Gaurav Jain v. Union of India & Ors.

the Central Excise Rules,

2002. b) The finished goods valued at Rs. 17,99,130/- 'Drillman' brand packing material valued at Rs.7,650/found at the premises of M/s Gaurav Enterprises which were clandestinely removed from the factory of M/s S.K. Jain & Co. should not be confiscated under Rule 25 of the Central Excise Rules, 2002. c) Penalty under Rule 25 of the Central Excise Rules, 2002 should not be imposed upon it for the aforesaid omission and commission

17. Further, M/s. Swastik Drilling Co. Ltd., 2760/7, Hamilton Road, Mori Gate, Delhi-6 through its Director, Sh. Satish Jain is hereby called upon to show cause to the Assistant Commissioner of Central Excise, Division-II, Milan Cinema Complex, Karam Pura, New Delhi-110 008 as to why: a) The finished goods valued at Rs 28,880/ should not be confiscated under Rule 25 of the Central Excise Rules, 2002. b) Penalty under Rule 26 of the Central Excise Rules, 2002 should not be imposed upon it for the aforesaid omission and commission. c) Penalty under Rule 26 of the Central Excise Rules, 2002 should not be imposed upon Sh. Satish Jain, Director of M/s. Swastik Drilling Co. Ltd., 2760/7, Hamilton Road, Mori Gate, Delhi-6

18. The Noticees to this show cause notice are further directed to produce all the evidence(s) upon which he/they intent to rely in support of his/their defence at the time of showing cause. He/they should also clearly mention in his/their written reply/replies as to whether he/they wish to be heard in person or through his/then legal representative before the case is adjudicated

19. If no cause is shown to this notice against the action to be taken within the time above, or he/they or his their legal representative do not appear before the adjudicating authority at the time of hearing, the case will be decided exparte on the basis of the facts already available on the record.

20. This show cause notice is issued without prejudice to any other action that may be taken against the above named persons or any other firm(s)/ companies/ Person(s) whether mentioned here-in-above, or not under the Central Excise Law or any other law for the time being in force.

18. This show cause notice is being issued for the seized goods only and further investigations are in progress. Show Cause Notice for the extended period under Sub- Section (4) of Section 11A of Central Excise Act, 1944 Including the appropriation of the amount tendered voluntarily shall be issued separately.

25. All documents relied upon to the Show Cause Notice are enclosed as RUD's. A list of RUDs is also annexed with the Show Cause Notice.”

6. Thereafter, another show cause notice dated 22nd July, 2014 (hereinafter, ‘SCN-II’) was issued, proposing demand and recovery of central excise duty to the tune of Rs.22,75,126/- from M/s. S. K. Jain & Co., the proprietary concern of Mr. Puneet Jain.

7. The central excise duty amounting to Rs.2,22,373/- in respect of the goods seized at the premises of M/s. Gaurav Enterprises, which were cleared from the factory premises of M/s. S. K. Jain & Co. was also taken into account while arriving at the proposed central excise duty demand of Rs.22,75,126/- The amount of Rs.15,00,000/- recovered during investigations, was proposed to be appropriated against this proposed demand. The said SCN-II was issued in the following terms:

Commissionerate, C.R. Building, J.P. Estate, New Delhi- 110109 as to why:

(i) Central Excise duty amounting to Rs. 22,75,126/-(BED-

Rs. 19,37,128/-, Edu. Cess- Rs. 2,25,331/- & S.H.E. Cess Rs. 1,12,667/-) as detailed in para 18.[1] above should not be demanded and recovered from them under Section 11A of the Central Excise Act, 1944;

(ii) Interest at appropriate rate should not be charged and recovered from them under Section 11AA of the Central Excise Act, 1944;

(iii) The Central Excise Duty amounting to Rs. 15,00,000/already deposited by them should not be appropriated against the Central Excise duty liability at (i) above;

(iv) Penalty should not be imposed upon Sh. Puneet Jain,

Prop. of M/s. S. K. Jain & Co. in terms of Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002 for the aforesaid contravention of the provisions of Central Excise Act, 1944 and Rules made thereunder.

22. Further, M/s Gaurav Enterprises, 2778/8, Hamilton Road, Mori Gate, Delhi are hereby called upon to show cause to the Additional Commissioner, In-charge of Div-II, Central Excise, Delhi-I, C.R. Building, I.P. Estate, New Delhi-110 109 as to why: i) Penalty should not be imposed upon them in terms of Rule 26 of the Central Excise Rules, 2002 for their connivance in the said evasion of central excise duty and hence contravention of the provisions of Central Excise Act, 1944 and Rules made thereunder.

