Gujarat High Court
Poornima Rajkumar Chawla vs Union Of India on 21 February, 2023
Author: Sonia Gokani
Bench: Sonia Gokani
NEUTRAL CITATION
C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6239 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
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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 ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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POORNIMA RAJKUMAR CHAWLA
Versus
UNION OF INDIA
==========================================================
Appearance:
MR D K TRIVEDI(5283) for the Petitioner(s) No. 1
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 2,3,4,5
NOTICE SERVED for the Respondent(s) No. 6
NOTICE UNSERVED for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MS. JUSTICE
SONIA GOKANI
and
HONOURABLE MS. JUSTICE NISHA M. THAKORE
Date : 21/02/2023
CAV JUDGMENT
(PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE)
1. By way of this petition, the writ applicant has approached this Page 1 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Court under Articles 226 and 227 of the Constitution of India, seeking direction against the respondent authorities to immediately release attachment/bojha (claim) on land belonging to M/s. Madhu Dyeing situated at 237, Saijpur-Gopalpur Road, Nr. Sahwaji Octroi Naka, Narol, Ahmedabad.
2. The facts as set out in detail in the present petition, are briefly summarized as under:
2.1 The writ applicant is the widow and the legal heir of late. Shri Rajkumar Chawla, who was the proprietor of M/s. Madhu Dyeing.
As M/s. Madhu Dyeing had failed to pay the government dues against the excise duty, which came to be crystallized in four different orders in original applications before the Commissioner of Central Excise (Adjudication). The said different orders were passed by the authorities, which was determined as under:
Government dues to be
Sr. OIO No. & Order passed
recovered (Rs. In actual)
No. Date by
Duty Penalty/ Total
Page 2 of 34
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NEUTRAL CITATION
C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023
undefined
Personal
Penalty
The
Commissione
27/98 dated r of Central 15 34.54 49.54
1
30-4-1998 Excise, Lacs Lacs Lacs
(Adjudication)
, Mumbai
The
221/ Additional
Addl.Com/ Commissione 12.06 12.06 24.12
2
2000 dated r of Central Lacs Lacs Lacs
7-3-2001 Excise,
Ahmedabad
The 4.9 9.8
3 222/Addl. 4.9 Lacs
Additional Lacs Lacs
Com/ Commissioner
2000 of Central
dated 7- Excise,
3-2001 Ahmedabad
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NEUTRAL CITATION
C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023
undefined
115/
The Additional
Addl.
Commissioner
Com/20 2.95 2.97
4 of Central 5.89 Lacs
01 Lacs Lacs
Excise,
dated 8-
Ahmedabad
5-2001
Total 34.88 54.47 89.35
2.2 It is contented by the petitioner that in absence of the payment of such outstanding dues, more particularly in order in original no. 27/98, the Central Excise Department had created charge/bojha/attachment of land of M/s. Madhu Dyeing. On 19.06.2006, Mr. Rajkumar Chawla expired, who was the sole proprietor of M/s. Madhu Dyeing, therefore, the entire liability of the arrears of aforesaid dues was on the petitioner, who was the wife of the deceased.
2.3 On 01.08.2019, the Finance (No.2) Act, 2019 was published in the Gazette of India Extraordinary. Chapter V of the such notification relates to Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter to be referred as "SVLDRS Act"). Page 4 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Thereafter, vide separate Notification No.04/2019-Central Excise- N.T. dated 21.08.2019, the Central Government had appointed 01.09.2019 as the date on which the aforesaid scheme came into force. By Notification No.05/2019, Central Excise-N.T. dated 21.08.2019, the Central Government had made Sabka Vishwas (Legacy Dispute Resolution) Scheme Rules, 2019 (hereinafter to be referred as "SVLDRS Rules").
