Holding

The Court held that the revenue’s failure to appeal or issue a short‑levy notice within the statutory period rendered the Assistant Collector’s assessment final, precluding any further demand or penalty, and that the penalty was untenable as there was no clandestine removal of goods.

Summary

Mis. Duncans Industries Ltd., a cigarette manufacturer, was served with two show‑cause notices covering the period July 1973‑February 1983, one by the Assistant Collector of Central Excise, Calcutta and another by the Commissioner of Central Excise, Delhi. The Assistant Collector incorporated the material of the Delhi notice into his own and finally adjudicated both notices, fixing assessable value and raising a demand for duty and short‑levy. The Revenue later issued a fresh demand and penalty under Section 11‑A, which the Tribunal set aside the duty liability but upheld the penalty. The Supreme Court held that the Revenue had neither appealed the Assistant Collector’s order under Section 35(2) nor issued a short‑levy notice under Section 11‑A within six months, so the order became final and no further demand or penalty could be raised, especially after the dispute was settled under the Kar Vivad Samadhan Scheme, 1998. Consequently, the Court dismissed the Revenue appeals, affirmed the deletion of duty liability, and ordered the penalty to be deleted.

Issues considered

The revenue could invoke an appeal under Section 35(2) of the Central Excise Act or issue a short‑levy notice under Section 11‑A after the Assistant Collector’s final adjudication.
Whether a second assessment or demand for the same period is permissible after a prior assessment has become final.
Whether the penalty under Rules 9(2), 52‑A, 210 and 226 can be sustained in the absence of clandestine removal of goods without assessment.
The effect of the Kar Vivad Samadhan Scheme, 1998 on further proceedings and liability.

Legislation cited

Central Excise Act, 1944s. 11-A, s. 35(2)
Central Excise Rules, 1944s. Rule 210, s. Rule 226, s. Rule 52-A, s. Rule 9(2), s. Rule 98
Finance (No.2) Act, 1998s. 89

Subjects

central exciseshort levyassessment finalitypenaltyKar Vivad Samadhan Schemeclandestine removalSection 11-ASection 35(2)duty liabilityappellate jurisdiction

Judgment

A MIS. DUNCANS INDUSTRIES LTD., CALCUTTA
v.
COMMISSIONER OF CENTRAL EXCISE, NEW DELHI

AUGUST 22, 2006

B [ASHOK BHAN AND MARKANDEY KA TJU, JJ.)

Central Excise Act, 1944-Sections 35£(2) and I I-A-Deletion of
demand of duty short paid and levy of penalty-Show cause notices alleging
contravention of duty, one by Assistant Collector and other by
C Commissioner-Final adjudication of two notices by Assistant Collector,
assessable value determined and demand raised-Thereafter, adjudication of
second show cause by Commissioner, demand of duty short paid and penalty
levied-Tribunal set aside duty liability as already been adjudicated in the
earlier proceedings however, penalty levied upheld-On appeal held:
D Department could invoke right of appeal against the order u/s 35 £(2) or
issue short levy notice u/s I I-A-Options having not invoked, order attained
finality-Further, matter settled under the 1998 Scheme-Also no finding
I
that goods removed clandestinely without assessment-Thus, determination
of duty liable and levy ofpenalty do not arise-Kar Vivad Samadhan Scheme,
1998.
E
Assessee is engaged in manufacturing of cigarettes. Dispute arose as
to whether excise duty was leviable on manufacturing cost plus manufacturing
profit and post manufacturing cost and profits arising from post manufacturing
operations. Provisional assessments were made from July, 1973 to February,
F 1983. Assistant Collector of Central Excise, Calcutta issued show-cause notice
dated 8.5.1984 to the assessee for the period July, 1973 to February, 1983
alleging contravention of the central excise duty in respect of cigarettes
manufactured and cleared from the factory. Collector of Central Excise, Delhi
issued another show-cause notice on 1.10.1986 to tbe assessee for the period
September, 1981 to February, 1983 alleging that the assessee had willfully
G mis-declared assessable value of cigarettes. Collector of Central Excise, Delhi
passed an order directing the Assistant Collector, to make final assessment
in the case taking into consideration the material contained in the show cause
notice dated 1.10.1986. Assistant Collector Central Excise then issued
addendum incorporating the contents of the show-cause notice dated l.10.1986