23. Further, Shri Satish Kumar Jain, Prop. M/s Reliance International, Darya Ganj, Delhi and Director M/s Swasti Drilling Co., 2778/8, Hamilton Road, Mori Gate, Delhi is hereby called upon to show cause to the Additional Commissioner, In-charge of Div-II Central Excise, Delhi-I, C.R. Building, I.P. Estate, New Delhi - 110 109 as to why: i) Penalty should not be imposed upon him in terms of Rule 26 of the Central Excise Rules, 2002 for his connivance in the said evasion of central excise duty by M/s S.K. Jain & Co. and hence contravention of the provisions of Central Excise Act, 1944 and Rules made thereunder.

24. The Noticees to this show cause notice are further directed to produce all the evidence(s) upon which he/they intent to rely in support of his/their defense at the time of showing cause. He/they should also clearly mention in his/their written reply/replies as to whether he/they wish to be heard in person or through his/their legal representative before the case is adjudicated.

25. If no саusе is shown to this notice against the action to be taken within the time above, or he/they or his their legal representative do not appear before the adjudicating authority at the time of hearing, the case will be decided exparte on the basis of the facts already available on the record.

26. This show cause notice is issued without prejudice to any other action that may be taken against the above named persons or any other firm(s)/ companies/ Person(s) weather mentioned here-in-above or not under the Central Excise Law or any other law for the time being in force

27. All documents relied upon to the Show Cause Notice are enclosed as RUD's. A list of RUDs is also annexed with the Show Cause Notice.”

8. During the pendency of the adjudication of SCN-I & SCN-II, the SVLDR Scheme was introduced by the Government vide Chapter V of Finance Act, 2019. Vide Notification 04/2019- Central Excise- NT, the said scheme was brought into effect from 1st September, 2019.

9. The said Scheme was meant to give benefit to persons who were having disputes or pending litigation in respect of non-payment of excise duty and other penalties. The Scheme’s purpose was to give some amnesty in case of legacy disputes.

10. Section 124 of the SVLDR Scheme provided for various reliefs for payment under either show cause notices or orders which have already been passed before the SVLDR Scheme came into effect.

11. After going through the provisions of the SVLDR Scheme, the Petitioners stand is that that they are eligible to avail the benefit thereof. Thus, the Petitioners applied for resolution of the disputes with regard to both SCN-I & SCN-II, under the SVLDR Scheme vide their respective applications dated 16th November, 2019.

12. It is the case of the Petitioners that upon applying under the SVLDR Scheme, discharge certificate dated 9th December, 2019 in Form SVLDR Scheme-IV with respect to the SCN-II was issued to them. Hence, the proceedings emanating from SCN-II stood settled in terms of the SVLDR Scheme.

13. However, the declaration in terms of form SVLDR Scheme- I filed by the Petitioners with respect to SCN-I was rejected by the designated committee by stating as under: "The SCN issued for confiscation of goods is not eligible under the scheme."

14. In the present petitions, the case of the Petitioners is that the cases involving confiscation of goods are eligible to avail the benefits of SVLDR Scheme and thus, their application with respect to SCN-I ought to be considered by the Designated Committee in accordance with law and discharge certificates deserve to be issued in respect thereof. It is further argued that since SCN-I & SCN-II pertain to the same subject matter and the discharge certificate has been issued in respect of SCN-II, thus, SCN-I would also stand covered under the SVLDR Scheme. Hence, the Petitioners pray for reconsideration of declaration in SVLDR Scheme-I form filed with respect to SCN-I and issuance of a discharge certificate in respect thereof.

15. On the other hand, it is submitted on behalf of the Respondents that cases involving confiscation of goods are not covered under the SVLDR Scheme, unless the issue of redemption fine has been adjudicated. In this regard, reliance is placed upon para 3 of reference dated 20th December, 2019 of Ministry of Finance, CBIC, wherein it is categorically stated as under:

16. Accordingly, it is the submission of the Respondents that the SCN-I was issued to the Petitioners proposing confiscation of the seized goods. Since, the said show cause notice had never been adjudicated, there was no finding with regard to the quantum of redemption fine to be imposed upon the Petitioners in order to allow release of the goods.

