Delhi High Court
Shree Flavours Llp vs Government Of India & Ors. on 1 September, 2017
Author: Prathiba M. Singh
Bench: S.Muralidhar, Prathiba M. Singh
$~8
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P. (C) 6569/2017
SHREE FLAVOURS LLP ..... Petitioner
Through: Mr. Parag Tripathi, Senior Advocate
with Mr. Vivek Kohli, Mr. Ashwani
Sharma, Mr. Kumal Bhari and Ms.
Prerna Kohli, Advocates.
versus
GOVERNMENT OF INDIA & ORS. ..... Respondents
Through: Mr. Amit Mahajan, CGSC for R-1.
Mr. Sanjeev Narula, Senior Standing
Counsel with Mr. Abhishek Ghai,
Advocate for R-2 & 3.
CORAM: JUSTICE S.MURALIDHAR
JUSTICE PRATHIBA M. SINGH
ORDER
% 01.09.2017 Prathiba M. Singh, J.
1. The powers of the Customs and Central Excise Settlement Commission (hereafter referred to as 'Settlement Commission') constituted under Section 32 of the Central Excise Act, 1944 (hereinafter referred to as 'the CEA'), to send the matter to the adjudicating authority by rejecting the application for settlement filed by the Petitioner, are in question in the present case.
2. The Petitioner No.1 ('the Petitioner'), Shree Flavours LLP, is a Limited Liability Partnership firm of which the remaining Petitioners Nos. 2 to 8 are W.P.(C) No. 6569/2017 Page 1 of 21 the partners. It is engaged in the business of manufacturing Flavoured Chewing Tobacco ('FCT') at its factory at 11/7, Mathura Road, Faridabad, Haryana. The FCT manufactured by the Petitioner is packed in various types of packing i.e. Pouches, P.P. Jars and Tins. Each of these packings is in various pack sizes. As per the Petitioner, the packing of FCT products was undertaken by it either manually or with the help of manually operated machines. FCT being excisable, the Petitioner avers that it was paying excise duty on the products of its manufacture.
3. There are three types of assessments under the provisions of the CEA. First, under Section 4 of the CEA, goods are assessed as per the transaction value i.e. the consideration received from the purchaser. The second method is under Section 4A of the CEA, which is based on the MRP of the products, provided the goods are excisable and there is a requirement of declaring their MRP under provisions of applicable laws. The third method is the method of deemed assessment, under Section 3A, which is based upon the 'capacity of production'. Under this method, the Excise Authorities do not go into the details of the actual production but the assessment is done on the basis of `presumed production'.
4. According to the Petitioner, it is subjected to assessment under Sections 4 and 4A of the CEA. By Notification No.10/2010-CE (N.T.) (hereinafter referred to as 'Notification No. 10/2010') dated 27th February, 2010, the Central Government notified that FCT manufactured with the aid of the packing machines and packed in pouches, would be 'notified goods' to be assessed as per Section 3A of the CEA. The said Notification No.10/2010 W.P.(C) No. 6569/2017 Page 2 of 21 reads as under:
"G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby specifies,-
(i) unmanufactured tobacco, bearing a brand name, falling under tariff heading 240I of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and
(ii) chewing tobacco falling under tariff item 2403 99 10 of the said Tariff Act, manufactured with the aid of packing machine and packed in pouches as notified goods, on which there shall be levied and collected duty of excise in accordance with the provisions of the said section 3A.
2. This notification shall come into force on the 8th March, 2010.
Explanation. - For the purposes of this notification,-
(a) "packing machine" includes all types of Form, Fill and Seal (FFS) machines and Profile Pouch Making Machine, by whatever names called, whether vertical or horizontal, with or without collar, single-track or multi-track and any other type of packing machine used for packing of pouches of notified goods; and
(b) 'brand name' means a brand name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating or so as to indicate, a connection in the course of trade between the product and a person using such name or mark with or without any indication of the identity of that person."