H 860
DUNCANS INDUSTRIES LTD., CALCUHA 1•. COMMR. OF CENTRAL EXCISE, 86 J

in the show cause notice dated 8.5.1984. Thereafter, the Assistant Collector A
finally adjudicated the two show cause notices, determined the assessable value
finalized assessments for the entire period, raised demand. On 3.7.1996
Assistant Collector Central Excise issued show cause cum demand notice
quantifying the amount of short levy for the period. The same was confirmed
on adjudication. Aggrieved assessee filed an appeal. Commissioner remanded
the matter to the Assistant Collector Central Excise who recomputed the B
amount of duty short paid after adjusting pre-deposited amount. After
finalization of the proceedings, Commissioner of Central Excise took up show-
cause notice dated 1.10.1986 for adjudication and determined Rs. 17.67 crores
due as duty liability and imposed a penalty of Rs. One crore. On appeal the
tribunal set aside the duty liability as it had already been adjudicated in the C
earlier proceedings but upheld the levy of penalty. Hence the present cross
appeals.

Disposing of the appeals, the Court

HELD: I.I. For the period September, 1981 to February, 1983, the D
Commissioner of Central Excise, Delhi passed the order directing the
Assistant Commissioner Central Excise, Calcutta to determine the assessable
value taking into consideration the materials contained in show cause notice
dated 1.10.1986. Thereafter, Assistant Collector Central Excise, Calcutta
issued addendum incorporating the allegations made in show cause notice
dated 1.10.1986 in the show-cause notice dated 8.5.1984. The effect of the E
order passed by the Commissioner of Central Excise, Delhi was that the
Assistant Collector Central Excise alone had the jurisdiction to finally
adjudicate and determine the assessable value of the goods cleared from the
assessee's factory for the entire period and the consequent duty liability.· The
two show-cause notices were finally adjudicated by the Assistant Collector F
Central Excise on 11.01.1996. The asses8able value was determined and
consequent demand raised by finalizing assessments for the entire period July
1973 to February, 1983. lfthe revenue was aggrieved by the above proceedings
it was incumbent upon them to either invoke the right of appeal against that
order under Section 35 E (2) of the Central Excise Act, 1944 or issue a short
levy notice under Section 11-A of the Act within six months. Neither of these G
two options having been invoked, the order attained finality as agai~st the
revenue. (868-E-H; 869-A-C)

1.2. There could not be two assessments for the same period. This apart,
after the grant of certificate under the Kar Vivad Samadan Sclreme, 1998 as H
862 SUPREME COURT REPORTS (2006] SUPP. 4 S.C.R.

A having settled the dispute and payment of the amount determined no further
proceedings could be initiated or proceeded with for the period in question.
Thus there is no substance in the appeals filed by the Revenue and are set
aside. [870-B-D[

Union of India v. Godrej & Boyce Mfg. Co. (Pvt) ltd. Civil Appeal No.
B 12824of1989 decided on 8.3.90 and Hira Lal Hari Lal Bhagwati v. CBI. [2003]
5 sec 257, referred to.

2. There is not even an allegation much less finding by the department
that there has been any clandestine removal of goods without assessment. As
such the penalty is liable to be set aside. The matter having been settl~d in
C the Kar Vivad Samadan Scheme, 1998 the question of determination of the
duty payable or levy of penalty did not arise. [870-G-H; 871-A]

N.B. Sanjana v. Elphinstone Spg. & Wvg Mills Co Ltd., [197111 SCC
337, relied on.
D CIVIL APPELLATE JURISDICTION: Civil Appeal No. 754 of2001.

From the Order No. 829 & 830/2000-A dated 4.10.2000 of the Customs,
Excise and Gold (Control) Appellate Tribunal, (West Block, Bench-A) New
Delhi in Appeal No. E/1622/99-A.
E WITH

C.A. Nos. 4075-4076 of200i.