2.4 On 31.12.2019, the writ applicant submitted SVLDRS-1 declaring the basic duty in arrears of an amount of Rs.12,05,862/- and penalty of equivalent amount in accordance with Order-in- Original No.221/ADDL.COM/2000 received on 07.03.2001. The tax dues less tax relief was shown as Rs.4,82,344.80 ps. On 31.12.2019, the writ applicant also submitted SVLDRS-1 declaring basic duty in arrears as Rs.4,90,200/- and penalty of equivalent amount in accordance with Order-in-Original No.222/ADDL. COM/ 2000 received on 07.03.2001. The tax dues less tax relief was shown as Rs.1,96,080/-. On 31.12.2019, the writ applicant also submitted SVLDRS-1 declaring basic duty in arrears of Rs.29,298/- and penalty of equivalent amount in accordance with Order-in-Original No.115/ADDL.COM/2001 received on Page 5 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined 08.05.2001. The tax dues less tax relief was shown as Rs.11,719.20 ps. On 31.12.2019, the writ applicant also submitted SVLDRS-1 declaring basic duty in arrears of Rs.24,53,987.35 ps. and penalty of equivalent amount in accordance with Order-in- Original No.27/98 received on 30.04.1998. The tax dues less tax relief was shown as Rs.6,00,000/-. The pre deposit/any other deposit of duty already made was shown as Rs.9,53,987.35 ps. 2.5 In respect of Order-in-Original No.27/98, the respondent authorities were of the view that application was not maintainable since order of confiscation was already made. The personal hearing was given to the writ applicant on 12.02.2020, whereby she had explained the legal provision involving redemption fine and requested to consider her application under Amnesty Scheme. 2.6 It is the case of the writ applicant that although the scheme required payment of 40% of the central excise duty amount only but with a view to settle the dispute to get discharge the attachment/bojha from the land, the writ applicant, by letter dated 20.02.2020 had expressed to wind up the matter, whereby she had shown her readiness to pay entire redemption fine of Page 6 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Rs.3,45,000/-. She had further invited the attention of the respondent authorities that the amount, Rs.15,00,000/- is already deposited as mentioned in the letter dated 16.09.2004 of the Department itself. It is the case of the writ applicant that the basic duty in arrears was Rs.4,90,200/-, the tax relief was Rs.2,94,120/- and thus the amount payable was Rs.1,96,080/-. 2.7 It is therefore contended that on having paid such a remaining amount of discharge certificate dated 06.03.2020 in the form of SVLDRS-4 was issued. Similar discharge certificates came to be issued in respect of other applications on 13.04.2020 and 03.07.2020. The writ applicant therefore, approached the Principal Commissioner, CGST & Central Excise, Ahmedabad South Commissionerate and the Assistant Commissioner, CGST & Central Excise, Division-IV, Ahmedabad South Commissionerate letters dated 20.07.2020, 27.08.2020 and 04.09.2020, thereby seeking removal of claim (bojha) of the Central Government on the said land in view of issuance of SVLDRS-4 discharge certificates. 2.8 However, the Joint Commissioner, CGST & Central Excise, Ahmedabad South Commissionerate by letter dated 07.10.2020 Page 7 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined informed the writ applicant that SVLDRS are only for the purpose of putting an end to the litigation. The writ applicant was therefore compelled to approach higher authorities by addressing different letters dated 14.10.2020 and 19.10.2020. The request of the writ applicant was not entertained and hence, the writ applicant has approached this Court by way of this captioned writ petition.
3. At the stage of admission hearing, this Court had heard learned advocate Mr. D.K. Trivedi appeared for the writ applicant at length and had permitted him to produce on record the order passed by the respondent authorities under Section 33/34 of the Central Excise Act with regard to the confiscation of the land in question being passed by the respondent authorities at a relevant point of time.
Learned advocate Mr. D.K. Trivedi appearing for the writ applicant has placed on record further affidavit of the writ applicant in compliance of the aforesaid order and has explained the amount payable by the writ applicant and the amount payable as per SVLDRS-3 determined by the designated committee. He has also placed on record the copy of the order dated 30.04.1998 passed in Page 8 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Order-in-Original No.27/98 with regard to confiscation of land in question of the writ applicant, wherein at the relevant point of time in addition to confirming the central excise duty liability, interest and penalties were also imposed on the writ applicant.
4. Considering the submissions made by learned advocate for the writ applicant, this Court had issued notice in the captioned writ petition.
5. Mr. Nikunt K. Raval, learned advocate on panel of respondent authorities has appeared and an affidavit-in-reply is filed by Principal Commissioner, CGST and Central Excise, Ahmedabad South on behalf of respondent Nos.1 to 6.
5.1 The prayers, as sought for, by the writ applicant have been objected by the respondent authorities and has invited attention of this Court that apart from confirmation of duty demand along with interest and imposition of penalty, the land, the building, plant and machinery of M/s. Madhu Dyeing were also confiscated pursuant to the order dated 30.04.1998 passed in Order-in-Original No.27/98. The option of redeem the same by payment of Page 9 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined redemption fine of Rs.3,00,000/- within a period of 30 days of receipt of the order was offered in terms of provisions of the Section 34 of Central Excise Act, 1944. However, no such option was exercised by the writ applicant within the stipulated time framed nor any application was filed for extension of time limit for making such payment. Resultantly, the order of confiscation of land, building, plant and machinery had attained finality. It was further contended that the property absolutely stood confiscated much before the introduction of SVLDRS Scheme. Thus, the provisions of scheme would not apply to the issue pertaining to confiscation of such property.