5. Along with the said notification, the Central Government also issued Notification No.11/2010-CE (N.T.) dated 27th February, 2010 notifying the W.P.(C) No. 6569/2017 Page 3 of 21 Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 [hereafter 'CTU Rules']. The definition given to the word 'packing machines', both in the notification as also in the CTU Rules, as is evident, was on the basis of the nature of the machines. Thus, under Section 3A of the CEA, the capacity of production of a particular unit was to be determined on the basis of the number and nature of the packing machines.
6. The industry, by letter dated 2nd March, 2010, sought clarification with respect to applicability of the Notification No. 10/2010 and the CTU Rules. A clarification was thereafter issued by the Central Government on 5th March, 2010 by way of a circular. The circular sought to allay some apprehensions which were expressed by the industry.
7. Controversy thereafter arose as to the nature of machines used by the Petitioner in its manufacturing unit. The Petitioner filed a declaration on 5th March, 2010 claiming that it does not use any Form, Fill and Seal Machines (hereafter 'FFS machines') and that all manufacturing activities in its factory are undertaken with the aid of manual machines and tin packing machines. The Petitioner requested the authorities to seal all the packing machines used in packing of the notified goods. In response to this request, the officers from the Department visited the factory premises of the Petitioner and uninstalled 16 machines, which were covered under the Compounded Levy Scheme ('CLS'), as per Section 3A of the CEA. The three machines, subject matter of the dispute currently, were not sealed. According to the Petitioner the Department felt that same were not covered under the CLS.
W.P.(C) No. 6569/2017 Page 4 of 218. The Department however issued a letter dated 8th March, 2010 wherein it notified to the Petitioner that the FFS machines, notified under the CTU Rules, would cover tin packing machines. This position was disputed by the Petitioner and hence several visits were made by the Department officials to inspect the machines. Several letters were exchanged. Finally, the Anti Evasion Staff of the Department visited the Petitioner's unit on 21st May, 2010, and commenced a detailed investigation. Relying upon the Notification No.10/2010 and the CTU Rules, a show cause notice ('SCN') was issued on 21st July, 2011 to the Petitioner. By this SCN the Department stated as under:
"The contention of the party that they packed pouches with the help of manually operated machines (devices) and sealed separately with the aid of sealers is incorrect in as much as that machines in question are not operated with the human power, instead, those are run with the aid of electric power/pneumatic power generated with the help of a compressor run with the aid of electric power, which is a fact admitted by the concerned directors and employees of the Party in the subsequent Paras of this Show Cause Notice."
9. The SCN relied upon the technical report prepared by YMCA University of Science &Technology, Faridabad (Haryana) to state that:
The Petitioner tried to deliberately and knowingly camouflage the descriptions of machines used by it;
The Petitioner did not pay central excise duty wilfully and knowingly in accordance with the provisions of Section 3A of the CEA and the CTU Rules;W.P.(C) No. 6569/2017 Page 5 of 21
The outstanding excise liability is liable to be recovered from the Petitioner along with the interest under Section 11A and 11AB of the CEA;
The partners of the Petitioner are liable to penal action; The suppliers of the machines were not deliberately told by the Petitioner's representatives to change the description of the machines; The mis-declaration of the number and nature of the machines present at the Petitioner's unit;
The Petitioner committed fraudulent mis-representation only with a view to evade the excise duty;
The Petitioner is, thus, liable to pay the central excise duty of Rs.250,11,88,585/-
10. The Petitioner then approached the Settlement Commission under Section 32 E of the CEA with a prayer to admit the application and settle the SCN issued to it. The Settlement Commission then directed the application to be proceeded with under Section 32 F (1) on 2nd July, 2012 and called for a report from the Additional Commissioner under Section 32 (F) (3), which was submitted on 8th August, 2012 The Settlement Commission, after considering the same and after hearing the parties, by the impugned order dated 3rd September, 2012, by a 2:1 majority sent the matter to the adjudicating authority and did not entertain the application of the Petitioner. The said order, passed by the Settlement Commission, is challenged by way of the present writ petition. On 16th October, 2012, notice was issued by this Court and an interim order to the following effect was passed:
"Issue notice.W.P.(C) No. 6569/2017 Page 6 of 21
Notice is accepted by Mr. Mukesh Anand, Adv. for respondent No. 1 and Mr. Satish Kumar, sr. standing counsel for respondents No. 2 and 3.