Joseph Vellapally, U.A. Rana, Prashant Thakur, Raghvesh Singh and
F Srabonee Roy for (Gagrat & Co.) for the Appellant.

Mathai M. Paikeday, Kiran Bhardwaj and B.K. Prasad for the Respondent.

The Judgment of the Court was delivered by

BHAN, J. These civil appeals are directed against the common impugned
G order Nos. 829 and 830 of2000 dated 4.10.2000 passed by the Customs, Excise
& Gold (Control). Appellate Tribunal (hereinafter referred to as "the Tribunal")
in Appeal Nos. E/1622/99-A and E/2095/2000-A. Revenue has filed Civil Appeal
Nos. 4075, 4076 of2001 against the deletion of duty demand of Rs. 17,67,13,315/
- raised in the show-cause notice dated I . I 0.1986 for the period September
H 1981 to February 1983 and the assessee has filed Civil Appeal No. 754 of2001
DUNCANS INDUSTRIES LTD., CALCUTIA 1•. COMMR. OF CENTRAL EXCISE, [BHAN,J.] 863

against the levy of penalty of Rs. One crore. Since these appeals are directed A
against the common order passed by the Tribunal, we also propose to dispose
them of by a common order. The facts are common in both the sets of appeals.

This case has a chequered history and has had various round of
litigation in different forums. In order to determine the controversy and the
point involved in these appeals the following facts may be noticed. B
Mis National Tobacco Company Limited Agarpara, a manufacturer of
cigarettes falling under erstwhile Central Excise Tariff Item No. 4 II(2), and
holder of Central Excise Licence L-4 No. 3184 for the manufacture of cigarettes,
was merged with Mis Mirpara Tea Company effective from l.4.1977.
Consequent to this, it became a Division of newly formed Mis. Duncans Agro c
Industries Limited, Calcutta. Thereupon, Central Excise Licence L-4 No. 1-Cig/
l/V/78 dated 18.2.1978 for the manufacture of cigarettes was issued to Mis.
National Tobacco Company.

In April 1984, Mis. National Tobacco Company was de-merged from D
Mis. Duncans Agro Industries Limited and was made a wholly owned
subsidiary of Mis. Duncans Agro Industries Limited in the name and style
of Mis. New Tobacco Company. Mis. Duncans Agro Industries Limited, is the
respondent in the two appeals filed by the Revenue and the appellant in Civil
Appea!No. 754 of 2001 and would be referred to as the assessee.
E
As a result of demerger, a new Central Excise Licence No. L-4 No. J/Cig/
IV/Kharl85 dated 9.3.1985 was issued to Mis. New Tobacco Company Limited
for the manufacture of cigarettes.

As there was some dispute as to whether excise was leviable on
manufacturing cost plus manufacturing profit and post manufacturing cost F
and profits arising from post manufacturing operations, the provisional
assessments were made from July, 1973 to February, 1983. Final assessments
were to be made later. On 8.5.1984, Assistant Collector of Central Excise,
Calcutta issued a show-cause notice to the assessee for the period July, 1973
to February, 1983 calling upon the assessee to show cause as to why:
G
"... the deductions claimed on account of freight, interest on freight,
rebate, octroi, interest on receivables and tariff rate of duty from the
wholesale price should not be disallowed and why the charges on
account of freight, interest on freight, rebate, octroi and interest on
receivables should not be included in the assessable value and also H
864 SUPREME COURT REPORTS [2006] SUPP. 4 S.C.R.

A why the cost of C.F.C. packing charged and realized by them from the ...
buyers should not be included in the assessable value under Section
4( I) (a) and Section 4 (4) (d) (i) of Central Excise & Salt Act, 1944 and
why price of each product should not be approved accordingly.

