Madras High Court
M/S.Shri Renuga Soft-X-Towels vs )Customs & Central Excise Settlement on 29 November, 2018
Author: J.Nisha Banu
Bench: J.Nisha Banu
1
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 29.11.2018
(Reserved on 09.10.2018)
CORAM :
THE HONOURABLE MRS.JUSTICE J.NISHA BANU
W.P(MD)No.9402 of 2010
and
M.P(MD)No.1 of 2010
M/s.Shri Renuga Soft-X-Towels,
Represented by its General Manager,
Mr.N.P.Perumal,
Mariamman Koil Patti,
Theni 625 531. ... Petitioner
vs.
1)Customs & Central Excise Settlement
Commission, Additional Bench
II Floor, Narmada Block,
Customs House, Rajaji Salai,
Chennai 600 001.
2)The Commissioner,
Customs & Central Excise Settlement
Commission, Additional Bench
II Floor, Narmada Block,
Customs House, Rajaji Salai,
Chennai 600 001.
3)The Commissioner of Central Excise,
Central Revenue Building,
Bibikulam, Madurai-625 002. ... Respondents
http://www.judis.nic.in
2
Writ Petition is filed under Article 226 of the Constitution of
India, for issuance of a Writ of Certiorari, calling for the records
comprised in Final Order No.3/2010-CE dated 08.06.2010 on the file
of the first respondent, quash the same.
For Petitioner : Mr.S.P.Maharajan
For Respondents : Mr.R.Aravindan
ORDER
Prayer : To issue a Writ of Certiorari, calling for the records comprised in Final Order No.3/2010 dated 08.06.2010 on the file of the first respondent and quash the same.
1. The petitioner M/s Shri Renuga Soft-X Towels were an hundred % EOU engaged in the manufacture of Terry Towels. An investigation into the evasion of taxes and misuse of the scheme of EOU during the period from March 2000 to October 2003 and the discharge of duty liability during the de-bonding of the unit culminated in the issue of Show Cause Notice in C.No.V/63/15/39/2005-Adjn dated 06.01.2006 and a corrigendum in http://www.judis.nic.in 3 C.No.V/63/15/39/2005-Adjn dated 20.11.2006 demanding a duty amount of Rs.23,96,11,012/-.
2. The petitioner had approached the Settlement Commission for settlement of disputes raised in the above Show Cause Notice under Section 32 E of the Central Excise Act, 1944. The case came to be dismissed at admission stage for want of full and true disclosure vide order dated 25.01.2008. The Petitioner preferred Writ Petitions before this Court in WP Nos 1149, 1557, to 1562 of 2008. Vide order dated 15.04.2008 on the above writ petitions, the first respondent was directed to admit the matter and settle the dispute exercising its powers under Section 32 E of the Act.
3. The learned Settlement Commission had vide its final order No 03/2010 dated 08.06.2010 had settled the disputes after hearing the case from time to time. The petitioner had filed ROM application before the Settlement Commission on the above said http://www.judis.nic.in 4 final order on 05.07.2010 and 12.07.2010 stating that there are errors apparent on the face of the record. The learned Settlement Commission had vide the impugned order dated 12.07.2010 rejected the ROM application stating that the application for ROM does not point out any factual mistake in the order, but reflects the grievance of the applicant against the interpretation of the facts leading to the conclusions recorded in the Order by the Bench and therefore in the circumstances there is no case for rectification of mistake. In response to the additional submission in the ROM application filed on 12.07.2017 by the petitioner, another order dated 21.07.2010 reiterating the dismissal of the ROM application came to be passed by the learned Settlement Commission.
4. Against the orders of the learned Settlement Commission, three Writ Petitions WP No 9402, 9403 and 9984, all of 2010 were filed by the petitioner before this court against one or the other orders of the learned Settlement Commission. Writ Petition No http://www.judis.nic.in 5 9403 & 9984 of 2010 were dismissed by this Court by a common order dated 30.06.2011 which was brought to the notice of this Court by the respondents.