17. Hence, it is the stand of the Respondents that in a scenario where such a show cause notice proposing confiscation has not been adjudicated, it will not be possible for the designated committee to issue a discharge certificate.

18. The Court has considered this matter. The SVLDR Scheme is a scheme which was meant to provide some relief to tax payers whose dues may have been pending for a very long time or where there are disputes in respect of payment of Excise dues. One of the purposes of the SVLDR Scheme is to resolve the litigations and cases which were pending and were also burdensome, both to the taxpayers and to the Department. In terms of the said SVLDR Scheme, the definitions of the following terms are relevant and are set out below:

and the cess payable under the indirect tax enactment; (e) “amount payable” means the final amount payable by the declarant as determined by the designated committee and as indicated in the statement issued by it, in order to be eligible for the benefits under this Scheme and shall be calculated as the amount of tax dues less the tax relief;

123. For the purposes of the Scheme, “tax dues” means - 123 (a)…… (b) where a show cause notice under any of the indirect tax enactment has been received by the declarant on or before the 30th day of June, 2019, then, the amount of duty stated to be payable by the declarant in the said notice: Provided that if the said notice has been issued to the declarant and other persons making them jointly and severally liable for an amount, then, the amount indicated in the said notice as jointly and severally payable shall be taken to be the amount of duty payable by the declarant;

124. (1) Subject to the conditions specified in sub-section (2), the relief available to a declarant under this Scheme shall be calculated as follows:— (a) where the tax dues are relatable to a show cause notice or one or more appeals arising out of such notice which is pending as on the 30th day of June, 2019, and if the amount of duty is,—

(i) rupees fifty lakhs or less, then, seventy per cent. of the tax dues;

(ii) more than rupees fifty lakhs, then, fifty per cent. of the tax dues;

(b) where the tax dues are relatable to a show cause notice for late fee or penalty only, and the amount of duty in the said notice has been paid or is nil, then, the entire amount of late fee or penalty;

(c) where the tax dues are relatable to an amount in arrears and,—

(i) the amount of duty is, rupees fifty lakhs or less, then, sixty per cent. of the tax dues;

(ii) the amount of duty is more than rupees fifty lakhs, then, forty per cent. of the tax dues;

(iii) in a return under the indirect tax enactment, wherein the declarant has indicated an amount of duty as payable but not paid it and the duty amount indicated is,— (A) rupees fifty lakhs or less, then, sixty per cent. of the tax dues; (B) amount indicated is more than rupees fifty lakhs, then, forty per cent. of the tax dues;

(d) where the tax dues are linked to an enquiry, investigation or audit against the declarant and the amount quantified on or before the 30th day of June, 2019 is—

(i) rupees fifty lakhs or less, then, seventy per cent. of the tax dues;

(ii) more than rupees fifty lakhs, then, fifty per cent. of the tax dues;

(e) where the tax dues are payable on account of a voluntary disclosure by the declarant, then, no relief shall be available with respect to tax dues. (2) The relief calculated under sub-section (1) shall be subject to the condition that any amount paid as predeposit at any stage of appellate proceedings under the indirect tax enactment or as deposit during enquiry, investigation or audit, shall be deducted when issuing the statement indicating the amount payable by the declarant: Provided that if the amount of predeposit or deposit already paid by the declarant exceeds the amount payable by the declarant, as indicated in the statement issued by the designated committee, the declarant shall not be entitled to any refund. 127(8 )- On payment of the amount indicated in the statement of the designated committee and production of proof of withdrawal of appeal, wherever applicable, the designated committee shall issue a discharge certificate in electronic form, within thirty days of the said payment and production of proof.

129. (1) Every discharge certificate issued under section 126 with respect to the amount payable under this Scheme shall be conclusive as to the matter and time period stated therein, and— (a) the declarant shall not be liable to pay any further duty, interest, or penalty with respect to the matter and time period covered in the declaration; (b) the declarant shall not be liable to be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration;

(c) no matter and time period covered by such declaration shall be reopened in any other proceeding under the indirect tax enactment. (2) Notwithstanding anything contained in sub-section (1),— (a) no person being a party in appeal, application, revision or reference shall contend that the central excise officer has acquiesced in the decision on the disputed issue by issuing the discharge certificate under this scheme; (b) the issue of the discharge certificate with respect to a matter for a time period shall not preclude the issue of a show cause notice,—

(i) for the same matter for a subsequent time period; or

(ii) for a different matter for the same time period;

(c) in a case of voluntary disclosure where any material particular furnished in the declaration is subsequently found to be false, within a period of one year of issue of the discharge certificate, it shall be presumed as if the declaration was never made and proceedings under the applicable indirect tax enactment shall be instituted.”