5.2 It was further stated that the duty demand stood confirmed with interest and penalty under the said order which was pending recovery and such amount qualified as amount in arrears. In such circumstances, the form submitted by the writ applicant was processed, however, subject to the outcome of the decision of the Hon'ble Supreme Court in case of M/s. Synpol Products Ltd in Special Leave to Appeal (C) 449 of 2021. However, he submitted that any tax relief for the immunity with regard to the SVLDRS can be considered only to the extent pertaining to the aforesaid Page 10 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined confirmed duty demand/interest and penalty. 5.3 The Department has further tried to clarify that subsequent payment of redemption fine under SVLDRS would not lead to removal of attachment/bojha (claim) of the Department over the land of the writ applicant as redemption fine would never become a part of arrears of revenue. Thus, the act of respondent authorities of confiscation of land cannot be considered as part of SVLDRS or pending arrears and accordingly, the SVLDRS -4 (discharge certificate), though being issued, can only be treated for limited purpose of finalization of the arrears in the form of Central Excise duty, interest and penalty. In such circumstances, the question of release of the land is rightly not considered by the respondent authorities.
5.4 The Department has further tried to distinguish the case of Union of India vs. M/s. Synpol Products Private Limited, by submitting that in the facts of the present case, the confiscation had got over many years before, prior to introduction of SVLDRS scheme. It was further submitted that no appeal was pending against the original order, whereby the land was confiscated. In Page 11 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined absence of any option being exercised by the writ applicant within the stipulated time frame as provided under Section 34 of the Act, the Authorities has rightly not considered the case of writ applicant for removal of charge/bohja entry on land.
5.5 In support of his submissions, learned advocate Mr. Nikunt Raval appearing for the respondent-Department has placed reliance upon the decision of the larger bench of Hon'ble High Court of Delhi in the case of Gillette India Ltd. Vs. Commissioner of Customs reported in 2019 (367) E.L.T. 23 (Del).
By relying upon the aforesaid decision, learned advocate Mr. Nikunt Raval has submitted that failure to pay the redemption fine within stipulated time is bound to follow by confiscation. He has further submitted that the Hon'ble Larger bench of Delhi High Court after detailed analysis of section 125 and 126 of the Customs Act answered the question referred in affirmation and held that where redemption fine in lieu of confiscation is not paid within the stipulated time, the Central Government is entitled to retain the excess auction sale proceeds of the confiscated goods, after adjustment of the duty, penalty , interest and other statutory goods.
He therefore urged this Court to not entertain the present Page 12 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined petition as the confiscation has become absolute and pursuant to the confiscation proceedings, the land absolutely vested in the Central Government.
6. Opposing the aforesaid arguments advanced by learned advocate Mr. Nikunt Raval appearing for the respondent- Department, learned advocate Mr. D.K. Trivedi, appearing for the writ applicant had invited attention of this Court to the decision of this Court in case of M/s. Synpol Products Private Limited and has submitted that the coordinate bench of this Court while interpreting Rule 25 of the Central Excise Rules, 2002 and the "amount in arrears" as defined in Section 121 (C) of the Scheme would mean the amount of duty, which is recoverable as arrears of duty under indirect taxes. He therefore submitted that the case of confiscation and redemption fine can also be considered under the scheme. He further submitted that the only thing which was required to be looked into was to ascertain the amount in arrears as per the scheme, which include both the amount of duty as well as amount of redemption fine required to be recovered from the taxpayer. He therefore submitted that the case of the writ applicant being similarly situated is governed by the ratio laid down by the co- Page 13 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined ordinate Bench.
7. Having heard the learned counsels appearing for respective parties and the record, the question which falls for our consideration is whether the respondent authorities can be permitted to continue with the attachment on the land in question despite issuance of discharge certificate contrary to what is provided in Section 129 of the Finance Act.
8. While answering the aforesaid issue, one would require to go through the relevant provisions of the Act and the Rules framed thereunder:
8.1 If one looks at the provisions of recovery under the Central Excise Act, Section 11(AA) pertains to charging of interest on the delayed payment of duty.