List on 10th December, 2012.
Request is made for postponement of proceedings before the Commissioner.
The same shall be considered reasonably since this Court had issued notice.
Dasti under signature of the Court Master."
The said order continues till date.
Petitioners' Submissions
11. Mr. Parag Tripathi, learned Senior Counsel appearing on behalf of the Petitioner, submitted that the Tribunal has committed a fundamental error while rejecting the application of the Petitioner for settlement. Mr. Tripathi submits that the majority view of the Tribunal clearly came to the conclusion that "There is no suppression of facts regarding the nature and working of three machines on the applicant's part". Thus, the Petitioner in its application has crossed the initial threshold of 'full and true disclosure' as required under Section 32 E of the CEA. According to Mr. Tripathi, once this pre-condition has been fulfilled, the Settlement Commission had no option but to proceed further in the matter. He took exception to the observation of the Settlement Commission that its jurisdiction could only be invoked by 'errant tax evaders who resort to concealment of facts'. He submitted that an applicant making a full and true disclosure of facts cannot be denied relief by the Settlement Commission on the above ground.
12. Mr. Tripathi further submits that out of 16 machines, which were seized, W.P.(C) No. 6569/2017 Page 7 of 21 the dispute boiled down only to three machines and thus, the Settlement Commission could have easily dealt with the matter. The nature of the machines was not so complicated as to reject the application before it and send the matter to the adjudicating authority. Mr. Tripathi further submits that the Settlement Commission need not only go by what the parties suggest but enjoys wide powers as is defined from a reading of Section 32 I of the CEA. According to Mr. Tripathi, the Settlement Commission does not have the power to refuse to entertain an application and its powers to reject the application, are constricted by the provisions of Section 32 L of the CEA. As per Mr. Tripathi, it is only in a case where the applicant, who makes an application for settlement, has not cooperated with the Settlement Commission, that the Settlement Commission can send the case back to the Central Excise Officer exercising jurisdiction on the case. Mr. Tripathi further submits that the Settlement Commission, under Section 32 F (5) may "pass such orders as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application". However, it can reject an application only under Section 32 L due to non- cooperation. Mr. Tripathi also relies upon the minority view of the Settlement Commission to submit that there was in fact no major dispute between the parties and relies upon the following observations recorded therein:
"Thus, there are no disputed facts in this case, nor any disputed question of fact and law as to the applicability of a provision of law."
13. Mr. Tripathi, thus, submits that the matter ought to be sent back to the Settlement Commission and not to the adjudicating authority. He also W.P.(C) No. 6569/2017 Page 8 of 21 submits that the Petitioner would not be able to avail of the remedy before the Settlement Commission if the present petition is rejected in view of Section 32 O of the CEA and therefore it should be given a chance to approach the Settlement Commission. If the Settlement Commission again feels that this is not a fit case for settlement, the matter would in any case be send back to the adjudicating authority and no prejudice is thus caused to the Revenue.
Respondents' Submissions
14. Mr. Sanjeev Narula, learned Senior Standing Counsel, appearing on behalf of the Revenue vehemently submits that the stand of the Petitioner is wholly untenable, inasmuch as, the Petitioner is wanting to go back to the Settlement Commission only to seek acceptance of the application filed by it. In the event that the Settlement Commission does not agree with the Petitioner, it would then seek adjudication and hence the entire purpose of going back to the Settlement Commission is going to be defeated. Mr. Narula submits that the Petitioner is only willing to go by the minority view of the Tribunal which has held that the Petitioner is liable to pay only Rs.4,08,77,436/- crores of the duty.