5. The petitioner contends that the orders are ex-facie illegal, arbitrary and left with no other alternative remedy they are forced to approach this Court in a Writ Petition. On perusal of the impugned orders, it is seen that after considering the disclosures and defence of the petitioner some portions of the demand proposals were dropped and most portions of the allegations in the Show Cause Notice were sustained. Accordingly, the settlement was arrived in the impugned order 03/2010-CE dated 08.06.2010. A nominal penalty was imposed and full immunity from prosecution was sanctioned to the petitioner / applicant in the event of full compliance of the Order within a specified date. As discussed earlier, the ROM came to be rejected.
http://www.judis.nic.in 6
6. Aggrieved by the above orders, the petitioner had filed this Writ Petition. Under the Statutory scheme of Settlement Commission, the order of the settlement commission is conclusive and no proceeding under the central excise law or any other law is permissible otherwise than as explicitly provided under the provisions of the Central Excise Act, 1944. Thus, it is clear that the Order can be tested only on the ground of illegality and arbitrary exercise of powers. The merit of the order is not open for agitation. Regarding the Order in the ROM application, in view of the clear observations in the Order dated 12.07.2010 impugned in this Writ Petition, and extracted in the Writ Petition, I do not find any infirmity in the rejection of the application of rectification of mistakes. I find so because ROM can be entertained only when there is an error apparent on the face of record. An error that is not self evident and has to be detected by a process of reasoning can hardly be said to be an error apparent on the face of the record. Therefore, the plea of violation of Principles of Natural Justice does not find http://www.judis.nic.in 7 force in an application for rectification of mistake. It is a settled principle that ROM cannot be used as a tool to re-agitate or re-argue matters which stand conclusively decided. The Hon'ble Supreme Court in the case of Saurashtra Kutch stock exchange Ltd 2008 (230) ELT 385 (SC) observed that a patent error, manifest and self evident error which does not require elaborate discussions of evidence and arguments to establish it, can be said to be an error apparent on the face of records.
7. Therefore, and in view of the scheme of the settlement commission, the plea of the petitioners that they had pointed out certain finding of the settlement Commission and the apparent errors striking a discordant note in the order of the Commission is not tenable. I say so because the settlement commission scheme is a voluntary mode/option for settlement of the disputes. It shuts the rigours of the Adjudication proceedings for the applicant besides providing immunities from penalties and prosecutions. Full and http://www.judis.nic.in 8 truthful disclosure by the applicant is a necessary pre requisite under the scheme. There is no scope for disagreements for the applicants in the proceedings before the settlement commission. That is why the commission is saddled with powers to send back the case for adjudication in the event it is satisfied that the applicant has not co- operated with the commission. Therefore, it is not open for the petitioner to agitate facts before the commission. Needless to say, in matters of disagreement, the conclusion of the Commission is final.
8. The petitioner assails the other impugned Order that is, the Final Order No.03/2010-CE dated 08.06.2010 as illegal and arbitrary. On perusal of the Petition, it is seen that no grounds are made out to suggest that the impugned Final Order of the Settlement Commission suffers from illegality. Under the Scheme of the Act, the Settlement Commission is not an adjudicating body. They are saddled with the powers to settle disputes on the basis of voluntary disclosures of the applicant. If the disclosures are found to be not http://www.judis.nic.in 9 true, the settlement commission had the power to reject the application. And if the facts in the disclosures are challenged by the Tax Authority before the Commission, the commission will consider the objections and derive its own findings to arrive at the truthfulness of the disclosure. There is no scope for agitating facts. And there is no scope for the applicant to question the wisdom of the Settlement Commission in arriving at its judgement particularly when substantial evidences of evasion of taxes warranting penalties and prosecution are brought before it.
9. In the instant case, the original demand in the Show Cause Notice was brought down/ reduced by the Commission. In its discretion, the consequences of penalty was substantially reduced. Full waiver from prosecution to the applicants and co-applicants were granted, though conditionally. We cannot lose sight of the fact that the revenue is also aggrieved by the Order of Settlement though they choose to accept the Order. It is not open for the petitioner to http://www.judis.nic.in 10 opt for remedy under the settlement commission and contest its conclusions after choosing immunity from the adjudication and appeal processes set out in Law. The Hon'ble Supreme Court in the case of Sanghvi Reconditioners Private Limited 2010 (251) ELT 3 (SC) held that the petitioner having opted for settlement is not permitted to dissect Settlement Commission's Order to accept what is favourable and reject what is not. In my view, the citation relied by revenue assumes exalted significance in the light of the observations of Justice V Krishna Iyer in CIT vs B.N.Bhattacharjee, that “the recommendation of Wanchoo Committee was a compromise measure of a statutory settlement machinery where a big evader could make a disclosure, disgorge what the commission fixes and thus buy quittance for himself and accelerate recovery of taxes in arrears by the state, although less than what may be fixed after long protracted litigation and recovery proceedings”. http://www.judis.nic.in 11
10. On perusal of the petition, and the Final Order of the Settlement Commission, it is seen that no new averments are placed in the Writ Petition. All the averments in the Writ Petition are part of the settlement application that are considered and covered in the Settlement Commission proceedings culminating in the impugned orders. Though this court does not want to get into the merits of the disputes, it is difficult to lose sight of the fact that some of the claims of the petitioner is patently at error.