19. A perusal of the above provisions of the SVLDR Scheme would show that the same applies to Central Excise Duty and under Section124 of the Scheme, different amounts are prescribed, which if paid, would result in a discharge certificate being issued to the tax payer stating that their liability stands discharged.

20. Further a reading of Section 123 (b) of the SVLDR Scheme would show that `tax dues’ in terms of the said provision would mean the duty payable in a show cause notice issued prior to 30th June 2019. In the present case, both SCNs have been issued to the Petitioners prior to the said date. Thus, the SCNs had raised a demand which was pending and yet to be adjudicated.

21. Various amounts which are prescribed in the SVLDR Scheme are amounts relatable to the show cause notices, tax dues relatable to a show cause notice for late fee or penalty or relatable to amount in arrears. Different percentages have been fixed, which if paid in accordance with the Scheme, under Section 129, the discharge certificate is to be issued by the Department.

22. Section 124(2) of the SVLDR Scheme, however, makes it clear that if the tax payer has deposited any amounts as pre-deposit at the appellate stage, it would be deducted from the amount payable. However, the tax payer would not be entitled for any refund of such amount.

23. The terminology that Section 121(1)(a) of the SVLDR Scheme uses is that duty, interest and penalty would stand waived under the scheme. The question that then arises for consideration is whether redemption fine would constitute duty, interest or penalty.

24. A perusal of form SVLDR Scheme-I would show that the only amount mentioned even in this form, in cases where there is pending litigation, is in respect of duty/tax/cess and then amount of penalty, amount of late fee. However, there is no mention of redemption fine in this form as well.

25. A further reading of the FAQs/ the flyer published by the CBIC would show that in the said document, there is a clear benefit mentioned in the following words: “Benefits under the Scheme: ●Total waiver of interest, penalty and fine ●Immunity from prosecution ●Cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is Rs. 50 lakh or less and 50% if it is more than Rs. 50 lakh.” The said flyer of the SVLDR Scheme, as published by the CBIC can also be accessed via the following URL: https://cbic-gst.gov.in/pdf/sabkavishwas/Sabka-Vishwas-Scheme-English.pdf

26. The issue that has arisen for consideration in the batch of cases, which the present petitions are a part of, is whether in cases where goods are liable for confiscation or any seizure is effected, such cases would be covered under the SVLDR Scheme. The further question is whether in cases where redemption fine is imposed for release of confiscated goods, the Scheme would apply or not and if the person deposits the duty in terms of Section 124 of the SVLDR Scheme, a discharge certificate would be liable to be issued.

27. Under the Central Excise Act, 1944, Section 12F and Section 34 provides as under: “12F. Power of search and seizure – (1) Where the Joint Commissioner of Central Excise or Additional Commissioner of Central Excise or such other Central Excise Officer as may be notified by the Board has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any Central Excise Officer to search and seize or may himself search and seize such documents or books or things. [(2) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of Section 165 of the said Code shall have effect as if for the word “Magistrate”, wherever it occurs, the words [Principal Commissioner of Central Excise or Commissioner of Central Excise] were substituted.]]

34. Option to pay fine in lieu of confiscation.— Wherever confiscation is adjudged under this Act or the rules made thereunder, the officer adjudging it, shall give the owner of the goods an option to pay in lieu of confiscation such fine as the officer thinks fit. [34-A. Confiscation or penalty not to interfere with other punishments.—No confiscation made or penalty imposed under the provisions of this Act or of any rule made thereunder shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of this Act or under any other law.]”

28. A perusal of the above provisions of the Central Excise Act, 1944 would show that whenever there is confiscation due to non-payment of excise duty, seizure of relevant material can be done under Section 12F and a fine would have to be paid by the tax payer for release of the goods which have been confiscated. Such a fine is called the redemption fine. Hence, the seizure and/or redemption fine is nothing but a consequence of non-payment of excise duty. The same cannot be considered as a separate category of penalty, insofar as the applicability of the SVLDR Scheme is concerned.

