aside the OIO. This Court by interim order dated 23.12.2010 passed in those subsequent petitions restrained the respondents from insisting on deposit of any interest amount of any further amount of penalty pursuant to the order under challenge.
3.5 At this juncture, and subsequent to the abovementioned writ petitions and the interim order passed therein, the petitioners moved this Court by filing two Misc. Civil Application no. 623 of 2011 and No. 624 of 2011 for a review of order dated 13.06.2007 whereby SCA No.
17314 of 2006 and SCA No. 17315 of 2006 were dismissed. It was submitted on behalf of the respondent department that if the applicants were allowed to move from the stage as observed by the Court in order dated 13.06.2007, the same would be against sec 32M of the Act. These review applications were allowed by this Court by order dated 6.7.2011 and two SCAs No. 17314 of 2006 and 17315 of 2006 came to be restored.
3.6 In the order allowing the review application, it was observed as under, “From the submission made on behalf of the respondents, it is evident that the respondents do not intend to comply with the order dated 13th June 2007 passed by the Court so far as it relates to the last portion of the order wherein the Court observed 'as a result, the immunities were withdrawn, the matter remains at the stage, which was prior to the Settlement Commission' on the ground that the same is against Section 32M of the Act. On the other hand, they wanted to take advantage of the order dated 13th June 2007 to say that the proceedings stand final. “ “In view of the aforesaid fact, and as even according to the respondents, the last portion of the observation made by this Court is against Section 32M of the Act and since the applicants are now not being given advantage of the said observation, we are of the view that this is a fit case to review and recall the order dated 13th June 2007. We, therefore, recall the order dated 13th June 2007 in Special Civil Application Nos.17315 of 2006 and 17314 of 2006 and restore the said writ petitions Special Civil Application Nos.17315 of 2006 and 17314 of 2006 to their original file.
(para 6,7 )
3.7 The above clarification put the matters at the stage of section 32M of the Act. It was also clarified by the Court that the applicants were not being given the advantage of the stage “prior to the Settlement Commission” as earlier observed.
Statutory provisions
4. The relevant statutory provisions in Chapter V of the Act regarding settlement of cases may be usefully referred to. Section 31(g) defines ‘Settlement Commission’, which is constituted under section 32. Its jurisdiction and powers are provided under section 32A. Section 32E deals with the application for settlement of the cases to be made before the Commission, whereas sec.32F provides for the procedure on receipt of such application. It is relevant to note that the whole of section 32F, the Sub-section (1) of section 32E were substituted and the other sections in the chapter were amended with effect from 1.6.2007 by Act 22 of 2007. The orders of the Settlement Commission in the present cases being prior to 1.6.2007, the provisions of the sections as they stood before the amendment would apply. They are accordingly noticed and quoted herein.
4.1 Section 32E as it stood before the amendment is reproduced hereunder.
“32E. Application for settlement of cases - (1) An assessee may, at any stage of a case relating to him, make an application in such form and in such matter as may be prescribed, and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short levy on account of misclassification or otherwise of such excisable goods, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided:
Provided that no such application shall be made unless, —
(a) the applicant has filed returns showing production, clearance and Central excise duty paid in the prescribed manner;
(b) a show cause notice for recovery of duty issued by the Central Excise Officer has been received by the applicant;
(c) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees;
Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending with the Appellate Tribunal or 0any court:
Provided also that no application under this sub-section shall be made for the interpretation of the classification of excisable goods under the Central Excise Tariff Act, 1985 (5 of 1986).
(1A)Notwithstanding anything contained in sub-section (1), where an application was made under sub-section (1), before the 1st day of June, 2007 but an order under sub- section (1) of section 32F has not been made before the said date or payment of amount so ordered by the Settlement Commission under sub-section (1) of section 32F has not been made, the applicant shall within a period of thirty days from the 1st day of June, 2007, pay the accepted duty liability failing which his application shall be liable to be rejected.
(2) Where any excisable goods, books of accounts, other documents have been seized under the provisions of this Act or rules made thereunder, the assessee shall not be entitled to make an application under sub-section (1), before the expiry of one hundred and eighty days from the date of the seizure.
(3) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed.
(4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant.
4.2 The Settlement Commissioner has power to grant immunity from prosecution and penalty under section 32K, which is as under, “32K. Power of Settlement Commission to grant immunity from prosecution and penalty. – (1) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 32E has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his duty liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act or under Indian Penal Code (45 of 1860) or under any other Central Act for the time being in force and also either wholly or part from the imposition of any penalty, fine and interest under this Act, with respect to the case covered by the settlement :
Provided that no such immunity shall be granted by the Settlement Commission in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application under section 32E.
