By TIOL News Service

CHENNAI, OCT 20, 2016: THE petitioner is a manufacturer of leather goods [Ch. 42]. On receiving information that the petitioner is manufacturing and removing goods without payment of duty and availing SSI exemption and manipulating the records of the sister concern and job workers, camouflaging transactions to show as trading activities, investigation was conducted & which culminated in a SCN dated 06.03.2007 demanding CE duty of Rs.5,16,08,561/-.

The petitioner filed application before the Settlement Commission for settlement of this case by admitting additional duty of Rs.1,42,95,172/- along with a prayer for immunities.

The Revenue strongly opposed the admission of the application stating that except for stitching and pasting, all other activities have been done by the petitioner/applicant and when the applicant accepted the department's stand that the three job workers do not have any facility to stitch and paste and the final stitching has been done at the premises of the applicant, they have to discharge the demanded duty liability. They also objected that there is no true and full disclosure and the applicant has indulged in manipulation/burning of documents which is a serious offence.

The petitioner submits that the matter has to be remanded to the Commission for fresh consideration in view of the observations made by the Settlement Commission in paragraph 25 of the order.

Inasmuch as the Commission had asked the Revenue to compute the duty liability if it was assumed that the activities did not amount to manufacture; both with and without benefit of cum-duty; that the calculation was submitted directly to the Commission but was not considered and, therefore, the matter needs to be remanded.

The High Court observed -

+ The direction issued to the Revenue by the Settlement Commission at best could be considered, as an information, the Commission wanted to know with regard to the impact of duty assuming that the activity done by the petitioner, did not amount to manufacture. On a reading of the order passed by the Settlement Commission, in its entirety, it is evidently clear that the Settlement Commission did not accept the case of the petitioner .

+ Therefore, the petitioner cannot rest his case upon the observations made in paragraph 25 of the impugned order.

+ It is not the case of the petitioner that it did not have an opportunity to put forth its submissions. It was represented by counsel; it made actual and legal submissions and the Settlement Commission has considered the matter elaborately and recorded a finding that the applicants are attempting to hoodwink the legal provisions and therefore, while settling the case, directed the entire Central Excise duty to be paid , apart from imposing penalty of Rs.50,00,000/- on the applicant and giving an option of redemption of the seized goods on payment of redemption of fine of Rs.2,00,000/- with simple interest and settling the interest at 10% (simple interest), and granting immunity from prosecution to the applicant and co-applicants.

+ An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any statutory provisions of the Act. [ Ind- Swift Laboratories Ltd.- 2011-TIOL-21-SC-CX refers]

+ So far as the findings of the fact recorded by the Commission or questions of fact are concerned, the same is not opened for examination either by the High Court or by the Hon'ble Supreme Court.

+ The assessee having opted to get their duty liability settled by the Settlement Commission cannot be permitted to dissect the Settlement Commission's order with a view to accept what is favourable to them and reject what is not. This is what the petitioner precisely wants to do, accept the immunities granted to the petitioner, exercise the option of redemption and also willing to settle the penalty. [ Singhvi Reconditioners Pvt., Ltd., vs. UOI refers.]

Holding that there are no grounds made out by the petitioner to interfere with the impugned order passed by the Settlement Commission, the Writ Petition was dismissed.

(See 2016-TIOL-2532-HC-MAD-CX)