Collector of Central Excise, Delhi issued another show-cause notice on
B 1.10.1986 to the assessee for the period September, 1981 to February, 1983
alleging that the assessce has willfully mis-declared assessable value of
cigarettes from time to time during the period from September, 1981 to February,
1983 in the Central Excise documents, Price Lists with fraudulent intent to
evade the payment of correct amount of duty and thereby they have short
C paid Central Excise duty amounting to Rs. 97,55,56,362/-. Accordingly, the
assessee was called upon to show cause as to why:

''(a) the duty short paid amounting to Rs. 97,55,56,362.00 as per
Annexure 'D' should not be demanded under Rule 9(2) of the
Central Excise Rules, 1944 read with the proviso of sub-section
(I) to Section 11 A of the Central Excise and Salt Act, 1944.
D
(b) Penalties should not be imposed on them under Rules 9(2), 52A(5),
210 & 226 of the Central Excise Rules, 1944."

Assessee being aggrieved filed a Civil Writ Petition No. 1708 of 1987
in the Delhi High Court on the ground that the show cause notice dated
E I.I 0.1986 issued to the assessee alleging contravention of the central excise
duty in respect of cigarettes manufactured and cleared from the factory at
Agarpara during the period September, 1981 to February, 1983 and also
addendum to the show-cause notice dated I.I 0.1986 was in excess of the
jurisdiction and/or without authority of law inasmuch as the assessee had
F been paying the excise duty on the basis of the provisional assessments
pursuant to filing of provisional price lists and till the price lists and the
assessments were finalized a show-cause notice could not be issued.
According to the petitioner Section 11-A of the Central Excises Salt Act, 1944
(for short "the Act") could not be invoked in cases where duties are paid
under provisional assessment made under Rule 98 of the Central Excise Rules,
G 1944 (for short "the Rules") without first finalizing the assessment. The
Division Bench of the High Court dismissed the writ petition by its order
dated 12.8.1988 reported in Duncans Agro Industries Ltd. v. Union of India
& Ors., (1989) 39 EL T 511 (Del.). Contention of the assessee that the cause
of action for invoking Section 11-A would accrue only from the relevant date
H defined under Section 11-A which in case of provisional assessment means
DUNCANS INDUSTRIES LlD.,CALCUITA 1·. COMMR. OF CENTRAL EXCISE, (BHAN,l.] 865

the date of adjustment of duty after final assessment under Rule 98 was A
rejected. This judgment became final and is binding between the parties. This
Court later took a contrary view in Serai Keila Glass Workers Pvt. Ltd. v.
Collector of Central Excise, Patna, (1997] 4 SCC 641.

Collector of Central Excise, Delhi took up for hearing the proceedings
arising from the show-cause notice dated 1.10.1986 and disposed of the same B
on 27.3.1991 with the interim directions, which are as under:

"I direct the Divisional Assistant Collector, Kharda Division of
Calcutta-II Collectorate to make final assessment in the case under
Rule 98(5) of the Central Excise Rules, 1944, for the period covered
by the instant show cause notice as early as possible. He may use c
the material contained in the instant show cause notice as independent
material to support the final assessment after according an opportunity
to the manufacturer/other parties concerned to meet the case and after
considering the cause show. He is further directed to intimate the
undersigned as soon as he completes the said provisional assessment. D
Thereafter this show cause notice will be taken up for adjudication."

In this order the Collector of Central Excise, Delhi gave three fold
directions to the Divisional Assistant Collector, Kharda Division of Calcutta
II, namely, (1) To make final assessment in the case under Rule 98(5) of the
Rules for the period covered by the instant show-cause notice (1.10.1986) as E
early as possible; (2) He could use the material contained in the show-cause
notice dated 1.0.1986 as independent material to support the final assessment
after affording an opportunity to the manufacturer/other parties concerned to
meet the case and after considering the show cause; (3) He was further
directed to intimate the Collector of Central Excise, Delhi as soon as he
completes the provisional assessment; and (4) The show-cause notice dated F
1.10.1986 was to be taken up for adjudication thereafter.

