S. Ravindra Bhat, J. - (1.) The petitioner's grievance is that its Settlement Application under Section 32E of the Central Excise Act, 1944 was rejected. Pursuant to search, and subsequent investigation, a Show Cause Notice was issued to the petitioner alleging that it was involved in the clandestine removal and suppression of true quantity and under valuation of the goods. Thereupon, the petitioner applied to the Settlement Commission. In its application, it claimed that its duty liability was Rs.32,39,687/-. The amount demanded, however, was Rs.80,52,971/-.
(2.) The Settlement Commission initially issued notice under Section 32E(1) in the preliminary hearing and admitted the application for hearing. At that stage, the Commission's order (as communicated to the petitioner on 16.04.2015) was as follows:- "I am directed to communicate that the Hon'ble Bench has allowed the application filed by the above mentioned applicant to be proceeded with in terms of sub-section(1)of section 32F of the Central Excise Act 1944, as the conditions laid down under section 32E of the Central Excise Act, 1944, subject to the condition that the applicant show at the time of final hearing that they fulfill the conditions of section 32 E of the Central Excise Act, 1944. "
(3.) Thereafter, considering the submissions of the parties and the material on record, it rejected the Settlement Application. The rationale for rejection of the Settlement Application inter alia given by the Commission is as follows:- "17. The Bench has gone through the application filed and considered the rival submissions made orally as well as in writing both by the applicant and the Revenue. The Bench observed that this is a case of clandestine clearance of cast iron products by suppressing the production and also mis-declaring their weight; also of suppression of transaction value of the finished goods cleared to related persons. The applicant has accepted the total duty liability of Rs. 32,39,687/- out of a total duty demand of Rs. 80,52,971/-. The applicant has accepted his total duty liability on account of sale to related person (M/s. Manjeet Traders). However, the applicant has not accepted the duty liability on products where the weight was mis-declared in the range of 60% to 80%. The applicant's contention is that goods have been sold by M/s. Manjeet Traders on "piece" basis and hence the mis-declaration of weight is immaterial. They have further contended that the department should not have loaded the value in proportion to the increase of weight and should have charged the duty on the price on which goods were sold by M/s. Manjeet Traders to unrelated persons. Further when the price at which products were sold by M/s Manjeet Traders was available from their balance sheet, the assessable value should not have been loaded. The contention of the applicant prima facie is not acceptable and looks illogical. It is pertinent to mention that in the invoice, the value of the product was shown on kg. basis and not on piece basis. Only in the challan, the correct weight was mentioned; which was in majority of the cases higher by 60 to 80%. If the goods were sold only on piece basis, there was no necessity for the applicant to mis-declare the weight. The cast iron products are mostly sold on weight basis, no assessee will mis-declare the weight if the goods are to be sold on piece basis. If there was no evasion of duty in mis-declaring the weight, the applicant would have declared the weight correctly or there might have been a marginal error of maximum 5 to 10%. Thus, the contention of the applicant, in this regard, is not acceptable. Another contention of the applicant is that when price at which goods were sold by M/s. Manjeet Traders was available, the Revenue should not have increased the value in proportion to increase in weight. The price mentioned in the balance sheet of M/s. Manjeet Traders is co-related to the price at which the products were purchased by M/s. Manjeet Traders after adding a trading margin of 5 to 8%. When M/s. Manjeet Traders has procured the goods where the weight was mis-declared, they have sold the same products by adding the trading margin only. The excess payment made for procurement of the goods and sale price realized will not be reflected in their balance sheet. The loading in the price of M/s. Manjeet Traders in proportion to increase in weight is prime facie correct. The applicant contention, in this regard, is unacceptable. 18. The applicant during the hearing has contended that if they were granted cum-duty price benefit, their duty liability will get reduced to 55.56 lakhs from the total duty demand of Rs. 80.52 lakhs. Thus, they have claimed that they are entitled to cum duty price benefit of Rs. 24.96 lakhs. It may be mentioned that the duty rate on cast iron products ranged from 8.24% to 12.36% and majority of the clearances were made when the rate of duty was 10.3%. On a demand of Rs. 80.52 lakhs, the cum duty price benefit when the rate of duty is 10.3% (in the case of 85% clearance) cannot exceed rupees nine lakhs. Even at the highest rate of 12.36% it would not be more than 10 lakhs. This clearly shows that the applicant has not calculated their duty liability correctly and has tried to mislead the Commission by submitting wrong and incorrect claims. 19. The Bench observed that the applicant has only accepted about 40% of their duty liability and has contested the evidence collected by the Revenue. They have rejected the evidences given by the Revenue in respect of their duty demand without convincing explanation. From these facts, it can be inferred that there is no true and correct disclosure by the applicant. xxxx xxxx xxxx xxxx 27. In view of the foregoing discussion, the Bench observes that the applicant has not only denied a substantial part of the demand but has also contested the evidence collected by the Revenue. They have claimed certain facts which need further investigation by the Revenue. Therefore, the Bench observes that the case is not one that can be settled in this forum. In view of the complex issues of fact raised by the rival parties to the case, it would be more appropriate that the case is adjudicated by the proper Officer after appreciation of facts and evidence now produced by the applicant.";