(2) An immunity granted to a person under sub-section (1) shall stand withdrawn if such person fails to pay any sum specified in the order of the settlement passed under sub- section (7) of Section 32F within the time specified in such order or within such further time as may be assumed by the Settlement Commission or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.
(3) An immunity granted to a person under sub-section (1) may, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particular material to the settlement or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had no such immunity been granted.
4.3 Section 32M provides for conclusiveness of the order of the Settlement Commission, which reads as under, “32M. Order of settlement to be conclusive – Every order of settlement under sub-section(7) of section 32F shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force.”
4.4 Section 32N is regarding recovery of sums due under order of the Settlement Commission and provides that any sum specified in the order passed under section 32F(7) shall be recovered and any penalty for default may be imposed and recovered as sum due to the Central Government in accordance with provisions under section 11 by an officer of competent jurisdiction. Under section 32-L, the settlement Commission has power to send a case back to the Central Excise Officer in those csaes where, after applying under section 32E, the applicant does not cooperate. Section 32-I speaks of the powers of and procedure before the Settlement Commission.
4.5 An attentive reading of section 32K, as it stood before the amendment suggests that the Settlement Commission may grant immunity in respect of prosecution for any offence. It may also grant immunity wholly or in part from imposition of penalty, fine and interest. The section refers to prosecution, penalty, fine and interest only. No immunity can be granted with respect to any part of excise duty. An application for settlement would be adjudicated by the Commission in accordance with the procedure of section 32F and the Commission may settle the duty amount. What necessarily follows is that the withdrawal of immunity under sub-section (2) of section 32K would not relate to payment of excise duty. The conclusiveness of order of the Settlement Commission contemplated under section 32M applies to the all matters stated in the order, and in the case where immunities are withdrawn under section 32K(2), the conclusiveness would operate in respect of that part of the order of the Settlement Commission which settles the duty payable.
Prayers in SCA No. 17314 & 17315 of 2006
5. Considering the prayers made in SCA No. 17314 of 2006 and 17315 of 2006 in the context of above discussion of facts and the law, the mandate of section 32M is clear and unequivocal. It provides, firstly that every order of Settlement under section 32F(7) shall be conclusive with regard to the matters stated in the order. Secondly it is mandated that no matter covered by such order shall be reopened in any proceedings under the Act or under any law for the time being in force. Under section 32F(7) the Settlement Commission, after giving opportunity and after examination of records and the evidence, may settle the duty amount. The settlement of duty payable may be upon adjudication. The settlement of duty may also be on the basis of concession given or admission made regarding payability of such duty by the applicant assessee. When the applicant admits the duty liability, as is in the present cases, it would accordingly result into the order of the Settlement Commission.
5.1 As the provisions of section 32M says that the order shall not be reopened in any proceedings, the subsequent Misc. Applications filed by the petitioners were not competent. No such applications could have been maintained. There is no provision in the Act which permits the filing of such applications which was in the nature of review of the order passed by the Settlement Commission. In that view, the prayers in the Misc. Application were rightly not granted. The order already passed by the Settlement Commission was conclusive in law. Therefore, the orders dated 21.04.2006 and 30.06.2006 rejecting the said Misc. Applications were proper and legal. Those applications could not have met any other fate.
5.2 Furthermore, in no way the order of withdrawal of immunities could be faulted. As the petitioners did not comply with the order of the Settlement Commission and failed to pay the sum required to be paid as per its order, the immunities in respect of penalty, fine and interest were liable to be withdrawn. The immunity in penalty and prosecution as well as the immunity in payment of and interest at lesser rate of 10% was conditional, and the conditions were not complied with by the petitioners. The sum specified in the order of the Settlement Commission was not paid. In fact, the immunities stood withdrawn automatically and by virtue of operation of sub section(2) of section 32K. The operation of section 32K(2) is irrespective of any express order, as the bare reading of the said provision makes it clear.
5.3 With regard to the conclusiveness to the order of Settlement Commission provided under section 32M. The Apex Court in Union of India & Others vs. Ind-swift Laboratories Ltd. (2011) 4 SCC 635 may be noticed. The facts before the Supreme Court were similar to those involved in the present case. In that case the Settlement Commission imposed 10% simple interest on the wrongly availed Cenvate Credit. 10% interest was minimum, whereas levy of interest 36% was the highest in terms section 11AB of the Act. Besides, the allegations made in the show cause notice, were admitted by the respondent therein which established that it had taken wrongful CENVAT credit for a particular period and the payment of duty was made belatedly. The Settlement Commission had granted full immunities to the respondent from penalty and prosecution. In the context of such facts, the Supreme Court observed with reference to section 32M as under :
“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 as the findings of the fact recorded by the Commission or question of the 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 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. So far as the second issue with respect to interest on Rs. 50 lakhs 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 of the Settlement Commission when the same was not challenged on merits.”