Section 11AA in the Central Excise Act, 1944 1[11AA. Interest on delayed payment of duty.-- 2[(1) ] 3[Subject to the provisions contained in section 11AB, where a person] chargeable with duty determined under sub-section (2) of section 11A, fails to pay such duty within three months from the date of determination, he shall pay, in Page 14 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined addition to the duty, interest 4[at such rate not below 5[ten per cent.] and not exceeding thirty-six per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette] on such duty from the date immediately after the expiry of the said period of three months till the date of payment of such duty: Provided that where a person chargeable with duty determined under sub- section (2) of section 11A before the date on which the Finance Bill, 1995 receives the assent of the President, fails to pay such duty within three months from such date, then, such person shall be liable to pay interest under this section from the date immediately after three months from such date, till the date of payment of such duty. Explanation 1.-- Where the duty determined to be payable is reduced by the Commissioner (Appeals), Appellate Tribunal 6[, National Tax Tribunal] or, as the case may be, the Court, the date of such determination shall be the date on which an amount of duty is first determined to be payable. Explanation 2.--Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), Appellate Tribunal 6[, National Tax Tribunal] or, as the case may be, the Court, the date of such determination shall be,--
1. for the amount of duty first determined to be payable, the date on which the duty is so determined;
2. for the amount of increased duty, the date of order by which the increased amount of duty is first determined to be payable;
(c) for the amount of further increase of duty, the date of order on which the duty is so further increased].
7[(2) The provisions of sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the assent of the President.] Thus, on bare reading of aforesaid provision, it empowers authority to charge interest on delayed payment of an amount Page 15 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined beyond three months. Sub-section 2 of Section 11 (AA) provides the rate of such interest to be charged on the outstanding amount, which is not below than 10% and not exceeding than 36% per annum and such interest has to be determined from the date on which the duty becomes due till the date the actual payment is made. Sub-section 3 of Section 11 (AA) further provides that no amount of interest shall be payable where duty is voluntarily paid in full. Thus, the only exception available under the scheme for not charging duty in the case where the assessee, who is liable to pay the duty of excise, voluntarily makes such full payment. 8.2 Apt would be to look into relevant provisions related to penalty and confiscation provided under the Central Excise Act. Chapter VI of the Central excise Act, 1944 which relates to "Adjudication of Confiscations and Penalties". Section 33 of the Act is with regard to Power of adjudication. Section 33A inserted w.e.f. 10.09.2004, of the Act provides for "Adjudication procedure". Section 34 of the Act pertains to "Option to pay fine in lieu of confiscation". Under old Rule 173Q(2) of the Central Excise Rules, 1944, the competent authority was empowered to confiscate anything including movable and immovable properties, as evident from the said Rule and Page 16 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined quoted hereunder :-
"Rule 173Q(2) : Where
(a) in the case of a contravention of the nature referred to in clause
(a) or clause (b) or clause (c) or clause (d) of sub-rule (1), the duty leviable on the excisable goods referred to in that sub- rule exceeds one lakh of rupees, or
(b) any manufacturer, producer, registered person of a warehouse or a registered dealer, whose excisable goods were confiscated under sub-rule (1) and upon whom a penalty was imposed under that sub-rule, contravenes against any of the provisions of clause (a) or clause (b) or clause (c) or clause (d) of sub-rule (1) and the duty leviable on the excisable goods in respect of the contravention for the second or any subsequent occasion exceeds ten thousand rupees, then, in a case falling under clause (a) of this sub-rule or in a case falling under clause (b) thereof (whether the contravention under that clause has been committed for the second or any subsequent occasion), the officer adjudging the case under section 33 of the Act may, in addition to the award of confiscation and penalty under sub-rule (1), direct, for reasons to be recorded in writing, the confiscation of any or all of the following belonging to such manufacturer, producer, registered person of a warehouse or a registered dealer, namely :-
any land, building, plant, machinery, materials, conveyance, animal or any other thing used in connection with the manufacture, production, storage, removal or disposal of such goods, or any other excisable goods on such land, or in such building or produced or manufactured with such plant, machinery, materials or thing."
8.3 As per Rule 211 of the Central Excise Rules, 1944, on confiscation, the property vests in the Central Government, as Page 17 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined evident from the said Rule and mentioned hereunder :-
"Rule 211. On confiscation, property to vest in Central Government.- (1) When anything is confiscated under these rules, such things shall thereupon vest in Central Government.
(2) The officer adjudging confiscation shall take and hold possession of the things confiscated, and every officer of Police, on the requisition of such officer, shall assist him in taking and holding such possession."