15. Mr. Narula thereafter submits that owing to the stand of the Petitioner and the delays already caused, it would be a wasteful exercise to send the matter to the Settlement Commission. Mr. Narula further submits that the powers of the Settlement Commission are wide, however in the facts and circumstances of this case, the Settlement Commission is right in saying that since there are seriously disputed questions, as also mixed questions of fact W.P.(C) No. 6569/2017 Page 9 of 21 and law, which have arisen, the proper course of action to be adopted would be to send the parties to the adjudicatory authority for adjudication. The adjudication in this case would involve the interpretation of the definition of 'packing machines' as contained in the Notification No.10/2010 and the CTU Rules.
16. Mr. Narula seriously disputes the contention that the Settlement Commission cannot reject an application except under Section 32 L of the CEA and contends that the powers of the Settlement Commission to pass `such orders as it thinks fit' includes the power to send the matter to the adjudicating authority. Mr. Narula places reliance upon the judgment of the Division Bench of Allahabad High Court in Vinay Wire & Poly Product Pvt. Ltd. v. Dir. General of Central Excise 2014 (307) E.L.T. 438 (All.) (hereafter 'Vinay Wire'). Mr. Narula further submits that the said judgment categorically holds that the powers under Section 32 L of the CEA are in addition to the powers in Sections 32 F (5) and 32 F (8) of the CEA. Thus, he submits that the order of the Settlement Commission deserves to be upheld and the matter be allowed to be proceeded before the appropriate adjudicating authority.
Relevant Provisions of the Central Excise Act, 1944
17. The provisions of CEA which fall for consideration in the present case are-
"32E. Application for settlement of cases - (1) An Assessee may, in respect of a case relating to him, make an application, before adjudication, to the Settlement Commission to have the case settled, in such W.P.(C) No. 6569/2017 Page 10 of 21 form and in such manner as may be prescribed and containing a full and true disclosure of his duty liability which has not been disclosed before the Central Excise Officer having jurisdiction, the manner in which such liability has been derived, the additional amount of excise duty accepted to be payable by him and such other particulars as may be prescribed including the particulars of such excisable goods in respect of which he admits short levy on account of misclassification, under-valuation, inapplicability of exemption notification of CENVAT credit or otherwise and any such application shall be disposed of in the manner hereinafter provided......
32F. Procedure on receipt of an application under Section 32E -
(1)........ to (4) ...........
.
(5) After examination of the records and the report of the Principal Commissioner of Central Excise or Commissioner of Central Excise received under sub-
section (3), and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (4), and after giving an opportunity to the applicant and to the Principal Commissioner of Central Excise or Commissioner of Central Excise having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such orders as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in report of the Principal Commissioner of Central Excise or Commissioner of Central Excise and Commissioner (Investigation) under sub-section (3) or sub-section (4).
W.P.(C) No. 6569/2017 Page 11 of 21(6)....... to (10) ...........
32I. Powers and procedure of Settlement Commission
- (1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in a Central Excise Officer, under this Act or the rules made thereunder.......
32L. Power of the Settlement Commission to send a case back to the Central Excise Officer - (1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 32E has not cooperated with the Settlement Commission in the proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under section 32E had been made......."
Analysis and Findings
18. Section 32 E of the CEA requires an applicant to make a 'full and true disclosure' of the duty liability that has not been disclosed before the Tribunal, the manner in which said liability has been derived, the additional amount of excise duty accepted as being payable and such other particulars as specified in the provision. Once an application is filed under Section 32 E, the procedure under Section 32 F (1) requires the Settlement Commission to issue a notice to the applicant and within 14 days it can make an order allowing the application to be proceeded with or reject the same. In the absence of an order, within the period prescribed, it shall be deemed that the order for proceeding with has been passed. Upon the order for proceeding with the application being passed, under Section 32 F (3), a report is called W.P.(C) No. 6569/2017 Page 12 of 21 for along with the relevant records from the Principal Commissioner or Commissioner of Central Excise. Upon receipt of the report and after an examination of the records and the report, the Settlement Commission, after hearing parties, may `pass such order as it thinks fit in the matters covered by the application and any other matter relating to the case not covered by the application.' Thus, it is clear that the powers of the Settlement Commission are wide and are meant to effectively settle the disputes before it.
