Juice Electricals PVT. LTD. vs. The Union Of INDIA And Ors

Held

The Court held that the rejection of the petitioner's declaration on the ground that redemption fine is not covered by the SVLDR Scheme is unsustainable. The Court relied on its own Co-ordinate Bench's decision in M/s. Esbee Electrotech LLP, which held that redemption fine is akin to a penalty. Once an application under the SVLDR Scheme is accepted for payment of excise duty, the declarant is immune from the imposition of any redemption fine, thus extending the benefit of the Scheme to redemption fines. The Court noted that Section 121(d) defines 'tax dues' as 'amount of duty', and Section 123 defines 'tax dues' as 'amount of duty' being disputed. Section 129 provides immunity from further duty, interest, or penalty. While redemption fine is not explicitly mentioned in Section 129(1)(a), clarifications from the Central Board of Indirect Taxes and Customs and a press note dated August 22, 2019, indicated a total waiver of interest, penalty, and fine. The Court distinguished the reliance placed by the respondents on paragraph 10 of the Gujarat High Court's decision in Synpol Products Pvt. Ltd., stating it pertained to the definition of 'amount in arrears' (Section 121(c)), which was not applicable in this case. The Court emphasized that rejection orders must be tested on their recorded grounds, and arguments or replies cannot add new reasons. Therefore, the ground of rejection was deemed bad in law.

Facts

The petitioner, Juice Electricals Pvt. Ltd., challenged the rejection of its declaration filed under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme). The rejection pertained to a show cause notice dated March 27, 2017, which sought confiscation of goods worth Rs.10,06,82,932/- and imposition of penalty under Rule 25 of the Central Excise Rules, 2002. The petitioner had previously filed a declaration for another show cause notice dated May 2, 2019, which was accepted. The SVLDR Scheme was introduced to settle pending disputes. The petitioner's declaration for the March 27, 2017 notice was initially processed, with the Designated Committee issuing Form SVLDRS-2 calculating Nil duty payable. However, the declaration was later rejected on December 9, 2019, and again on December 30, 2019, on the grounds that confiscation of goods and redemption fine were not covered by the Scheme.

Key Issues

1. Whether the rejection of the petitioner's declaration under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, on the ground that redemption fine is not covered by the Scheme, is legally sustainable? (Question of law, turning on the interpretation of the SVLDR Scheme, particularly Sections 121(d), 123, and 129). Petitioner's contention: The petitioner argued that the redemption fine is covered by the Scheme, relying on the Bombay High Court's decision in M/s. Esbee Electrotech LLP Vs. Union of India. They sought allowance of the petition as per prayer clauses (a) and (b). Respondents' contention: The respondents relied on the Gujarat High Court's decision in Synpol Products Pvt. Ltd. Vs. Union of India, arguing that redemption fine forms part of the duty and should be included in the calculation under the Scheme. They conceded that this specific reason was not recorded in the rejection communication or their reply.