The assessee being aggrieved filed an appeal before the Appellate
Tribunal at New Delhi, which was disposed of on 9.12.1997. The assessee
challenged the finding/observation made by the Collector of Central Excise, G
Delhi that "thereafter this show cause notice will be taken up for adjudication"
on the ground that after finalizing of the assessment there would be nothing
left for the Collector of Central Excise, Delhi for consideration or decision and
therefore, this sentence in the order should be set aside. The appeal was
disposed of by observing:
H
866 SUPREME COURT REPORTS [2006] SUPP. 4 S.C.R.
.,..
A " ........ We do not understand the impugned order as recording a
finding overruling the contention raised by the appellant the collector
had no jurisdiction to adjudicate on the strength of show cause notice
dated I. J0.86 or as to whether after finalisation of assessments anything
would be left for the Collector to decide. Thereafter the appellant
cannot have any grievance. It is open to the appellant to raise these
B aspects if after finalisation of assessment, ihe Collector takes up the
proceeding before him for adjudication in this matter.

With this observation, the appeal is disposed of."
,.
[Emphasis supplied]
c
Thus the lib.:rty to take up this point was reserved with the assessee
after the finalization of the proceedings.

In pursuance to the interim directions issued by the Collector of Central
Excise, Delhi in its order dated 27.3.1991 the office of the Assistant Collector
D Central Excise, Kharda Division, Calcutta issued addendum dated 20.2.1992
incorporating the contents of the show-cause notice dated I. I 0.1986 in the
show cause notice dated 8.5.1984 thereby assuming jurisdiction to adjudicate
all issues raised in both the show cause notices.

The two show cause notices were finally adjudicated by the Assistant
E Collector Central Excise, Kharda Division, Calcutta by its order dated 11.1.1996.
The assessable value was determined and consequent thereupon demand
was raised by finalizing assessments for the entire period from July 1973 to
February, 1983.

F On 3.7.1996 show cause cum demand notice was issued by the
Superintendent, Office of the Assistant Collector Central Excise, Kharda
Division. Calcutta on the basis of adjudication order dated 11.1.1996
quantifying the amount of short levy for the period July 1973 to February,
1983. Assistant Collector Central Excise, Kharda Division, Calcutta adjudicated
the show cause cum demand notice dated 3.7.1996 confirming the demands
G (short levy) of Rs. 386,45,71,192.69 and Rs. 66,45,136.19 in respect of cigarettes
and smoking mixtures respectively.

The assessee being aggrieved against the order of Assistant Collector
Central Excise, Kharda Division. Calcutta filed an appeal before the .
Commissioner (Appeals) Central Excise, Calcutta. Commissioner of Appeals
H
DUNCANS INDUSTRIES LTD., CALCUTIA 1·. COMMR. OF CENTRAL EXCISE, [BHAN,J.] 867

by his order in appeal dated 25.7.1997 accepted the appeal and remanded the A
matter to the Assistant Collector Central Excise, Kharda Division, Calcutta for
recomputation of the duty afresh in the light of the decision of this Court in
Government of India v. Madras Rubber Factory, [1995] 4 SCC 349. Assistant
Collector Central Excise, Kharda Division. Calcutta in compliance of the order
of remand dated 25.7.1997 of the Commissioner of Appeals Central Excise,
Calcutta recomputed the amount of duty short paid as Rs. 16.6,94,320.34 and B
Rs. 8, 13,683.29 after adjusting Rs. 5.97 crores pre-deposited in the light of the
judgment of this Court in Madras Rubber Factory's case (supra). This order
was later on corrected by issuing a corrigendum and the amount was reduced.

After finalization of the proceedings by the Assistant Collector Central C
Excise, Kharda Division. Calcutta the Commissioner of Central Excise, Delhi
passed an order in original in show-cause notice dated I. I 0.1986 determining
Rs. 17 .67 crores as due as duty liability and imposing a penalty of Rs. One
crore.