19. Coming to the first submission of the Petitioner viz., the finding in the impugned order that since there is full and true disclosure by the applicant before the Settlement Commission, and that the applicant is not a tax evader, its application cannot be entertained. This finding of the Settlement Commission does not have any basis and is unsustainable. No forum whether adjudicatory or conciliatory can hold that its jurisdiction can be invoked only by those who fail to disclose fully and truly all material facts. Forums of this nature are created for quicker settlement of disputes and not to only entertain only those who evade tax. Thus, this Court rejects and sets aside the finding of the Settlement Commission that "these are meant for errant tax evaders who resort to concealment of facts relating to their transactions in statutorily prescribed records. To mend their such misdemeanor, these provisions have been incorporated in the law."
20. However, that does not bring to an end the further examination of the impugned order. The Court is required to examine the contents of the principal finding of the Settlement Commission that the issue is one which W.P.(C) No. 6569/2017 Page 13 of 21 requires adjudication. The Settlement Commission has given a categorical finding that the question regarding the nature of the two machines remains to be decided. The question as to whether the machines are 'packing machines', according to the Settlement Commission, is a mixed question of fact and law requiring detailed enquiry and adjudication. The impugned order categorically holds:
"This involves a mixed question of facts and law requiring detailed enquiry and adjudication. Such exercise may require further enquiry and material evidence on the matter. It would also necessitate to determine as to whether the scope of expressions used in the definition of 'packing machine' is such as to cover the remaining impugned 2 machines within its purview. Section 31 I of the Act confers on the Settlement Commission all the powers by a Central Excise Officer under the Act but its scope is limited and has to be read in accordance with the scheme of Chapter V and its objects. This provision is to give finality to the order of the Settlement Commission as held by the Hon'ble Delhi High Court in Ashwani Tobacco Co. Vs. Union of India - 2010 (251) ELT 162. In view of the above, in our view such enquiry and adjudication cannot be taken up by the Commission under the existing provisions of the settlement of cases under Chapter V of the Act."
21. The Settlement Commission has relied upon the judgment of the Madras High Court in Australian Food Ltd. v. Commissioner of Central Excise 2010 (254) ELT 392 (Mad.) (hereafter 'Australian Food') to hold that disputed questions of fact and law ought not to be entertained by it. The relevant para of Australian Food (Supra) reads:
W.P.(C) No. 6569/2017 Page 14 of 21"From this Section (Sec.32E), it is seen that the assessee may approach the Settlement Commission, before adjudication to settle the case, disclosing his duty liability which has not been disclosed by him before the Central Excise Officer. But, it nowhere provides that the assessee could approach the Settlement Commission, regarding a disputed question, particularly regarding a disputed question of fact and law as to the applicability of a provision of law, like the one in hand wherein the issue centres around the applicability of whether Section 4 or Section 4-A of the Central Excise Act. Though the assessee has admitted the short levy on dough and paid the duty thereof, since he is raking up the plea that he is eligible to claim benefits under Section 4-A of the Central Excise Act instead of Section 4, that point goes out of the jurisdiction of the Settlement Commission, since it has not been vested with the power to decide such a question of direct assessment. By such an act, the Settlement Commission has usurped the jurisdiction of the adjudicating authorities and as has been rightly commented on the part of the Revenue, by the impugned order, the Settlement Commission has set a bad precedent".
22. This Court has also considered the role of the Settlement Commission in Union of India v. Dharampal Satyapal & Ors. 2013 (298) ELT 653 (Del) (hereafter 'Dharampal Satyapal') where it was held as under:
"49. The other principle which has been set down in several judgments of this Court is that the Settlement Commission is not a substitute for adjudication proceedings before the central excise authorities and where complex issues of fact and law are involved for which a detailed inquiry is necessary, settlement proceedings cannot act as a proper substitute for the adjudication proceedings. In Picasso Overseas and Others v. Director General of Revenue (Intelligence) W.P.(C) No. 6569/2017 Page 15 of 21 and Another [W.P. (C) No.1495/2007 and W.P. (C) No.4401/2007] decided on 03.08.2009 by a Division Bench of this Court, the point directly arose for consideration. The issue posed before this Court was:
"...........can the settlement commission substitute itself for the adjudicating officer and arrive at a decision on highly contentious issue requiring detail and complex investigation for arriving at an adjudication of such facts". In paragraph 9 the following principles were set out: -
(i) The Settlement Commission cannot substitute itself for the adjudicating officer by deciding complicated and highly disputed or contentious questions and issues of facts themselves, because the expression "settlement" is used in the Customs Act in contra-
distinction with "adjudication" and the very scheme of the settlement provisions is to settle and not adjudicate.
