Bombay HC dismisses Writ Petition challenging Settlement Application before Settlement Commission u/s 32E Central Excise Act [Read Order]

A Division Bench of the Bombay High Court (HC) dismissed writ petition challenging settlement application before Settlement Commission under Section 32E Central Excise Act, 1994.

The Petitioner, Viva Herba Pvt Ltd, filed a settlement application before the Settlement Commission for settlement of the case under Section 32E of the Central Excise Act, 1994, admitting the duty liability as against the duty demand and seeking cum-duty price benefit. The Settlement Commission rejected the prayer of the Petitioner, and therefore, the Petitioner is before the Court, challenging the order of the Settlement Commission.

The Managing Director of the Petitioner was called upon to show cause why the penalty under Rule 26 of the Central Excise Rule, 2002 be not imposed and no response was given.The Commissioner confirmed the demand along with interest under Section 11A(1) and 11AB and penalty of Rs.10 lakhs on the Managing Director of the Petitioner.

The Petitioner filed an Appeal before the Commissioner, Central Excise (Appeal), under Section 35 of the Central Excise Act, 1994. While the Appeal was pending, the Petitioner filed an application for settlement of the case before the Settlement Commission under Section 32E of the Central Excise Act, admitting the duty liability against the duty demand of Rs.33 lakhs.

In the case of N. Krishnan v/s. Settlement Commission, a Division Bench of the Karnataka High Court observed that the Settlement Commission's decision could only be interfered with if grave procedural defects such as violation of the mandatory procedural requirements of the statute and breach of principles of natural justice are made out, or if there is no nexus between the reasons given and the decision taken by the Settlement Commission.

In Jyotendrasinhji v/s. S.I Tripathi and Ors, the Supreme Court of India held that the judicial review would be maintainable. However, the scope would be extremely limited.

The Petitioner not only did not clear the goods to the DTA but used some other entity to route the goods and create fabricated documents. Therefore, as per the opinion of the Commission, no reliable documents existed on record. Hence the Settlement Commission concluded that there was no evidence of the price realized being conclusive of duty given the manner in which the goods were removed; the value of the goods as a benefit of cum duty price of clearance of goods could not be granted.

The Bench consisting of Justice Nitin Jamdar and Justice Gauri Godse observed that “Therefore, we are not shown any judicial decision directly dealing with the fact situation such as the Petitioner, where the documentation itself was in grave doubt. Keeping in mind the scope of the judicial review and the ambit of proceeding for the settlement, we are not inclined to interfere in the writ jurisdiction of this Court.”

To Read the full text of the Order CLICK HERE

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