8.4 It is not in dispute that Rule 173Q(2) has been omitted by notification dated 12.5.2000 issued in exercise of the powers conferred by section 37 read with sub-section (3) of section 3A of the Central Excise Act, 1944. In view of such amendment, Rule 211 has also been omitted with effect from 1.7.2001. 8.5 It is contended by the writ applicant that the proprietorship firm had failed in payment of excise duty wherein proceedings were initiated by the authority. Four different orders of recovery were passed against the proprietorship firm. The first order came to be passed on 30.04.1998 in order in original No.27/1998, whereby the amount of outstanding excise duty was determined to the tune of Rs.15,00,000/- and penalty of an amount of Rs.34.54 Lakhs was imposed resulting into total recovery of an amount of Rs.49.54 Page 18 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Lakhs. The second order came to be passed on 07.03.2001 in order in original No.221/2000, whereby the authority had determined arrears of excise duty of an amount of Rs.12.06 Lakhs and equal amount of Rs.12.06 Lakhs was imposed resulting into total recovery of an amount of Rs.24.12 Lakhs. On the same day i.e. on 07.03.2001, another order of recovery was passed in order in original No.222/2000, whereby the authority had determined the outstanding excise duty of Rs.4.9 Lakhs and equal amount of penalty of Rs.4.9 Lakhs was imposed upon the proprietorship firm resulting into total recovery of 9.8 Lakhs. The last order came to be passed on 08.05.2001 in order in Original No.115/2001, whereby the authority had determined amount of arrears of excise duty to the tune of Rs.2.95 Lakhs and imposed penalty of an amount of Rs.2.97 Lakhs resulting into total recovery of amount of Rs. 5.89 Lakhs. Thus, the writ applicant has contended before this Court that in all the principal amount, which included the arrears of excise duty and the penalty imposed, which was required to be realized at the relevant point of time was Rs.89.35 Lakhs. Admittedly, the arrears of duty and the penalty amount were crystallized way back in the year-2001 in absence of any payment being made towards such amount being determined, the Page 19 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined proprietorship firm was liable to make interest on delayed payment of duty.
8.6 The very fact that subsequently in the year-2019, the wife of the deceased sole proprietor approached the authority for making payment under the SVLDR Scheme, was to suggest that the amount was not fully paid at any stage by the sole proprietor during his lifetime. In such circumstances, the outstanding amount was further subjected to the charging of interest by the respondent Authorities. It is the case of the writ applicant that the respondent authorities had addressed letter dated 14.09.2001, 20.07.2004 and 16.09.2004 to the Talati-cum-Mantri of Saijpur-Gopalpur, Taluka & District -Ahmedabad regarding confiscation of plant, machinery and land as the original assessee had failed to pay the government dues.
8.7 The aforesaid contention of the writ applicant has been seriously objected by the Department in its affidavit. It is the specific case of the Department that the confiscation of the land had resulted pursuant to the order dated 30.04.1998 passed in order in original No.27 of 1998. They have further stated and Page 20 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined submitted on affidavit that the attachment of the land is not made pursuant to the recovery of the dues as determined in rest of three orders in original cases. The operative order reads as under:
"I also order confiscation of land, building, plant & machinery and other things used in connection with the manufacturing, production, storage, removal or disposal of said excisable goods belonging to M/s Madhu Dyeing under Rule 173Q(2) of the C.Ex. Rules, 1944. However, M/s Madhu Dyeing are permitted to redeem the said land, building, plant & machinery etc. on payment of Rs.3,00,000/- (Rupees Three Lakhs only) in lieu of confiscation within one month of the receipt of this order or such extended period as may be permitted by the undersigned on adequate and sufficient reasons being stated."
