The Delhi High Court has held that the Settlement Commission cannot make final orders during the subsistence of the Dispute.
The petitioner, Suresh Kumar Verma & Ors challenged the order dated 14.03.2018 and corrigendum dated 27.03.2018, passed by the Customs, Central Excise & Service Tax Settlement Commission, Principal Bench, New Delhi (“Settlement Commission”).
The petitioners engaged in the manufacture of zarda and packing pouches, had their premises searched by the respondent/revenue. The search proceedings were triggered, it appears, based on intelligence gathered by the respondent/revenue that zarda was being manufactured by using six (6) pouch packing machines. This led to the matter being investigated which culminated in the issuance of show cause notices. Insofar as petitioners nos.1, 2 and 5 are concerned, they were served with a show cause notice dated 14.08.2015.
It was submitted that the Settlement Commission should have remitted the matter to the concerned statutory authority under the Central Excise Act, 1944 [ “1944 Act”] for adjudication by the law.
It was observed that once the Settlement Commission concludes that there has been no true and fair disclosure of facts and how the liability has been derived, the Settlement Commission cannot then proceed to adjudicate the liability. A plain reading of Section 32E1 of the 1944 Act stated that unless the twin conditions mentioned therein are fulfilled, the Settlement Commission cannot move further in the matter.
The Court comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed that the petitioners have got practically no benefit in approaching the Settlement Commission, as the quantum of liability which was indicated in the aforementioned show cause notice(s) is practically what has been the thrust on them via impugned orders. The Court set aside the impugned order and the notice of demand dated 06.04.2018 was quashed.
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