29. In light of the above, it is noted that the case of the Respondents that the SCN-I, which does not compute any redemption fine upon the Petitioners, cannot be given shelter under the SVLDR Scheme, is set up relying upon the clarification dated 20th December, 2019 of Ministry of Finance, CBIC. However, it is relevant to note that the said clarification issued by the CBIC has been held to be contrary to the intent and object of the SVLDR Scheme in Synpol Products Pvt. Ltd. v. Union of India 2020 (374) E.L.T. 851 (Guj.), wherein the Gujarat High Court has held as under: “9.10. With regard to the clarification issued by the respondent-Board in communication dated December 20, 2019 is also contrary to the intent and object of the Scheme which is discussed at length in paras 11 and 12 of the order dated December 24, 2019 passed by the Coordinate Bench of this court, and we therefore concur on such prima facie opinion. Paras 11 and 12 of the order dated December 24, 2019 read thus: "11. It may be further noted that in the communication dated December 20, 2019 of the Board, the contents whereof have been reproduced hereinabove, it has been stated that when a person gets immunity from prosecution, he also gets waiver of such fine for the offences under section 9 of the Central Excise Act, 1944. Thus, it is not the case of the Board that the Scheme does not provide for waiver of fine, but only that it does not provide for waiver of redemption fine. Testing the explanation put forth by the Board in the context of the relevant statutory provisions, section 9 of the Central Excise Act, 1944 specifies the categories of offences and the punishment thereunder, which may be punishable with imprisonment and fine or imprisonment or fine. Thus, the question of imposing fine arises only upon conviction for an offence specified in section 9 of the Central Excise Act. However, clause (b) of section 125 of the Finance Act, clearly excludes persons who have been convicted for any offence punishable under any provision of the indirect tax enactment for the matter for which he intends to file declaration. As a necessary corollary therefore, it follows that the Legislature would not have contemplated waiver of fine under section 9 of the Central Excise Act, 1944. The only other fine envisaged under the Central Excise Act, 1944 is fine in lieu of confiscation/redemption fine. Under the circumstances, when the Board has issued FAQs, press notes and flyers stating that the Scheme grants waiver of interest, penalty and fine, it appears that the same would be relatable to redemption fine, inasmuch as, it is the only other fine contemplated under the Act. Besides, as noticed earlier, persons whose cases involve confiscation/ fine in lieu of confiscation are not placed in the categories of persons enumerated in section 125 of the Finance Act, who are not eligible to file declarations thereunder.

12. By the communication dated December 20, 2019, the Board has stated that in case where redemption fine has been imposed and quantified, the discharge certificate can be issued only after settlement of redemption fine, namely payment of redemption fine. Therefore, it is not the case of the Board that declarations involving redemption fine cannot be accepted. This court, however, is prima facie of the view that the stand of the Board that in case where redemption fine is imposed and quantified, discharge certificate can only be issued after settlement of redemption fine, is not in consonance with the Scheme which contemplates putting an end to the matter. "

30. Hence, in light of the fact that the clarification relied upon by the Respondents has already been set aside by the Gujarat High Court and the SLP being SLP (C) No. 449/2021 against this decision has been dismissed, the same can no longer be a ground to deny the issuance of discharge certificate to the Petitioners.

31. In addition to that, a perusal of the SCN-I & SCN-II clearly shows that SCN-II had been issued in continuation to the proceedings emanating from SCN-I and the same is also clearly stipulated under SCN-I. Moreover, the appropriation of the amount of Rs. 15,00,000/- was also set out in SCN-1, which has been given adjustment qua SCN-II. Since the two SCNs arise from the same proceedings and the demands for penalty, excise duty raised in both SCNs are borne out of the same investigation constituting the search, seizure and confiscation of the goods of the Petitioners, it would be incorrect to issue the discharge certificate with respect to only one SCN i.e. SCN-II.

32. Further, under the SVLDR Scheme, Section124 provides that only the part of the excise duty has to be paid, depending upon the amount of tax due. Hence, the same can be either 40%, 50%, 60% or 70% of the tax dues and there is no requirement to pay either the balance tax alongwith penalty or any interest.