(para 22)
5.4 Having regard to the above position of law, the prayer in Special Civil Application No. 17314 of 2006 to set aside the said order dated 9.1.2006, cannot be granted. The orders dismissing the Misc. Applications and withdrawing the immunities warrant no interference.
Hence, prayers qua those two orders dated 21.4.2006 and 30.06.2006 cannot be considered and are hereby rejected. For the identical reasons, none of the prayers, which are similar in Special Civil Application No. 17315 of 2006, can be granted.
Challenge in SCA No. 17397 & 17398 of 2010
6. As already note, the aforesaid two petitions were the fallout of the proceedings which the petitioners sought to revive and pursued after order dated 13.06.2007 of this Court dismissing the earlier petitions. By approaching the Central Excise authorities, they questioned and agitated the original show cause notices dated 25.05.2005 and 24.06.2006, ending up with common order dated 12.07.2010 of the Tribunal, which came to be challenged in the subsequent petitions as stated above. Before the excise authorities, the contention of the petitioners was that as per the observations in the order of this Court, the matter was placed at the stage prior to the Settlement Commission order i.e. at the show cause notice stage. So as to complete the linking of the factual sequence, it may be repeated that it was after filing of Special Civil Application No. 17397 of 2010 and cognate petition, a review application was filed by the petitioners and in that order dated 06.07.2011 was passed.
6.1 Learned advocate for the petitioners raised various contentions in support of the prayers in SCA No. 13798 of 2010 and 13797 of 2010. He submitted with reference to the show cause notice that the entire case was booked merely on presumptions and assumptions, and without any corroborative evidence, the clandestine removal was established. It was submitted that the orders of the excise authorities were erroneous and the Tribunal passed order for payment of interest without due notice to them. It was repeated that it was not possible for the petitioners to pay the interest which was calculated Rs. 15,00,668/- on 23.04.2010 for want of financial means and that the factory was also closed since long.
6.2 It was further contended that there was another case of one M/s Shree Maruti Fabrics having similar facts and in that case the Settlement Commission remitted the case back under section 32L(1) to the jurisdictional central excise officer for fresh decision. On that basis, it was submitted that the same course ought to have been adopted in the petitioners’ case also. The contention was not well conceived because in the case of Maruti Fabrics, the party after making application did not attend the hearing despite notice and therefore, its case was sent back. In the present case, the Settlement Commission passed order under section 32F(7) of the Act upon admission of duty liability in writing by the petitioners and immunities were granted and Sec. 32M operated. There was therefore, no similarity between the case of said M/s Shree Maruti and the facts of the petitioners’ case.
6.3 Learned advocate for the petitioners Mr. Hasit Dilip Dave inter- alia relied on a decision in Mahendra Petrochemicals Ltd. v/s Union of India [(2008) 222 ELT 508 (Guj)], more particularly para 8 and 9 thereof. On the basis of Mahendra Petrochemical (supra) it was contended on behalf of the petitioner that as was done in said case, the rate of interest may be charged at the rate of 6% on the delayed payments made from time to time. Learned advocate Ms. Mandavia for the respondents responded by filing an affidavit objecting and contending that the facts of Mahendra Petrochemicals (supra) and that of the present case are quite different and not comparable.
6.4 It was alternatively contended that even if the order of the Settlement Commission was conclusive and could not be reopened, the authorities below ought to have enforced the same seeking recovery of dues only as settled by the Commission charging 10% interest and that the matter could not have been adjudicated again.
6.5 On the other hand learned adovacate for respondents, on the basis of affidavit of reply filed by the Assistant Commissioner Central Excise, justified the orders of the authorities below. She contended that the provisions of section 11AC and sedction 11AB would govern the penalty and interest aspects and once the duty liability was admitted and was already paid, the consequences of penalty and interest have to follow. It was submitted that the petitioners had not disputed the charges in the show cause notices that they suppressed vital information regarding production, storage and consumption of cotton yan in order to evade the duty. Learned advocate highlighted the conduct of the petitioners to submit that there was no real willingness to pay. It was submitted that the Tribunal was justified in dismissing the appeal.
