IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 20.07.2011 CORAM: THE HONOURABLE MR. JUSTICE N. KIRUBAKARAN W.P.No.4711 of 2011 & M.P.No.1 of 2011 M/s.Swasthik Tobacco Factory, Represented by its Managing Partner, Mrs.A.C.Dharmadevi, 265, Sethu Rastha, Vedaranyam – 641 810. Nagapattinam District. .. Petitioner Vs. 1.The Customs and Central Excise Settlement Commission, Additional Bench, Narmadha Block, 2nd Floor, Custom House, No.60, Rajaji Salai, Chennai – 600 001. 2.The Commissioner of Central Excise, No.1, Williams Road, Cantonment, Trichy – 620 001. .. Respondents Prayer: This Writ Petition is filed under Article 226 of the Constitution of India to issue a Writ of Certiorari, to quash the order of the first respondent dated 03.02.2011 in C.in.V/15/39- 42/2004-SC. For Petitioner : Mr.Hari Radhakrishnan For Respondents : Mr.S.Thimmavalavan ---- O R D E R The petitioner has challenged the order of the first respondent Settlement Commission, refusing to waive the interest. The petitioner is a manufacturer of chewing tobacco and it was issued show cause notice on 23.12.2002, demanding duty of Rs.64,08,807/-. An application for settlement was filed and the said application was finally settled by the Commission on 30.09.2005, wherein, the duty was confirmed. Though the benefit of immunity from penalty and prosecution was granted, the interest was levied at the rate of 10% per annum. The petitioner was aggrieved by the order with regard to https://hcservices.ecourts.gov.in/hcservices/ charging of simple interest at the rate of 10% per annum and filed a Writ Petition in W.P.No.7405 of 2006. By order dated 04.01.2011, this Court set-aside the order and remanded the matter to the Settlement Commission to pass appropriate orders regarding waiver of the interest, based on the reasons given by the petitioner. On remand, the matter was again heard and the rate of interest was reduced from 10% p.a. to 9% p.a. Therefore, the petitioner is before this Court, challenging the levying of 9% interest. 2.Mr.Hari Radhakrishnan, learned counsel appearing for the petitioner submits that as per Section 32K of the Central Excise Act, 1944, the petitioner complied with all the requirements. Secondly, he submitted that the bad financial condition due to Tsunami and also on account of ban imposed by the State Government regarding sale and manufacture of chewing tobacco, the petitioner was unable to pay the amount and sought for waiver. The learned counsel relied on the impugned order and submitted that the Commission itself was satisfied that the petitioner had made full and true disclosure of its duty liability and co-operated with the proceedings before it. When that is the position, the Commission should have granted full waiver based on the reasons given by the petitioner. He also pointed out, similarly placed other companies were given full waiver in respect of interest, whereas, the petitioner alone was not given the benefit. 3. Mr.S.Thimmavalavan, learned counsel appearing for the respondents submitted that as per Section 32K of the Central Excise Act, the discretion is vested with the Commission and that has been rightly exercised by the Commission by passing the impugned order by reducing the interest from 10% p.a. to 9% p.a. and the same cannot be interfered by this Court. He relied upon a Judgment of Hon'ble Supreme Court in Union of India v. Ind-Swift Laboratories Ltd. reported in (2011) 4 SCC 635 and a Division Bench Judgment of Gujarath High Court in Gujarat Cypromet Ltd. reported in 2010 (254) E.L.T.455, and submitted that the order has to be read as a whole and part of the order cannot be challenged before the Court. 4. Heard the parties and perused the record. 