33. In fact, the various judgments which have been cited by ld. Counsel for the Petitioner clearly cover this issue and the Court need not reinvent the wheel. In the decision rendered by the Allahabad High Court in M/s Jay Shree Industries Writ Tax No. 832 of 2020 which was considering this very scheme, the rationale behind the Scheme has been set out as under:

absence of any contrary statutory definition of the word 'penalty' or other specific exclusion of 'redemption fine' from the consequences of issuance of a Discharge Certificate (under section 129 of the Scheme), undoubtedly, the word 'penalty' appearing in section 129 of the Scheme includes, within its plain ambit, both, a penalty in personam and a penalty in rem. Here, both, personal penalty and the penalty in rem arose from a single transaction. Clearly, both penalties are part of the same dispute, for a common period. It is so because even according to the revenue both those penalties were imposed vide the Order-in- Original 2/A/Ayukt/M/97 dated 14.08.1997. Though that order has not been shown to us, yet it is not the case of the revenue that the 'redemption fine' in question was imposed on the petitioner, independent of that order. The revenue only contends that by its very nature, 'redemption fine' is not a 'penalty' at all. That submission is contrary to the law laid down by the Supreme Court. We have no hesitation to hold, 'redemption fine' is a kind or type of 'penalty' under the Central Excise Act, 1944. xxxx

35. As noted above, the Scheme being a piece of reformative legislation, 'redemption fine' that is a penalty in rem must dearly be shown to have been excluded from the meaning of the word 'penalty' used in section 129 of the Scheme, before it may be inferred that a Discharge Certificate may be issued only upon payment of the 'redemption fine'/penalty in rem. In absence of any provision to exclude 'redemption fine'/ penalty in rem from the benefits of the Discharge Certificate contained in section 129 of the Scheme, no such inference may be drawn, against the plain language and intent of the Scheme. In absence of any express exclusion created by the Scheme, 'redemption fine' would always ( ]ain a 'penalty' covered under the meaning of that word used in section 129 (1) (a) read with section 121 (u) of the Scheme. Thus, we have reached the same conclusion on the point as the Gujarat High Court, but for reasons of our own.

36. That being the law, the further objection of the revenue based on the rule of estoppel is devoid of any merit. In Commissioner of Income Tax (Central) v. B.N. Bhattacharjee & Anr., (1979) 4 SCC 121 = 2002- TIOL-2003-SC-IT, it was clearly opined that estoppel does not operate against a statute. The Supreme Court had laid down:

We have no reason to apply a different yardstick to allow the respondent authorities to overlook the clear and binding statutory provision, in favour of the concession claimed to have been made by the petitioner. The concession, if any, made by the petitioner in the Discharge Certificate proceedings - to deposit the 'redemption fine', would remain contrary to the express provision of law and therefore unenforceable and of no consequence.”

34. Similarly, in Synpol Products Pvt. Ltd. v. Union of India 2020 (374) E.L.T. 851 (Guj.), the Gujarat High Court has taken a similar view to the following effect:

under the Scheme. Therefore, the interpretation made by the Board in the communication dated 20-12-2019 in order to consider the declaration made by the declarant, the payment of redemption fine is prerequisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. Moreover, the declarant is required to include redemption fine as part of the duty demanded, so as to calculate the amount in arrears as per Section 121 (c) of the Scheme.

11. The Supreme Court in the case of K.P. Varghese (supra) has laid down that the Rule of construction by reference to the principle of 'contemporanea expositio est optima et fortissima in lege' which is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous. Therefore, when the Central Board of Indirect Taxes has issued FAQs, press, notes and flyers by way of explaining the scheme providing waiver of interest, penalty and fine and immunity from prosecution, then case involving confiscation/redemption fine cannot be excluded under the Scheme, as such explanation by the Board provides legitimate aid in the constructions and interpretations of the provision of the Scheme.

12. In view of the foregoing reasons, the petition succeeds and is accordingly allowed. The declaration filed by the petitioners and other similarly situated persons are required to be considered by the designated committee without payment of redemption fine by the declarant. The impugned orders passed by the designated committee are therefore quashed and set aside. As observed by the Coordinate Bench of this court, the order passed in this petition would also apply to the similarly situated declarants who have not approached this Court, in order to reduce the multiplicity of proceedings. Accordingly, this order would apply to the cases of all the declarants involving confiscation/redemption fine. In such circumstances, the respondent authorities are directed to issue necessary discharge certificate under Section 129 of the Finance Act, 2019 to the petitioners subject to fulfilment of all other conditions as per the Scheme. Rule is made absolute to the aforesaid extent, with no order as to costs.”