8.8 At the outset the court notices that the SVLDR'S application bearing no. ARN no. LD 3112190017391 had been filed under the 'Arrears' category and the arrears had arisen out of order-in- original no. 27 of 1998 dated 30.04.1998. The aforesaid order dated 30.04.1998 has been placed on record as Annexure-W at page 142. Under the said order, apart from confirmation of the excise duty demand along with interest and imposition of penalty, the land, building, plant and machinery of M/s. Madhu Dyeing was also directed to be confiscated. The reasons assigned by the Commissioner (Adjudication), Central Excise, Mumbai reflects the modus in which the proprietor operated the factory premises. Page 21 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined During investigation search was conducted at the factory premises whereby various documents were seized which indicates that the fabric quantity received was much more as compared to entry made in record. The proprietor had intentionally evaded duty and had not accounted for the lot register and production of processed fabric in RG-1 register. The processed fabrics were cleared without payment of central excise duty. Confiscation is the maximum punishment to be imposed by the authority. Considering the order in original , there exists reasons to pass the order of confiscation. The authority has acted as per the provisions of law and has given the option of payment of arrears with redemption fine Rs. 3,00,000 was provided within a period of 30 days of the receipt of the order, in terms of section 34 of the Central Excise Act, 1944. 8.9 In the present case, the proceedings under the Central Excise Act, 1944 were initiated and culminated into order of confiscation way back in the year 1998, when Rule 173Q(2) and Rule 211 were in vogue at that stage. At the time when the order of confiscation was passed, the authority had jurisdiction under Rule 173Q(2) to confiscate the land, building, plant, machinery, etc. It transpires from the order in original that sufficient opportunity was given to Page 22 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined the assessee to make good payment of tax dues as well as redemption fine, however, the same has not been paid within stipulated time. In such circumstances, upon expiry of such period and by operation of statutory provision, the land stood absolutely vested in the Central Government for all purposes.
9. We find support from the ratio laid down by the Hon'ble Apex Court in the case of Shewpujanrai Indrasanrai Ltd. vs. The Collector of Customs, reported in AIR 1958 SC 845 : 1983 (13) E.L.T. 1305 (SC) as relied upon by the Hon'ble Larger Bench of the Delhi High Court in the case of Gillette India Ltd. (supra). Considering the nature of 'confiscation' under the Foreign Exchange Act, a five judge Constitution Bench of the Supreme Court in Sewpujanrai Indrasanarai Ltd. (supra) at that early stage, had made a distinction between the penalty imposed on a citizen for violating the law and, a penalty imposed on the offending goods, both penalties arising from one transaction. The first was categorized as a penalty in personam, visiting the offender/person whereas confiscation was held to be a penalty in rem, visiting the goods. That penalty being imposed on the offending goods may be imposed even if the ownership in the goods remains undetermined Page 23 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined or in doubt or in dispute and even if a penalty in personam may remain from being imposed. Confiscation of property means permanent deprivation of the right of the property, by which transfer of the ownership of the assets derived from the illegal activity are affected in the State holding. The legal principle behind such an action of confiscation is that the government takes away such property without compensation to the owner if the property is acquired or used illegally. Thus, in our opinion the property ceases to be of ownership of M/s. Madhu Dyeing and stood absolutely vested in the State.
10. In light of the aforesaid facts, the question which falls for consideration is whether the application under SVLDR's could have been entertained by the respondent authority. At this stage, it would be equally important to look into relevant provisions under the Sabka Vishwas ( Legacy Dispute Resolution) Scheme, 2019. 10.1 Section 121 (c) defines the term " amount in arrears" which means " the amount of duty which is recoverable as arrears of duty under the indirect tax enactment , on account of -
(i) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of Page 24 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined time for filing appeal; or
(ii) an order in appeal relating to the declarant attaining finality ; or
(iii) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June , 2019, wherein he has admitted a tax liability but not paid it;"
Section 121(e) defines the term " amount payable" means "the final amount payable by the declarant as determined by the designated committee and as indicated in the statement issued by it, in order to be eligible for the benefits under the scheme and shall be calculated as the amount of tax dues less the tax relief;"
Section 121 (t) defines the term " tax relief " as "the amount of relief granted under section 124."
Section 123 Tax Dues : For the purposes of the Scheme , 'tax dues' means -
xxx
(e) where an amount in arrears relating to the declarant is due, the amount in arrears.
Section 124 Relief available under the scheme (1) Subject to the conditions specified in sub-section (2) the relief available to a declarant under this Scheme shall be calculated as follows:--
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(a) where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019 and if the amount of duty is,- (i) rupees fifty lakhs or less, then, seventy per cent, of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent, of the tax dues;
(b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty:--
(c) where the tax dues are relatable to an amount in arrears, and,- (i) the amount of duty is, rupees fifty lakhs or less, then, sixty per cent, of the tax dues; (ii) the amount of duty is more than rupees fifty lakhs, then, forty per cent, of the tax dues; (iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,- (A) rupees fifty lakhs or less, then, sixty per cent, of the tax dues;-
(B) amount indicated is more than rupees fifty lakhs, then, forty per cent, of the tax dues;
(d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is-- (i) rupees fifty lakhs or less, then, seventy per cent, of the tax dues; (ii) more than rupees fifty lakhs, then, fifty per cent, of the tax dues;
(e) where the tax dues are payable on account of a voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues.