5. There is a finding of fact recorded by the Commission in para 9.2 of the impugned order, which reads as follows:- "9.2. ....It will appear from the above provision that Settlement Commission can grant the immunity from interest, only if it is satisfied that the applicant has fulfilled following requirements: (i)Co-operated with the Settlement Commission in the proceedings before it and (ii)Has mad a full and true disclosure of his duty liability. In the instant case, the applicant had made the full and https://hcservices.ecourts.gov.in/hcservices/ true disclosure of his duty liability before the Settlement Commission and has also co-operated in the proceedings before the Settlement Commission." From the above, it is clear that the petitioner had complied with the conditions imposed under Section 32K(1) of the Central Excise Act, 1944 and a finding of fact was also rendered by the Commission stating that the petitioner had complied with the requisite conditions. When that is the position, the Commission should have taken into consideration the reasons for immunity from interest given by the petitioner viz., bad financial condition due to Tsunami as well as on account of ban imposed by the State Government on the sale and manufacture of chewing tobacco due to which, the petitioner's business was badly affected. However, the first respondent observed that the grounds pleaded by the petitioner for immunity are not relevant ground under Section 32K of the Central Excise Act, 1944. The Commission cannot mechanically interpret the Section and it should be interpreted based on the circumstances pleaded. It is not denied by the Commission that there was no Tsunami or there was no ban imposed by the State Government on sale and manufacture of chewing tobacco. When two material grounds which cannot be denied by the Commission are made out by the petitioner- Company, the Commission should have taken into consideration of the said facts and ought to have granted immunity from the payment of interest. The Legislature/Parliament would not have perceived the eventuality like Tsunami and the ban of tobacco by the State Government. When those grounds pleaded by the petitioner are material, they should be considered by the Settlement Commission properly while deciding the immunity regarding the payment of interest. Therefore, the reasoning given by the Settlement Commission for denying the immunity from interest is erroneous and the same is liable to be set-aside. 6.The Judgment relied upon by the learned counsel for the respondents, does not help the respondents in any way. The Division Bench Judgment of the Gujarath High Court in Gujarat Cypromet Ltd. reported in 2010 (254) E.L.T.455 is concerned, that the order has to be challenged as a whole and not in part. However, when an order has been passed with two limbs, the petitioner would challenge the adverse portion only and the petitioner cannot be expected to challenge the favourable portion. 7.There is no dispute / quarrel with regard to the dictum laid down by the Hon'ble Supreme Court in Union of India v. Ind-Swift Laboratories Ltd. reported in (2011) 4 SCC 635, that a finding of fact recorded by the Settlement Commission are not open for examination. In this case, two findings of facts were recorded by the Settlement Commission, viz., 1) the petitioner made full disclosure and 2) the petitioner co-operated fully with the Commission https://hcservices.ecourts.gov.in/hcservices/ and therefore the said findings are not interfered with and in fact it supports the petitioner. What has been interfered with by this Court is the manner in which the discretion given under Section 32K of the Central Excise Act, 1944, was exercised without properly appreciating the prevailing circumstances under which the petitioner was placed. Therefore, the judgment fully supports the petitioner's case. 8.One another factor is that the similarly placed persons were already given total immunity from payment of entire interest, as in the case IN RE: K.B.STEELS reported in 2003 (159) E.L.T. 1090 (Sett. Comm) and IN RE: LUMAX SAMLIP INDUSTRIES LTD. reported in 2007 (220) E.L.T.669 (Sett.Comm.) Therefore, following the same also, the petitioner is entitled to the relief. 9.Accordingly, the impugned order is set-aside and the petitioner is granted fully immunity as prayed for. Consequently, connected miscellaneous petition is closed. No costs. r n s Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar To 1.The Customs and Central Excise Settlement Commission, Additional Bench, Narmadha Block, 2nd Floor, Custom House, No.60, Rajaji Salai, Chennai – 600 001. 2.The Commissioner of Central Excise, No.1, Williams Road, Cantonment, Trichy – 620 001. + 1 cc to M/s. Radhakrishnan, Advocate SR No.53607 + 1 cc to Mr. S. Thirumavalavan, Advocate SR No.43284 SSK(CO) SR/23.9.2011 W.P.No.4711 of 2011 https://hcservices.ecourts.gov.in/hcservices/