35. The SLP being SLP (C) No. 449/2021 against this decision of the Gujarat High Court has been dismissed. Subsequently, this very view has been followed in respect of the SVLDR Scheme by the Punjab and Haryana High Court in M/s Shoe Sales Corporation CWP-1493-2021 & CWP-1496-2021 where the decision in Synpol Products Pvt. Ltd. (supra) and in M/s Jay Shree Industries (supra) have been followed in the following terms: “The petitioner-M/s Shoe Sales Corporation is seeking writ of certiorari for setting aside orders of the Designated Committee made under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (hereinafter referred to as SVLDR Scheme) whereby the application of the petitioner has been rejected vide letter/order dated 23. 12 2010 (Annexure P-5) by observing as under- "The said application was filed with respect to your appeal filed before Hon'ble CESTAT vide appeal no. E/52743/2015 EX-(DB) which is in pending state. However, as per concerned O-I-O NO. 02/TS/D-III/2014-15 dated 19.05.2014, the matter involves Redemption Fine. The amount of fine in lieu of confiscation of goods has not been proposed for relief in the Sabka Vishwas Scheme as the scheme encompasses only the matters in which demand of Duty, Interest and Penalty are involved. Accordingly your SVLDRS-1 application having ARN LD1410190000014 dated 14.10.2019 has been rejected" The benefits under the SVLDR Scheme has been reflected in Annexure P-4, which are as under- ● Total waiver of interest, penalty and fine. ● Immunity from prosecution. ● Cases pending in adjudication or appeal, a relief of 70% from the duty demand if it is Rs. 50 Lakh or less and 50% if it is more than Rs. 50 Lakh The same relief for cases under investigation and audit where the duty involved is quantified on or before 30th June, 2019. ● In case of an amount in arrears, the relief offered is 60% of the confirmed duty amount if the same is Rs. 50 Lakh or less and it is 40% in other cases. ● In cases of voluntary disclosure, the declarant will have to pay full amount of disclosed duty. Leamed counsel for the petitioner while referring to letter/order dated 23.12.2019 (Annexure P-5) has argued that his application under the SVLDR Scheme was made on 14.10.2019 against the demand of penalty of Rs. 1,98,597/- and redemption fine of Rs.9,64,062/- (Annexure P-3). While rejecting his application, it was observed that since the matter involves redemption of fine and this fine was in lieu of confiscation of goods which had not been proposed for relief in the said scheme as the said scheme only relates to the matters involving demand of duty, interest and penalty. He has referred to a judgment passed by the High Court of Gujarat in a case titled as Synpol Products Pvt. Ltd. Vs. Union of India, 2020 (32) G.S.T.L 705 (Guj.) (Annexure P-6). While interpreting the contents of the Sabka Vishwas Scheme, 2019, it was held that when the Central Board of Indirect Taxes and Customs had issued flyers, press release and FAQs, it was clearly stated that there would be full waiver of interest, fine and penalty and also complete immunity from prosecution and the cases involving redemption of fine and confiscation cannot be excluded under the said scheme. In this backdrop, the explanation given by the Board with respect to redemption fine cannot be treated separately than the amount of duty under the scheme. The term ‘fine' mentioned in the Board's flyers, press release and FAQs cannot be fine imposable under Section 9 of the Central Excise Act, 1944 and the fine mentioned in flyers, press release and FAQs is redemption fine only, As per Section 125 of the Scheme, a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine. The declarant is required to include redemption fine as part of the duty demanded so as to calculate the amount in arrears as per Section 121 (c) of the Scheme. Leamed counsel for the petitioner has also stated that Special Leave to Appeal (C) No. 449 of 2021 against the aforesaid judgment has been dismissed on 03.03.2021 and the judgment has attained finality. He has referred another judgment of Allahabad High Court passed in Writ Tax No. 832 of 2020 M/s. Jay Shree Industries Vs. Union of India 838 of 2020, allowed on 06.08.2021 whereby the application under the SVLDR Scheme had been rejected by the designated committee on 17.11.2020 on the ground that there was an outstanding amount of Rs.30 lacs of redemption fine and the application could not be considered unless the petitioner paid that amount and in this backdrop, discharge certificate could not be issued under Section 129 of the Scheme. xxxxx Keeping in view the aforesaid judgment passed by Gujarat High Court, upheld by the Hon'ble Supreme Court after dismissal of Special Leave to Appeal (C) No. 449 of 2021 and the object of the SVLDR Scheme, writ petitions are allowed and the orders of the designated committee are being set aside. The matter is remanded back to designated committee to consider the case of the petitioner(s) as per the SVLDR Scheme and redetermine payable including redemption fee/fine under the SVLDR Scheme by passing fresh order. The designated committee will give six months' time after making assessment under the SVLDR Scheme so that the petitioner(s) can deposit the amount in time.”