Assessee being aggrieved filed Appeal No. E/1622/99-A/92E/2095/2000A D
which has culminated in the impugned order. Tribunal accepted the appeal
partly. Duty liability was set aside as it had already been adjudicated in the
earlier proceedings but upheld the levy of penalty. While deleting the duty
liability the Tribunal observed thus:

"From this, it is clear that the Collector had left the duty demand E
raised in the show cause notice dated 1-10-1986 also to be included
in the finalisation of the provisional assessment which was pending
from 1973. The Revenue had not challenged that order. Pursuant to
that order, the Assistant Collector had issued an Addendum to the
assessees on 20-2-1992 making the materials relied upon in the show
cause notice dated 1-10-1986 as part of the materials for finalising the F
assessments and the duty demand was finalised after assessees made
their representations. That duty demand became final as the Revenue
did not challenge it. The order passed on the assessees' appeal
against that duty demand was also not challenged by both sides. We,
therefore, hold that the duty demand made by the Assistant Collector G
was a consolidated demand and that demand having become final, no
second demand could be made in another adjudication proceeding by
the Commissioner. Accordingly, we set aside the duty demand of over
Rs. 17 crores made in the impugned order."

Revenue being aggrieved has filed Civil Appeal Nos. 4075-4076 of2001 H
868 SUPREME COURT REPORTS [2006] SUPP. 4 S.C.R.

A against the deletion of the duty liability and the assessee has filed the Civil
Appeal No. 754 of 200 I against the order maintaining the levy of penalty.

Another fact which needs to be noticed is that after the Assistant
Collector Central Excise, Kharda Division, Calcutta finalized the assessment
order dated 3.12.1996, the Assistant Collector Central Excise, issued show
B cause notice dated 27.5.1998 stating therein that the order in original dated
12.12.1997 ihe extra amounts realized as "additional consideration" was not
taken into consideration and accordingly a demand of Rs. 21.58 crores was
made on the assessee. In the meantime, Kar Vivad Samadhan Scheme, 1998
(for short "the KVS Scheme") was introduced by Finance (No. 2) Act, 1998.
C Pursuant to the said scheme the assessee filed a declaration under Section
89 of the Finance (No. 2) Act,.1998 in respect of the KVS Scheme. An order
under the KVS Scheme was passed in pursuance to which the assessee paid
the demand raised under the said scheme.

Counsel for the parties have been heard at great length.
D
The issue before the Assistant Collector Central Excise, Khar<la Division,
Calcutta was for the determination of the assessable value of the goods for
the period July, 1973 to February, 1983 i.e. the period covered by the show
cause notice dated 8.5.84. The issue before the Commissioner of Central
Excise, Delhi was also for determination of the assessable value of the goods
E forthe period September, 1981 to February, 1983, the period covered by show
cause notice dated 1.10.1986. The show cause notice dated 1.10.1986 was
issued against 20 persons including the assessee company. As regards the
assessee, for the period September, 1981 to February, 1983, the Commissioner
of Central Excise passed the order dated 27.3.1991 directing the Assistant
F Commissioner to determine the assessable value taking into consideration the
materials contained in show cause notice dated I.I 0.1986. This he did by
noticing the correct position of law laid down by this Court in the case of •
Union of India v. Godrej & Boyce Mfg. Co. (Pvt.) ltd, (Civil Appeal No.12824
of 1989 decided on 8.3.90). The Assistant Collector Central Excise, Kharda
Division, Calcutta thereafter issued addendum dated 20.2.1992 incorporating
G the allegations made in show cause notice dated I. I 0.1986 in the show-cause
notice dated 8.5.1984. The effect of the order passed by the Commissioner of
Central Excise, Delhi was that the Assistant Collector Central Excise, Kharda
Division, Calcutta alone had the jurisdiction to finally adjudicate and determine
the assessable value of the goods cleared from the assessee' s factory for the
H entire period and the consequent duty liability. Either party wishing to dispute
DUNCANS lNDUSTIUES LID., CALCUITA ''· COMMR. OF CENTRAL EXCISE, [BHAN,J.] 869
"I the determination made by the Assistant Collector Central Excise, Kharda A
Division, Calcutta had to do so by invoking the right of appeal to the
Commissioner of Appeals, Tribunal and the Supreme Court. In addition the
Department could have invoked the short levy provision under Section 11-
A within a period of six months or invoked the extended period of limitation
of 5 years under proviso to Section 11-A provided the conditions laid down
in the proviso were satisfied. The two show-cause notices were finally B
adjudicated by the Assistant Collector Central Excise, Kharda Division, Calcutta
on 11.01.1996. The assessable value determined and consequent demand was
raised by finalizing assessments for the entire period July 1973 to February,
1983. If the revenue was aggrieved by the above proceedings it was incumbent
upon them to either invoke the right of appeal against that order under c
Section 35 E (2) or issue a short levy notice under Section 11-A within six
months. Neither of these two options having been invoked, the order attained
finality as against the revenue.