11. One of the dispute of facts raised by the petitioner before the Settlement Commission and in this Writ Petition pertains to the demand of Rs.50,41,149/- (Rupees Fifty Lakhs Forty One Thousad One Hundred and Forty Nine only) as set out in Annexure VI of the SCN. The demand was made against the diversion of power manufactured out of the imported duty free coal under the EOU scheme to other DTA Units which is a serious offence under the law carrying penal consequences besides causing substantial loss of http://www.judis.nic.in 12 revenue to the exchequer. The appropriate duty becomes payable when the power produced by the duty free coal imported under the EOU Scheme is diverted to DTA Units. And the merit in the demand can not be disputed. Therefore, the petitioner had contested the demand on the ground of limitation. But the goods imported under the EOU scheme are bonded. Also it is a preposterous stand to make that the Department is in the know of the fact of utilizing the duty free bonded goods imported under the EOU Scheme for producing power distributed to the DTA units. The respondents staunchly oppose this contention of the petitioner relying on the decision in the case of Big Bags India Private Limited 2008 (228) ELT 400 (Tri-Ban). Rightly, the Commission had directed to pay the amount.
12. Another issue is the demand of Rs.7,47,15,817/- (Rupees Seven Crores Forty Seven Lakhs Fifteen thousand Eight Hundred and Seventeen only) being the duty on the manufactured goods escaping assessment at the time of de-bonding of the Petitioner's http://www.judis.nic.in 13 Unit. The petitioner had admitted duty liability to an extent of Rs. 53,55,572/- as the duty on the raw materials. They did not accept the remaining amount of 6.93 crores approximately on final products . They had taken the support of the letter of the Assistant Commissioner issued at the time of de-bonding, that permitted non payment of duty on the finished goods in stock on the condition that the said goods should be exported. There can be no doubt that duty on the final products ought to have been paid at the time of de- bonding. The conditional permission of the Assistant Commissioner is at worst a concession/relaxation extended to the petitioner. It is unclear whether such a concession is permissible in law. However, it is certain that the final products in question manufactured under bond availing the benefits of the EOU Scheme had to be cleared for exports without illegitimately availing any export incentives/benefits like DEPB or Draw Back. But the finished goods under question were exported under claim of DEPB & Drawback which is not permissible under the EOU Scheme under the EXIM Policy. A huge loss of http://www.judis.nic.in 14 revenue to the exchequer on account of availing both the EOU Scheme and DEPB/Drawback incentives on the same goods is noticed. Therefore, the demand is raised on the EOU manufactured goods that were de-bonded and exported availing export benefits. Rightly, the issue was concluded in favour of revenue by the Settlement Commission. But the petitioner herein is aggrieved by the conclusion and had pleaded arbitrariness in the Writ Petition.
13. Therefore, in view of the factual matrix in the above two issues that stands in favour of revenue discussed as examples, allowing scope for re-agitating the issues and facts afresh in a Writ Petition under the garb of arbitrariness will frustrate public interest and cannot be entertained. If entertained, the very object and purpose of Section 32 of the Central Excise Act, 1944 will be frustrated and defeated rendering the whole process before the settlement commission redundant. The object of introducing Section 32 under the Act as a speedy alternate dispute resolution mechanism http://www.judis.nic.in 15 will be reduced to an irony and a means of frustrating revenue interests. Such a course will be a serious impediment to the administration of justice.
14. In view of the above discussions, no extra ordinary situation warranting writ interference under Article 226 is brought out in the Writ Petition.
Accordingly, the Writ Petition is dismissed. No costs. Consequently, connected miscellaneous petition is closed.
Index : Yes / No 29.11.2018
Internet : Yes / No
bala
To
1)Customs & Central Excise Settlement
Commission, Additional Bench
II Floor, Narmada Block,
Customs House, Rajaji Salai,
Chennai 600 001.
http://www.judis.nic.in
16
J.NISHA BANU, J
bala
2)The Commissioner,
Customs & Central Excise Settlement
Commission, Additional Bench
II Floor, Narmada Block,
Customs House, Rajaji Salai,
Chennai 600 001.
3)The Commissioner of Central Excise,
Central Revenue Building,
Bibikulam, Madurai-625 002.
W.P(MD)No.9402 of 2010
29.11.2018
http://www.judis.nic.in