36. In Messers Espee Electrotech LLP Writ Petition No. 7653 of 2021, the Bombay High Court has also categorically held that redemption fine is nothing but a duty and the same would be waived upon the payment of the amount in terms of the SVLDR Scheme: “3.[3] It is the contention of Petitioner that the issue of waiver of redemption fine is covered by SVLDR Scheme or not is no more res integra in the light of the decision of (i) the Gujarat High Court in Synpol Products Pvt. Ltd. vs. Union of India (374) E.L.T. 851 and SLP has also been dismissed by the Supreme Court, (ii) the Allahabad High Court in M/s. Jay Shree Industries vs. Union of India & Anr. 2021 (8) TMI 446 and (iii) this Court in HP Adhesives Limited vs. Union of India & Ors. WP No. 3743 of 2021 dtd. 20th February 2023. Petitioner further submitted that under the Scheme what is required to be deposited is the amount of tax dues relating to the duty and, therefore, Respondents are not justified in rejecting the application since once the duty is settled under the scheme, waiver of penalty and fine is consequential. xxx 3.[7] Assuming we accept the contention of respondents that "redemption fine" is nothing but a "duty" then even in that case, the SVLDR Scheme grants immunity/waiver from such "redemption fine" if the basic excise duty is paid as per the Scheme. This is so because under Section 124, what is required to be paid is the prescribed percentage of "tax dues" which is defined in Section 123 to mean the amount of duty disputed and the "amount of duty" is further defined in Section 121 (d) to mean the amount of "central excise duty". Therefore, when Section 124 speaks of payment required to be made of the tax dues, it is certain percentage of central excise duty which entitles the applicant to waiver/immunity under Section 129 of the SVLDR Scheme. Therefore, payment has to be of basic excise duty and not redemption fine to avail benefit of SVLDR Scheme. Admittedly, "redemption fine" cannot be considered as "central excise duty". Section 129 (1) (a) which provides immunity/waiver states that the declarant shall not be liable to pay any further duty, interest or penalty. The phrase "further duty" by accepting the contention of respondents would cover redemption fine also. To put it simply, what is required to be paid for availing benefits of the scheme is the prescribed percentage of central excise duty which is payable as per Section 3 of the Central Excise Act and when Section 129(1)(a) which grants immunity/waiver refers to "any further duty", it would mean any payment other than central excise duty and, therefore, by accepting the contention of respondents, "redemption fine" would fall within the phrase "any further duty". Therefore even on this count, the rejection of the application by respondents is not justified”

37. In Juice Electricals Ltd. Writ Petition No. 12845 of 2023 the following view was expressed by the Court:

fine and, therefore the benefit of the scheme gets extended to the redemption fine also. The relevant paragraphs 3.5, 3.[6] & 3.[8] of the decision in the case of M/s. Esbee Electrotech LLP (supra) read as under:- 3.[5] The benefit of SVLDR Scheme is available, if the applicant pays "tax dues" as per Section 124 of SVLDR Scheme. Section 123 defines "tax dues" for the purpose of the scheme to mean the "amount of duty" which is being disputed in the appeal. The phrase "amount of duty" is defined in Section 121 (d) to mean 'the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment'. Therefore, on a conjoint reading of Sections 124, 123 and 121

(d) of SVLDR Scheme what is required to be paid for availing the benefit of the Scheme is the amount of certain percentage of the amount of excise duty and not the amount of redemption fine. Once the applicant pays the amount of excise duty as required under the Scheme, the applicant is not liable to pay any further duty, interest or penalty with respect to the matters covered in the declaration. Therefore, in our view, the reasons given by Respondents in the application for rejecting the application that Petitioner is required to pay the redemption fine is not borne out from any provisions of SVLDR Scheme. 3.[6] Once the applicant pays the amount of duty as per Scheme then Section 129 provides that the applicant shall not be liable to pay any further duty, interest or penalty with respect to the period covered in the declaration. Although in Section 129 (1) (a) of SVLDR Scheme redemption fine is per se not included, but the Central Board of Indirect Taxes and Customs issued flyers, wherein it is stated that the benefit under the Scheme would be total waiver of interest, penalty and fine. To the same effect, is the press note dated 22nd August 2019 issued by the Ministry of Finance, Government of India, wherein it is clarified that there would be no other liability of interest, fine or penalty if the dispute is resolved under the SVLDR Scheme. This issue had come up for consideration before the Allahabad High Court in M/s. