By TIOL News Service

CHANDIGARH, MAR 26, 2018: THE petitioner filed an application dated 11.07.2015 u/s 32E of the CEA, 1944 for settlement of the case covered by SCN dated 28.04.2015.

The CCESC by order dated 23.12.2015 rejected the application holding that it had no jurisdiction to entertain the application as it was barred under section 32(O)(1)(i) of the CEA, 1944. Inasmuch as a previous settlement application dated 15.04.2013 was disposed of by an order dated 31.01.2014 which besides settling the duty at about Rs. 1.82 crores imposed a penalty of Rs. 50,000/-.

Section 32O(1)(i) reads –

Section 32-O. Bar on subsequent application for settlement in certain cases.-

(1) Where,

(i) an order of settlement, provides for the imposition of a penalty on the person who made the application under section 32E for settlement, on the ground of concealment of particulars of his duty liability; or

[Explanation.- In this clause, the concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer.]

(ii) x x x; or

(iii) x x x,

then, he shall not be entitled to apply for settlement under section 32E in relation to any other matter.

[Note: The Explanation was inserted by the Finance Act, 2014 w.e.f 06.08.2014.]

The petitioner challenges this order dated 23.12.2015.

It is inter alia submitted that the explanation does not apply to the present case i.e. to the petitioner's settlement application dated 11.07.2015.

Inasmuch as the explanation to section 32(O)(1)(i) was inserted with effect from 06.08.2014 whereas the earlier order on the basis of which the present settlement application is dismissed was passed prior thereto on 31.01.2014 and, therefore, the explanation does not have retrospective effect.

The High Court extracted the Statement of Objects and Reasons with respect to clause 94 of the Finance Bill, 2014and which reads -

"STATEMENT OF OBJECTS AND REASONS:-

The object of the Bill is to give effect to the financial proposals of the Central Government for the financial year 2014-15. The notes on clauses explain the various provisions contained in the Bill.

Clause 94 of the Bill seeks to amend clause (i) of sub section (1) of section 32-O of the Central Excise Act so as to insert an Explanation there into clarify that the concealment of particulars of duty liability relates to any such concealment made from the Central Excise Officer, to avoid confusion as to whether the concealment is from Central Excise Officer or Settlement Commission and making the provision clear."

It is further observed that the Explanation is clarificatory as evidenced from the Statement of Objects and Reasons and being clarificatory, has retrospective effect. Reliance is placed on the apex court decision in Vatika Township Private Limited, 2015-TIOL-78-SC-IT-CB in this regard.

The High Court concluded –

“9. … Section 32(O)(1)(i) does not exclude from its ambit cases where penalty is imposed on the person on the ground of concealment of particulars of his duty liability before the Central Excise Officer. The plain language of the section does not warrant an interpretation to the effect that concealment of particulars only before the Settlement Commission and not before the Central Excise Officer is contemplated. The legislative intent is quite clearly to bar a party from making an application under section 32E of the 1944 Act for settlement if he has concealed particulars of his duty liability. It is difficult to appreciate why concealment of particulars before the Central Excise Officer ought to be treated more lightly than the concealment before the Settle ment Commission.

10. ... Even absent the Explanation we would interpret Section 32(O)(1)(i) to include the orders of settlement which provides for imposition of penalty on the ground of concealment of particulars of duty liability from the Central Excise Officer. We do not express any opinion whether section 32(O)(1)(i) also includes concealment of particulars of duty liability from the Settlement Commission."

The petition was dismissed.

(See 2018-TIOL-515-HC-P&H-CX)