SANJAY DIESELS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The petitioner was issued with two Show Cause Notices (SCNs) on 30-7-2013 and 9-10-2013 by the Commissionerate of Customs and Central Excise pursuant to search of its premises (including the head office) on 24-10-2009 and 26-10-2009. The SCNs were preceded by investigations. The Revenue alleged that the assessee/petitioner had clandestinely cleared/removed a substantial quantity of manufactured DG sets from Delhi without payment of Central Excise and further claimed that they were manufactured in its Kathua unit in J&K. It later sought and obtained duty refund in respect of the Kathua unit which was located in the area based exemption scheme, as a part of the benefit admissible to it. The investigations revealed that the manufacturer had cleared 1965 DG sets clandestinely without registration and payment of duty. The total value of the DG sets was Rs. 35,90,03,574/-. The SCNs alleged violation of Section 11A together with proviso to sub-section 1 of the Customs Act, 1944 (hereafter "the 1944 Act") and also claimed interest payable under Section 11AB together with penalty under Section 11AC of the 1944 Act. The SCNs were issued for penal action under Rule 25 of the Central Excise Rules, 2002 against ten other entities.

(2.) The petitioner/assessee, upon receipt of SCNs approached the Settlement Commission with an application on 16-3-2015, under Section 32E of the 1944 Act. The settlement application was allowed to be proceeded with on 30-3-2015 provisionally and a report was sought from the Commissioner of Customs and Central Excise, Delhi and J&K. The reports were filed on 22-7-2015 and 5-8-2015. Thereafter the matter was proceeded with on those separate dates. By the impugned order, after considering the submissions of the materials before it, the Settlement Commission declined relief. The appellant, therefore, approached this Court under Article 226 of the Constitution of India.

(3.) The appellant urges firstly that the impugned order is erroneous inasmuch as it violates principles of natural justice. Learned counsel highlighted that the last clarificatory report, with respect to discrepancies in the two DG sets was never made available to the petitioner and this serious infirmity vitiates the impugned order. It was urged secondly and more substantially that the tabular chart supplied by the assessee/petitioner clearly revealed that there was no real dispute or difference that required adjudication by the revenue which fell outside the scope of Settlement Commission's jurisdiction. Highlighting on the submission of this part, learned counsel stated that 1965 DG sets were manufactured in Delhi. The petitioner conceded to having removed and claimed 1554 DG sets from Kathua whereas in reality they were never manufactured or cleared from Kathua and were actually manufactured in Delhi, Having admitted that the only difference was in the payment of duty of 411 DG sets, it was stated that the annexures to the two SCNs covered about 195 DG sets and from these, in fact 189 DG sets were actually manufactured in the Kathua which meant that the balance that had to be reconciled or explained were only 27 DG sets. It was submitted that the assessee/petitioner's offer was to repay the amounts received as refund and also bear the penalty leviable in the circumstances as it were. In these circumstances, there was no real dispute requiring adjudication.