(2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as pre-deposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant:
Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund. "Page 26 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Section 125 Declaration under scheme "(1) All persons shall be eligible to make a declaration under this Scheme except the following, namely:--
(a) who have filed an appeal before the appellate forum and such appeal has been heard finally on or before the 30th day of June, 2019;
(b) who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file a declaration;
(c) who have been issued a show cause notice, under indirect tax enactment and the final hearing has taken place on or before the 30th day of June, 2019;
(d) who have been issued a show cause notice under indirect tax enactment for an erroneous refund or refund;
(e) who have been subjected to an enquiry or investigation or audit and the amount of duty involved in the said enquiry or investigation or audit has not been quantified on or before the 30th day of June, 2019;
(f) a person making a voluntary disclosure,--
(i) after being subjected to any enquiry or investigation or audit; or
(ii) having filed a return under the indirect tax enactment, wherein he has indicated an amount of duty as payable, but has not paid it;
(g) who have filed an application in the Settlement Commission for settlement of a case; (h) persons seeking to make declarations with respect to excisable goods set forth in the Fourth Schedule to the Central Excise Act, 1944; (2) A declaration under sub-section (1) shall be made in such electronic form as may be prescribed."
Section 129 Issue of Discharge certificate to be conclusive of matter and time period :
"(1) Every discharge certificate issued under section 126 with respect to the amount payable under this Scheme shall be conclusive as to the matter and time period stated therein, and-Page 27 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
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(a) the declarant shall not be liable to pay any further duty interest, or penalty with respect to the matter and time period covered in the declaration;
(b) the declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration;
(c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enactment.
(2) Notwithstanding anything contained in subsection (1),--
(a) no person being a party in appeal, application, revision or reference shall contend that the central excise officer has acquiesced in the decision on the disputed issue by issuing the discharge certificate under this scheme;
(b) the issue of the discharge certificate with respect to a matter for a time period shall not preclude the issue of a show cause notice,-
(i) for the same matter for a subsequent time period; or
(ii) for a different matter for the same time period;
(c) in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted." 10.2 The aforesaid scheme has been extensively dealt with by the coordinate bench of this court in the case of M/s. Synpol Product Ltd. ( supra) . The Hon'ble Coordinate Bench took notice of the fact that there is no express provision in the Scheme with regard to providing immunity from payment of fine, however the Court took notice of FAQs, press notes and flyers which specifically stated that Scheme provides for full waiver of interest, fine and penalty. Page 28 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined Thus, in the facts of the said case, the relevant observations made by the court as recorded in para-10 reads thus:
"10. In view of the above facts and situation, When the respondents had issued show cause notice demanding excise duty together with confiscation of the goods in terms of Rule 25 (a) and (d) of the Central Excise Rules, 2002 and redemption fine in lieu of confiscation under Rule-25 as goods were not available for confiscation, it is clear that by issuing the show cause notice , the respondent has invoked Rule-25 of the Central Excise Rules, 2002 for levy of redemption fine in lieu of confiscation as goods which were sought to be confiscated were not available for confiscation. Therefore, the levy of the redemption fine equivalent to demand of Central Excise Duty under Rule- 25 of the Central Excise Rules, 2002 would be an amount in arrears as defined in Section 121 (c) of the Scheme along with the amount of duty which is recoverable as arrears of duty under indirect tax enactment. Therefore, the test which is required to be applied to ascertain what is the amount in arrears as per the Scheme, it would include both the amount of duty as well as amount of redemption fine which is required to be recovered from the taxpayers. The amount of redemption fine cannot be treated separately then the amount of the duty under the Scheme. Therefore, the interpretation made by the Board in the communication dated 20.12.2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, the declarant is required to include redemption fine as part of the duty demanded, so as to calculate the amount in arrears as per Section 121 (c) of the Scheme."
The aforesaid decision has been confirmed by the Hon'ble Supreme Court in SLP. Thus, the cases involving redemption fine Page 29 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined can be considered under SVLDR's scheme and payment of redemption fine is not prerequisite. Thus, the realization of the redemption fine separately and as a prerequisite was not required for processing the application of the petitioner under SVLDR's scheme.
