D.A. Mehta, J.
1. Considering the scope of controversy between the parties, this petition is taken up for final hearing and disposal today. Rule. The learned Counsel appearing for the respondent authorities is directed to waive service.
2. The facts, as are necessary for the present, may be briefly stated. The petitioner, a Private Limited Company was assessed vide Order-In-Original dated 28/11/2003, stated to be an ex-parte order. The petitioner challenged the same before the Tribunal, and vide order dated 2/12/2004 the matter was remanded back to the adjudicating authority. Pursuant thereto, on 6/10/2005, the petitioner made an application before Settlement Commission under Section 32E of the Central Excise Act,1944 ('the Act') admitting duty liability to the extent of Rs. 20,65,680/-. The same was revised upwards to the tune of Rs. 31,11,030/-.
3. On 8/5/2006 the application made by the petitioner came to be admitted by Admission Order No: 80/CEX/2006 relatable to the period commencing from 1-4-1998, up to 7-7-2002.
4. In the meantime respondent authority issued a fresh notice of hearing, calling upon the petitioner to appear on 28/10/205 pursuant to the order of remand made by the Tribunal. It is the say of the petitioner that as the petitioner had moved the Settlement Commission by way of application dated 6/10/2005, and the said application was pending, the petitioner did not appear before the respondent adjudicating authority. On 31/10/2005 respondent authority passed de-novo adjudication Order-In-Original No. 11/VDR-II/MP/05 F. No. V CH.32 (15) 1/OA/Denovo/2005 confirming duty amounting to Rs. 90,50,293/-, and the said order came to be issued on 6/12/2005.
5. It is pertinent to note that aforesaid fact was pointed out to the Settlement Commission at the time of admission hearing of the application made by the petitioner, and Settlement Commission recorded in its order dated 8/5/2006 in the following words:
Further the adjudication order dated 30.10.05 passed in denovo proceedings becomes nonest as the same had been passed on a date after filing of the application by the applicant for settlement of its case.
6. Thereafter, various hearings took place before Settlement Commission and ultimately it appears that the petitioner was not agreeable to the amount of duty liability fixed by the Settlement Commission and, therefore, Settlement Commission vide final order dated 3/8/2007 observed as under:
As the applicant is not willing to accept the settled duty liability the Bench has to decide to send back the case to the jurisdictional Commissioner. Accordingly, we hold that the applicant has failed to co-operate with the Commission in the proceedings and send the case back to the adjudicating authority in terms of Section 32L(1) of the Act. The adjudicating officer shall dispose the case in accordance with the provisions of the Act as if no applications under Section 32E of the Act had been made.
7. The adjudicating authority, thereafter, called upon the petitioner to make payment of duty and penalty along with interest vide communication dated 17/10/2008, followed by communication dated 17/11/2008 and 29/12/2008. According to the respondent authority, the figure of duty liability fixed by the Settlement Commission had attained finality and hence, the petitioner was required to make payment of the said amount along with penalty and interest. It is the aforesaid communications which are under challenge in the present petition.
8. The case of the petitioner as put forth by the learned advocate for the petitioner is that when provisions of Section 31(c) of the Act are read with Section 32E(1) & Section 32F of the Act, it becomes clear that Settlement Commission had entertained the application made by the petitioner, 'the case' was under consideration of the Settlement Commission, but ultimately because of the opinion of the Settlement Commission that the petitioner had not cooperated with the Settlement Commission in the proceedings before the Settlement Commission, in exercise of powers under Section 32L(1) of the Act Settlement Commission had sent the case back to the adjudicating authority, who is bound thereupon to dispose of the case in accordance with provisions of the Act, as if no application under Section 32F had been made. That, therefore, the respondent authority was in error in calling upon the petitioner to make payment of duty, penalty and interest without any adjudication.
9. As against that, the learned Counsel for the respondent authority submitted that any order made by the Settlement Commission was conclusive as provided by Section 32M of the Act, and no matter covered by an order made by Settlement Commission could be reopened in a proceeding under the Act and, therefore, the adjudicating authority had no role to play and the demand raised on the basis of the order made by Settlement Commission / the order made by the adjudicating authority on 30/10/2005 had to be recovered by the authority in accordance with law. It was submitted that there was no question of any fresh adjudication being required in the aforesaid set of circumstances, and the petitioner was wrongly resisted the recovering proceedings. In support of the submissions made, reliance was placed on decision of Bangalore Bench of Central Excise And Service Tax Appellate Tribunal in the case of Commr. of C. Ex., Visakhapatnam v. Deccan Vaneer P. Ltd. 2008 (223) E.L.T. 263.
10. The controversy lies in a very narrow compass, as the facts are not in dispute. Provisions of Section 32-L of the Act read as under:
32-L. Power of Settlement Commission to send a case back to the Central Excise Officer ' (1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under Section 32E has not cooperated with the Settlement Commission in the proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under Section 32E had been made.
For purpose of Sub-section (1), the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the result of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him.
For the purposes of the time limit under Section 11A and for the purposes of interest under Section 11BB, in a case referred to in Sub-section (1), the period commencing on and from the date of the application to the Settlement Commission under Section 32E and ending with the date of receipt by the Central Excise Officer of the order of the Settlement Commission sending the case back to the Central Excise Officer shall be excluded.
11. A plain reading of the aforesaid section makes it clear that under Sub-section (1) once the Settlement Commission forms an opinion that any person who made an application for settlement under Section 32E of the Act has not cooperated with the Commission in the proceedings before the Commission, the Settlement Commission may send the case back to the adjudicating authority to dispose of the case in accordance with provisions of the Act, as if, no application under Section 32E had been made. If there is no application before Settlement Commission, there can be no question of any final order of adjudication. When one reads Sub-section (3) of Section 32L of the Act, it becomes clear that for working out the time limit prescribed under provisions of Section 11A of the Act for recovery of duties not levied etc., the period commencing on and from the date of application to the Settlement Commission under Section 32E of the Act and ending with date of receipt by the adjudicating authority of the order of the Settlement Commission sending the case back to the adjudicating authority, shall be excluded. Meaning thereby, in effect, the period consumed by the Settlement Commission, or before the Settlement Commission, shall not operate for the purposes of computing the limitation of one year or five years, as the case may be, prescribed under Section 11A of the Act for the recovery, and the balance period as may be available from the date of making of application before Settlement Commission shall be available to the adjudicating authority for making an order assessing duty liability of an assessee.
12. In the facts of the present case Settlement Commission having not made any order under Section 32F of the Act and having exercised powers under Section 32L of the Act, there is no question of invoking and applying provision of Section 32M of the Act, and the respondent authority has thus committed an error in law. This becomes amply clear by the following statement in communication dated 17/10/2009:
In this connection, you are requested to deposit the Duty and Penalty along with interest as per Settlement Commission's above Order or produce stay if any, and inform the payment particulars to this Office with a copy of challenge immediately. Failing which necessary action will be initiated against you as per law.
14. Respondent authority has thus failed to appreciate and understand the distinction between an order made under Section 32F of the Act and an order made under Section 32L of the Act.
15. What is more fatal to the case of the respondent authority is, that the earlier adjudication order dated 31/10/2005 was categorically found by Settlement Commission to be nonest in law, as noted hereinbefore, when order of admission dated 8/5/2006 came to be made. The said order of 8/5/2006 made by the Settlement Commission has attained finality, the same having not been challenged by the respondent authority. Thus in effect, in law and on facts, as of date, there is no order of adjudication which can be termed to be an order valid in eyes of law, made either by the adjudicating authority or by the Settlement Commission, on the basis of which a legitimate demand could be raised and recovery effected. The consequence of the order dated 3/8/2007 made by the Settlement Commission is that the adjudicating authority is required to continue the proceedings from the stage of show cause notice / notice of hearing issued by the authority during pendency of the application dated 6/10/2005 made by the petitioner before the Settlement Commission, because that is the legislative scheme. The Court is not called upon to decide whether the Settlement Commission has rightly exercised the powers while making the declaration of the order of adjudication being nonest in law because that order is not under challenge in the present proceedings, and that too, by the respondent authority.
16. The net result is that the impugned communications dated 17/10/2008, 17/11/2008 and 29/12/2008 can not be permitted to operate and are accordingly quashed and set aside. Respondent authority shall continue the adjudication proceedings from the stage at which the proceedings before Settlement Commission commenced. Respondent authority is, therefore, directed to issue a notice of hearing to the petitioner and continue with the adjudication proceedings in compliance with the order of remand made by the Tribunal. For this purpose, the petitioner shall appear before respondent adjudicating authority on 20/3/2009, on which day the respondent authority shall fix a date of hearing and continue the proceedings thereafter, in accordance with law.
17. Petition is allowed accordingly in the aforesaid terms. Rule made absolute, with no order as to costs.