(ii) All the provisions make it abundantly clear that what is required of the Settlement Commission is a decision when there are terms of settlement agreed to by the applicant and a duty liability which is accepted by him; he could not be fastened with the liability which he never intended as accepted to be payable by him.
(iii) Section 127(1) as it stood then, used the expression "complexity of the investigation" which shows that highly complex and contentious questions of fact cannot even be admitted for processing.
50. It was thus held that if the case involves highly complex and disputed questions of fact for which detailed inquiry is necessary, the Settlement Commission should refer the matter back to the adjudicating officer to be taken up from the stage from which the matter was before such officer just before the making of the settlement application."
W.P.(C) No. 6569/2017 Page 16 of 2123. Thus, if there is a complex question of fact or law or a mixed question requiring adjudication, then the Settlement Commission, may, depending on the facts of each case, refer the matter to the adjudicating authority, more so in a situation where it is of the opinion that a settlement is unlikely.
24. The second contention of the Petitioner that the Settlement Commission can reject an application and send the matter to the adjudicating authority, if and only if the applicant has not cooperated with the Settlement Commission as per Section 32 L of the CEA, is incorrect. The powers of the Settlement Commission to pass `such orders as it thinks fit' in Section 32 F (5) of the CEA, are so broad so as to confer the Settlement Commission with wide powers. Such orders would include the orders to refer the matter back to an adjudicating authority where the Settlement Commission feels that the dispute involves a mixed question of fact and law or that it is unable to decide the factual disputes between the parties owing to the technical nature of the disputes.
25. This Court is in agreement with the following observations of the Allahabad High Court in Vinay Wire (Supra):
"20. As noticed hereinabove, under sub-section (5) of Section 32F, the Settlement Commission, after examination of the records and the report of the Commissioner of Central Excise and the report, if any, of the Commissioner (Investigation) and after giving opportunity to the applicant and to the Commissioner of Central Excise to be heard, has to pass such order as it thinks fit on the matters covered by the application. Under sub-section (8) shall provide for the terms of the settlement and in case of rejection contain W.P.(C) No. 6569/2017 Page 17 of 21 reasons therefore. Thus, on a plain reading of the provisions of sub-section (5) and (8) of Section 32F, it is clear that the Settlement Commission has to pass such order as it thinks fit and it has the power to not only provide for the terms of the settlement but also to reject the application in which eventuality, reasons have to be recorded. The power conferred on the Settlement Commission under Section 32L to send the case back to Central Excise Officer is in addition to the aforesaid powers of the Settlement Commission. Such a power is given to the Settlement Commission under Section 32L, if it finds that any person who has made an application for settlement under Section 32E, has not co-operated with the Settlement Commission in the proceedings before it. This power given to the Settlement Commission under Section 32L does not and cannot take away the powers conferred on the Settlement Commission under sub-sections (5) and (8) of Section 32F. It is, therefore, not possible for the Court to accept the first submission of learned counsel for the petitioners......" (emphasis supplied)
26. The powers of the Settlement Commission under Section 32 L (1) of the CEA to send the matter to the adjudicating authority, if the applicant does not cooperate with the Settlement Commission, is in addition to the powers under Section 32 F (5) of the CEA. If in a settlement proceeding, any party refuses to cooperate with the authority, which is dealing with the dispute, it cannot expect it to proceed further. In any Alternate Dispute Resolution ('ADR') mechanism namely mediation, conciliation etc., cooperation of the parties is a pre-requisite and an essential condition. Thus, Section 32 L of the CEA merely states the obvious i.e. if there is non- cooperation, the matter would be sent to the adjudicating authority. In any process of settlement, it cannot be expected that the Settlement Commission W.P.(C) No. 6569/2017 Page 18 of 21 would force any party into a settlement. In the context of indirect taxation, the Settlement Commission, constituted under Section 32 of the CEA, and in the case of direct taxation, the Settlement Commission, constituted under Section 245B of the Income Tax Act, 1961, is an ADR mechanism, which provides for speedier resolution of disputes, provided the applicant comes clean and make a full and true disclosure of material facts and also cooperates with the Settlement Commission. If the Settlement Commission is of the opinion, for any reason whatsoever, that the dispute is one which cannot be settled, the Settlement Commission has the absolute discretion not to waste any further time on the matter and to immediately, with utmost alacrity, refer the matter to the adjudicating authority.