It need not be emphasized that there could not be two assessments for
the same period. D
This apart finally determined as due for the entire period of I0 years
from the assessee having been settled under the Kar Vivad Samadan Scheme,
1998, there is no scope for any further review or determination of that issue
by any authority under the Act.
E
In Hira Lal Hari Lal Bhagwati v. CBI, [2003] 5 SCC 257, at page 274
this Court observed:

"We have carefully gone through the Kar Vivad Samadhan Scheme,
1998 and the certificate issued by the Customs Authorities. Iri our
opinion, the GCS is immune from any criminal proceedings pursuant F
r
to the certificates issued under the said Scheme and the appellants are
being prosecuted in their capacity as office-bearers of the GCS. As
the customs duty has already been paid, the Central Government has
not suffered any financial loss. Moreover, as per the Kar Vivad
Samadhan Scheme, 1998, whoever is granted the benefit under the G
said Scheme is granted immunity from prosecution from any offence
under the Customs Act, 1962 including the offence of evasion of duty.
In the circumstances, the complaint filed against the appellants is
unsustainable."

And at page 280 it was observed: H
870 SUPREME COURT REPORTS [2006) SUPP. 4 S.C.R.

A "The Kar Vivad Samadhan Scheme certificate along with CBI v.
Duncans Agro lndustgries ltd., (1996] 5 SCC 591, and Sushi/a Rani
v. C./. T., (2002] 2 sec 697, judgments clearly absolve the appellants
herein from all charges and allegations under any other law once
the duty so demanded has been paid and the alleged offence has
been compounded. It is also settled law that once a civil case has
B been compromised and the alleged offence has been compounded, to
continue the criminal proceedings thereafter would be an abuse of
the judicial process. "

Thus, after the grant of certificate under the Kar Vivad Samadan Scheme,
C 1998 as having settled the dispute and payment of the amount determined no
further proceedings could be initiated or proceeded with for the period in
question.

For the reasons stated above, we do not find any substance in the
appeals filed by the Revenue. Accordingly, Civil Appeal Nos. 4075-4076 of
D 2001 are dismissed and the order passed by the Tribunal in this respect is
affirmed.

Taking up the appeal of the assessee, it may be noted that the proposed
penalty was under Rule 9(2) and 52-A. This Court in N.B. Sanjana v.
ElphinstoneSpg. & Wvg. Mills Co. ltd., (1971] l SCC 337, at page 348 held
E as under:

" ..... To attract sub-rule (2) of Rule 9, the goods should have been
removed in contravention of sub-rule ( 1). It is not the case of the
appellants that the respondents have not complied with the provisions
of sub-rule (1). We are of the opinion that in order to attract sub-rule
F (2), the goods should have been removed clandestinely and without
assessment. In this case there is no such clandestine removal without
assessment. On the other hand, goods had been removed with the
express permission of the Excise authorities and after order of
assessment was made. No doubt the duty payable under the
G assessment order was nil. That, in our opinion, will not bring the case
under sub-rule (2). "

In the present case there is not even an allegation much less finding
by the department that there has been any clandestine removal of goods
without assessment. As such the penalty is liable to be set aside. The matter
H having been settled in the Kar Vivad Samadan Scheme, 1998 the question of
DUNCANS INDUSTRIES LID., CALCUTIA 1•. COMMR. OF CENTRAL EXCISE, [BHAN,J.) 871

detennination of the duty payable or levy of penalty did not arise. In our view, A
the Tribunal clearly erred in upholding the levy of penalty. Accordingly, Civil
Appeal No. 754 of 2001 filed by the assessee is accepted and the penalty
levied is ordered to be deleted.

These two sets of appeals are disposed of in the above tenns leaving
the parties to bear their own costs. B
N.J. Appeals disposed of.