CX - Single application for settlement in case of same search & seizure leading to SCN for seized goods is proper: HC
By TIOL News Service
NEW DELHI, NOV 30, 2016: SEARCHES were conducted in the premises/residential premises of the petitioners in July 2014 during the course of which statements of various individuals were recorded.
Show causes notices phrased identically were issued on 16.01.2015 demanding duty based upon valuation of the goods seized, as well as in some instances, currency seized.
Thereafter, further statements were recorded and the petitioners deposited the amounts which according to them constituted admitted duty liability.
A further show cause notice to each of the petitioners was issued on 04.12.2015 spelling out additional duty liability in respect of clearance for the past period.
On 02.06.2016, all the petitioners filed settlement applications.
The Settlement Commission ruled that the applications as filed could not be entertained and that each of the present petitioners should have filed two applications before the Commission. Inasmuch as a composite application filed by the applicant in respect of two SCNs cannot be allowed to be proceeded with, the Commission held. The Bench noted that this view is fully endorsed by the Madras High Court in the matter relating to Optigrab International = 2009-TIOL-473-HC-MAD-CUS.
The petitioners' position that both the show cause notices were interconnected was not accepted.
Before the Delhi High Court, the petitioners adverted to the following portions of the show cause notices -
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"5. This show cause notice is being issued for the seized goods/currency only. Further investigations are in progress. Show cause notice as a result of subsequent investigation shall be issued separately." [first SCN dated 16.01.2015 ]
"15. The Show Cause Notice in respect of goods seized at the premises Door Deco Industries has already been issued vide SCN C. No. IV(Hqrs.Prev.)Int/19/5/2014 dated 16.01.2015." [second SCN dated 04.12.2015]
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It is, thereafter, urged that substance of dispute or "lis" before the Settlement Commission was one and the same and that the insistence that separate applications should be filed in the circumstances was unjustified.
The counsel for the Revenue supported the stand taken by the Settlement Commission and the reliance placed on the Madras High Court (supra) decision.
The High Court extracted the definition of the term "case" contained in section 31(c) of the CEA, 1944 and the provisions of section 32E(1) of the CEA, 1944 and inter alia observed -
++ "Case" means a proceeding in the Act or any other Act for the levy, assessment and collection of excise duty pending before an adjudicating authority before which the application under Section 32E is made. The decision in Optigrab International (supra) is premised upon the fact that separate show cause notices, that involved adjudication by different authorities, were issued. At the same time, a close reading of the facts of that case reveal that the searches and investigations were common; firms which received the show cause notices were the same; all of which were issued on the same day. What persuaded Madras High Court was that the adjudicating authorities fall in different Commissionerates.
++ This Court is not persuaded to accept the Madras High Court's logic. The search and seizure proceedings relate to the premises of the petitioners, each of whom applied for settlement. That investigation was split up and issuance of separate show cause notices was a matter of convenience of the Excise department. In respect of two sets of show cause notices potentially there even could have been six but these do not detract from the fact that investigation was a seamless one in relation to the same trigger, i.e., same search and seizure which took place on 17.07.2014. In that proceeding there was only one cause that resulted in the issuance of show cause notices.
++ Unlike the Madras High Court decision, the Commissionerate which is concerned with the adjudicating authority is common. In such circumstance, if the assessee/unit were not to approach the Settlement Commission, there is every likelihood of multifarious conflicting decisions. The Court in such circumstance should lean to a progressive interpretation that furthers the petition rather than based on purely procedural views.
Taking a view that the impugned order directing the petitioners to move separate applications has to be set aside,the orders of the Settlement Commission were quashed and the applications pending - in the two sets of show cause notices were directed to be proceed with as expeditiously as possible.
The Writ petitions were allowed.
(See 2016-TIOL-2891-HC-DEL-CX)