27. The power of granting immunity from prosecution and penalty, vested with the Settlement Commission, is a consequence being provided to any applicant before the Settlement Commission, only to ensure the speedier disposal and resolution of the disputes and is not a tool for delaying adjudication. Whenever the Settlement Commission comes to the conclusion that the dispute cannot be resolved by it, it must refer the matter to the adjudicating authority. Any other interpretation to the contrary, defeats the fundamental purpose for constitution of the Settlement Commission namely speedier resolution.
28. This Court has not embarked upon an enquiry as to the nature of the machines of the Petitioner - Whether they constitute `packing machines' as defined in Notification No.10/2010 or the CTU Rules. This is an issue which now needs to be adjudicated by the adjudicating authority. The Court has W.P.(C) No. 6569/2017 Page 19 of 21 been shown the technical reports on record and some of the findings of the minority view to contend that the issue is not as technical as it is made out to be, by the majority view. In fact, the Petitioner heavily relies upon the minority view to submit that there is in fact no dispute between the parties as to the nature of the machines.
29. This Court has perused the minority view. The minority view is clearly contradictory, inasmuch as, while holding that there are no disputed facts and that there is no disagreement, it observes that the Settlement Commission has to conclude whether the impugned machines are 'packing machines'. The minority view seeks to suggest that there is no dispute, while reading of the said view itself supports the conclusion that there is a clear and unequivocal dispute between the parties.
30. The minority view, to the effect that the Settlement Commission itself has to decide all such factual issues, even if they involve a complication, without sending the case back for adjudication, is contrary to the view of this Court in Dharampal Satyapal (Supra).
31. The judgment in Director General of Central Excise Intelligence v. Murarilal Harishchandra Jaiswal Pvt. Ltd. 2013 (291) ELT 484 (Del), relied upon in the minority view, is clearly distinguishable, inasmuch as, in the said case the question was only as to the rate of customs duty.
32. Thus, in any event, this Court is not to embark on deciding the correctness of the minority view for the purpose of this writ. It is the W.P.(C) No. 6569/2017 Page 20 of 21 majority view which forms the impugned order.
33. Insofar as the submission of the Petitioner regarding Section 32 O is concerned, the Court is not called upon, at this stage, to decide whether the Petitioner would be barred from approaching the Settlement commission in future. The said question depends upon whether at any stage, in future, the Petitioner is hit by the conditions which constitute the `Bar on subsequent application for settlement in certain cases'. This Court, in view of the findings above, is not going into the said question.
34. In view of the discussion hereinabove and in the facts and circumstances of this case, the writ petition is dismissed and the matter is sent to the adjudicating authority to proceed from the stage of the issuance of the SCN dated 21st July, 2011, in accordance with law. Needless to add, in view of the delay that has already occurred in this matter, the adjudicating authority should conclude the proceedings and render its decision expeditiously.
35. In the facts and circumstances of the present case, there is no order as to the costs.
PRATHIBA M. SINGH, J S.MURALIDHAR, J SEPTEMBER 01, 2017 dk W.P.(C) No. 6569/2017 Page 21 of 21