Protect Construction Chemicals Pvt. Ltd. vs Union of India

Akil Kureshi, J.—The petitioner has challenged an order dated 3-9-2015 passed by the Settlement Commission, in which, the Commission quantified the petitioner''s revised duty liability of Rs. 97.98 lacs (rounded off) and imposed penalties, upon payment of which, petitioner would be immune from prosecution. We may notice that out of the excise duty liability of Rs. 97.98 lacs, the petitioner had already paid, a sum of Rs. 59.99 lacs (rounded off) and availed Cenvat credit to the tune of Rs. 8.24 lacs (rounded off). We are informed, the petitioner has also paid sizeable amount of interest.

Having heard learned counsel for the parties and having perused the documents on record, we gather that the petitioner-manufacturer was subjected to excise VAT raid in which, the authorities found that the petitioner was maintaining two sets of invoices. One containing sale invoices for balance sheet and profit and loss account which declared sales tax and VAT returns and second containing excise invoices for excise returns. Between the two sets of invoices, there was considerable difference in value. The statement of the Director of the petitioner-firm was also recorded, from which, it appeared that the unit had crossed the SSI exemption limit. It was on the basis of these factors that the petitioner was served with the show cause notice why the excisable goods cleared by the petitioner should not be determined at Rs. 2 crores and unpaid excise duty of Rs. 1 core (rounded off) should be recovered with interest and penalties.

The petitioner applied for settlement of the case by the Commission. The Commission, after verifying the disclosures made by the petitioner and duty paid, on admitted facts, proceeded to dispose of the settlement case by the impugned order. Before the Settlement Commission, the petitioner had raised principally two arguments. First was that the petitioner was engaged in trading of goods and not manufacturing and that therefore, was not liable to pay excise duty. Second grievance of the petitioner was that by merely on the projection of the petitioner as a manufacturer to disguise the identity of the true manufacturer, the authorities had included the value of such goods for determining the SSI exemption limit and denied the benefit of SSI exemption. The petitioner placed heavy reliance on the certificate of Chartered Engineer which indicated that the unit did not have necessary manufacturing facilities. These issues were considered by the Settlement Commission in the impugned order as under :

"8.5 So far as deduction towards trading goods is concerned, the Revenue report is very clear that the documents submitted by the applicant could not establish the co-relation between the trading goods purchased and later resold. In fact it is on record that the applicant had been showing in their invoices the trading goods as their own manufacture. In that view of the matter deduction towards so called trading goods cannot be allowed. In fact if any bought out item is sold along with the manufactured item duty is to be discharged on the value of both the items taken together. A manufacturer has the option to take Cenvat credit of the duty paid on the bought out items. The Chartered Engineer''s certificate is of no relevance as it relates to a period subsequent to the period of dispute."

As is well known, the order of the Settlement Commission is not open to challenge in a writ petition as if the Court is acting as a appellate authority. The counsel for the petitioner himself had drawn our attention to a decision of Division Bench of Delhi High Court in case of M/s. Asahi India Safety Glass Ltd. v. Union of India and ors. reported in 2004-TIOL-29-HC-DEL-CX : 2005 (180) E.L.T. 5 (Del.), in which, referring to various decisions of the Supreme Court, it was observed that the sole overall limitation of the Commissioner appears to be that, it should be in accordance with the provisions of the Act. The scope of inquiry whether by the High Court under Article 226 or by the Supreme Court under Article 136 is the same whether the order of Commission is contrary to any of the provisions of the Act and, if so, apart from ground of bias, fraud and malice which constitute a separate and independent category, has it prejudiced the petitioner.

Reverting back to the facts of the case, as noted, the Commission considered both the grievances of the petitioner but did not find merit in the same. When the petitioner itself had obtained central excise registration and claimed manufacturing activity, to contend that certain goods which may have been cleared by the petitioner as manufacturer but the value thereof should not be counted for considering the petitioner''s SSI exemption limit, would not be correct. The argument, that the petitioner did not have any manufacturing activity, as would be borne out from the Chartered Engineer''s certificate or even the panchnama drawn by the department, would be venturing into examination of factual aspects wholly impermissible in exercise of writ jurisdiction against the order of Settlement Commission. We do not find that order of Settlement Commission can be stated to be against the law or the provisions of the Central Excise Act. The petition is, therefore, dismissed.