M/S. SHREE NAKLANK LIMITED Vs. CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH, AHMEDABAD

JUDGEMENT

(1.) These appeals arise in similar background and out of a common judgment of CESTAT dated 11.1.2017. While issuing notice for final disposal on 22.2.2018, the Court had framed the following substantial question of law :

(2.) We may record facts from Tax Appeal No.1040/2017. The appellant M/s. Shree Naklank Laminates is a proprietary concern. The Directorate General of Central Excise Intelligence, Ahmedabad, had issued a show cause notice on 16.9.2011 against one M/s. Simalin Chemical Industries Pvt. Ltd. and 53 other co-noticees, M/s. Shree Naklank Laminates being one of them. Broad allegations in the said show cause notice were that M/s. Simalin Chemical had indulged in large scale evasion of central excise duty by way of clandestine removal of finished goods to different manufacturers of laminated sheets and plywood. Amount of sale proceeds would be collected in cash which was not accounted in the records. M/s. Simalin Chemical would issue Central Excise invoices to manufacturers of laminated sheets and plywood for transportation of goods from factory premises to the premises of buyers. Soon after the delivery of goods, such invoices would be returned and cancelled. After cancellation of the invoices, sale proceeds of such transactions would be received in cash. The assessee M/s. Shree Naklank Laminates was one such manufacturer of laminated sheets and plywood. In the show cause notice, the authority proposed to levy unpaid duty of excise of Rs.71.21 lacs (rounded off) from M/s. Simalin Chemical with interest and penalty under section 11AC of the Central Excise Act, 1944 ("the Act" for short). The notice also proposes confiscation of illicitly cleared finished goods. The notice also proposes penalties on the buyers including M/s. Shree Naklank Laminates under Rule 26 of the Central Excise Rules, 2002 ("the Rules" for short). During the pendency of the adjudication of show cause notice proceedings, M/s. Simalin Chemical approached the Settlement Commission along with some other co-noticees and applied for settlement of the case. Settlement Commission passed an order on 10.12.2012 settling the case and granting immunity to the applicants therein in terms of section 32M of the Act. The remaining co-noticees who had not approached the Settlement Commission were subjected to adjudication. The adjudicating authority imposed different penalties against each one of them by an order dated 5.2.2013. Against such order, M/s. Shree Naklank Laminates and other manufacturers preferred separate appeals before the CESTAT. Before the Tribunal, the sole ground raised by the appellants was that the main noticee i.e. M/s. Simalin Chemical having settled the case, no further proceedings would lie against the co-noticees. It was argued that the settlement in terms of provisions of the Act can be of entire issue. Since co-noticees were only subsidiary defaulters, if at all, no proceedings can be undertaken against them once the main noticee had applied for settlement and such settlement was accepted. The Tribunal by the impugned judgment dismissed the appeals referring to various judgments of different High Courts and also of the Tribunal against which the present group of appeals has been preferred.

(3.) Learned advocate Ms. Gargi Vyas for the appellants argued at length raising the following contentions :