6.6 On going through the decision in Mahendra Petrochemicals (supra), it was in respect of exercise powers of the Settlement Commission under section 127H(2) of the Customs Act, 1962 to withdraw the immunity. For paying the amount, the assesse in that case was given an extension once, and the party requested the extension for the second time, which was not allowed by the Settlement Commission. That was challenged before the High Court. In that case, the party was willing to pay the total amount of interest and further interest on the delayed payment was to be awarded and there was a willingness to pay the total. Even otherwise the factual background of this case is totally different. In Mahendra Petrochemicals (supra) it was observed by this Court also observed as under.
“However, at the same time it is necessary to bear in mind that in a case where the Settlement Commission finds, or there is evidence on record, to suggest that the person whose case is settled is not making payment of the specified sum within the specified time and is trying to derive an undue advantage, it would always be open to the Settlement Commission to exercise its power of withdrawal of immunity under Section 127H(2) of the Act. In short, in each case, the matter has to be decided after taking into consideration the facts and circumstances peculiar to the case. The Court is not laying down any general proposition as such as to in what circumstances the said power can be or cannot be exercised.”
(para-7)
7. On consideration of the facts and the rival contentions, what emerges clearly is that the total case and contention of the petitioners in attempting to re-agitate the very show cause notices dated 25.5.2005 and 24.06.2005 and at all material stages thereafter, were that as per the order of the High Court, the matter remained at a stage prior to the petitioners approaching the Settlement Commission i.e. at the show cause notice stage. Such a contention was based on erroneous assumption and interpretation, and which order in any case, came to be clarified by this Court in its order dated 6.7.2011 while deciding the Review application. Thereby the observations made in order dated 13.06.2010 were clarified and its effect stood effaced. The import of section 32M was never lost sight of.
7.1 The immunities were withdrawn under section 32K(2). Once the immunities stood withdrawn, as the section provides, the provisions of the Act shall operate and apply as if such immunities had not been granted. Therefore, upon the withdrawal of the immunities in penalty and in interest payment, the liability to pay the amount of penalty as well as the interest amount as per the provisions of section 11AB and section 11AC arose. The challenge in the two subsequent petitions would be required to be appreciated having regard to the ambit and working of the aforesaid provisions.
7.2 The approach of the authorities below in taking view that the immunity and interest having been withdrawn by the Settlement Commission the interest became payable under section 11AB was proper and legal. Upon admission of excise duty liability and payment thereof, section 11AB as regards interest liability and sec. 11AC regarding penalty operated and are required to be allowed to operate to their full import. The authorities rightly held the view that the case being of suppression of facts the penalty under Sec. 11AC was imposable and for that no discretion was available as per the law laid down by the Supreme Court in Union of India vs. Dharmendra Textile Processors. Furthermore, as the immunity in interest came to be withdrawn under section 32K(2), the interest became chargeable under section 11AB of the Act.
7.3 It may also be pertinently stated that the petitioners-assessee did not contend at any stage of the long drawn proceedings that they had wrongly admitted the duty liability before the Settlement Commission. Permitting the petitioners to resile would mean circumventing from the backdoor the mandate of section 32M for conclusiveness of the order of the Settlement Commission.
8. The lack of willingness on the part of the petitioner to make the payments as per the orders of the competent authorities, was evident from the events and orders noted above which were passed subsequent to the order-in-original and the order in appeal. The petitioners did not comply with the condition of pre-deposit as required by the Appellate Commissioner. The petitioners also failed to make deposit before the Tribunal despite extension granted. As such, the Tribunal by way of a modifying order required the petitioners to deposit 25% penalty amount and interest. Still however, the interest amount was not deposited. The appeal therefore came to be rightly dismissed for non compliance of the order.
9. In view of above discussion and reasons, the orders passed by the Excise Authorities could not be faulted. Tribunal did not commit any error in dismissing the appeal of the petitioners.
The discretion exercised by the Tribunal to dismiss the appeal for non compliance of pre-deposit amount, was based on the relevant and the applicable parameters for exercise of such discretion. Also, the Order- in-Original confirming the penalty and interest passed by the adjudicating authority and the order-in-appeal contained no error, as elaborated hereinabove. The alternative prayer to set aside the same was meritless and could not be granted. No ground could be pointed out to persuade the Court to exercise its jurisdiction under Article 226 of the Constitution warranting interference in the impugned orders.
10. In light of the above, no prayer in either of the four petitions can be granted. Accordingly, all the four petitions are dismissed. The Rule is discharged. There will be no order as to costs.
[V.M.SAHAI, J.] cmjoshi [N.V.ANJARIA, J.]