J.R.B.Engineering Works Thr.Ba v. Customs and Central Excise Set

SANJIV KHANNA, J. AUGUST 02, 2011 NA

* IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 289/2007 % Date of decision: 2nd August, 2011. M/S J.R.B.ENGINEERING WORKS ..... Petitioner Through Mr. Pradeep Jain and Mr. Shubhankar Jha, Advs versus CUSTOMS AND CENTRAL EXCISE SETTLEMENT COMMISSION & ANR. ..... Respondent Through Dr. Ashwini Bhardwaj, Adv CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not ? Yes. 3. Whether the judgment should be reported in the Digest ? Yes. DIPAK MISRA, CJ:- Being dissatisfied with the rejection order dated 18th October, 2006 passed by the Settlement Commission in Settlement Application No.1269/2006, the petitioner has preferred this writ petition under Articles 226 and 227 of the Constitution of India for setting aside the same. 2. The facts which are requisite to be stated are that the petitioner M/s. J.R.B. Engineering Works filed a the settlement application in respect of the proceedings initiated vide SCN C.No.IV (Hqrs. Prev.) 12/27/D-II/2005/467 dated 31st March, 2006 issued by the Additional Commissioner, Central Excise, Delhi-II. 3. The Settlement Commission adverted to the various facts and submissions put forth and eventually came to hold that the search was conducted on 20th March, 2006 and the department carried out investigations upon which it transpired that the petitioner was wrongly availing the benefit of SSI exemption. Thereafter, a demand of duty of Rs. 20,59,184.33/- along with interest was proposed and the petitioner was asked to show cause against penal action under Section 11AC of the Central Excise Act, 1944. It was contended by the petitioners then that since the amount of Rs. 20 lakhs had been paid before the issue of the notice and the remaining amount of duty for Rs. 59,184.33/- was deposited in April 2006, the application be admitted and taken up for consideration by the Settlement Commission. 4. The Settlement Commission opined that since the petitioner was neither registered with the Central Excise Department, nor did they file any declaration or return during the relevant period, they were not eligible to the benefit of the aforesaid exemptions for SSI units with regard to the goods of the brand name "Kalsi". It was observed that the brand name "Kalsi" was owned by another person i.e. M/s Kalsi Mechanical Works and that the petitioner had defaulted in paying duty all along on the said goods and for obtaining registration for the same as mandated by clause (a) to Section 32E(1) of the Central Excise Act, 1944 (Act, for short). Being of this view, the Commission has held that the application does not conform to the parameters as stipulated under Section 32E (1) of the Act. Be it noted, before the Commission reliance was placed on the decision of the Special Bench of five members rendered in M/s Emerson Electric Company India Pvt. Ltd. 2005 (189) ELT 377 (Settlement Commission) and on M/s JMD Beverages Pvt. Ltd, New Delhi AO No. A 466/CE/06- SC (PB) dated 9th June, 2006. The Settlement Commission however held that the two decisions are of no help to them. 5. Mr. Pradeep Jain, learned counsel for the petitioner contended that the applicant was using brand names owned by the same family and were under the impression that the benefits of the said exemptions for SSI units were available. Learned counsel has invited out attention to paragraph 5 of the decision, which reads as follows:- "5. On a query from the Bench whether the applicant was registered with the Central Excise and had filed returns showing production, clearances and Central Excise duty paid in the prescribed manner in fulfillment of the condition in (a) in the First Proviso to Section 32-E(1) of the Act, the Avocate for applicant submitted that the applicant was manufacturing the goods under the brand name "Optigear" owned by the applicant itself and brand name "Kalsi" owned by the same family. They were under an impressi