11. We notice that in the case of M/s. Synpol Products Pvt. Ltd, the court had noted that the authority had invoked Rule 25 of the Central excise Rules, 2002 for levy of redemption fine in lieu of confiscation as the goods to be confiscated were not available. Thus, in that case the matter did not transit to the stage of confiscation of goods/ property of the assessee and consequential vesting of such goods/ property in the State.
12. In juxtaposition of the SVLDR's scheme, if ones examines the provisions of the Central Excise Act, 1944 and the rules framed there under, we notice that by virtue of Section 34 of the Central Excise Act read with Rule 173(Q)(2) and 211 of the Central Excise Rules, it is settled position of law that " Redemption fine" is an option given by the adjudicating authority to the person whose goods are confiscated, to be paid in lieu of the confiscation. Our Page 30 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined attention was invited to the relevant provisions of the Customs Act. It appears that by virtue of notification no. 68/63, dated 04.05.1963, issued under section 12 of the Central Excise Act, 1944 provisions of Customs act related to search, seizure and confiscation are made applicable to the Excise Act. Section 125 of the Customs Act, 1962 provides the option to pay fine in lieu of confiscation. Clearly, as the heading itself points out, the fine i.e., redemption fine, is an option in lieu of confiscation and hence, both cannot run simultaneously, which means redemption fine is leviable only as an alternative to confiscation. In our opinion the time limit stipulated under the Act, suggests that such option of payment of redemption fine has to be exercised at an earlier stage. At the same time, it is evident from the reading of Rule 173(Q)(2) and 211, that the action of confiscation of property is in addition to the charging of arrears of duty, interest and penalty. Even proviso to section 125 of the Customs Act clarifies that such redemption fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable. Thus, in our opinion the payment of outstanding duty less tax relief paid under the scheme in no manner will discharge the confiscation of the property in terms of the order in original having attained finality. Page 31 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023
NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined The key aim of the Government to introduce SVLDR scheme was a one time measure to unload the baggage of past litigation of service tax and excise act in the transit phase to CGST regime. Thus, the respondent authority has rightly processed the application of the writ applicant involving redemption fine by extending the benefit of tax relief while realizing the outstanding excise duty related to past litigation by treating it as " amount in arrears" and waiving interest and penalty.
13. The order in original has been placed on record and it appears from the order that the adjudicating authority had followed due procedure prescribed under law while imposing penalty and interest and giving option for payment of redemption fine in lieu of confiscation. However, the facts remain that the assessee didn't approach in appeal neither has deposited redemption fine nor has prayed for extension of time. Thus, as per Rule 211 , the property has been vested in the Central Government since Year 1998. The writ applicant has not questioned the confiscation since then and hence, there is no option available for an offer of redemption fine, at the stage of declaration under the SVLDR's scheme in 2019. In our opinion, the payment of Rs. 3,45,000 :00 made by the Page 32 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023 NEUTRAL CITATION C/SCA/6239/2021 CAV JUDGMENT DATED: 21/02/2023 undefined petitioner towards the redemption fine under SVLDR's scheme is totally misconceived. The designated committee ought to have noticed that the order in original no. 27 of 1998 was passed on 30.04.1998 and as per Rule 173(Q) of the Rules, the assessee was directed to make payment of Rs. 3,00,000 : 00 towards redemption fine, within a period of one month of the receipt of the said order. In absence of such payment within the stipulated period, the order of confiscation stood final. Thus, after passage of almost 21 years at the stage of settlement there was no authority to accept the redemption fine. In our opinion, when the order of the confiscation remains unchallenged, the land stood absolutely vested in the Central Government, which cannot be restored on payment of redemption fine to the tune of Rs. 3,45,000 : 00. In the facts of the case once assessee accepted the order of confiscation, there was no question of redemption fine. Therefore, the voluntary act of payment of writ applicant of redemption fine of Rs. 3,45,000 belatedly in the SVLDR's scheme and issuance of discharge certificate will in no manner lead to removal of attachment / boja on the land in question.
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14. For the reasons recorded, the present petition fails and is disposed of. Notice stands discharged. Since we have held the acceptance of redemption fine without authority, we direct the respondent authorities to refund such amount paid towards redemption fine to the writ applicant forthwith on receipt of copy of this order. So far as payment made towards arrears of excise duty for relevant periods is concerned, it would be governed by the provisions of section 129 and 131 of the Finance(no.2)Act 2019.
(SONIA GOKANI,CJ) (NISHA M. THAKORE,J) Y.N. VYAS Page 34 of 34 Downloaded on : Sun Sep 17 22:04:54 IST 2023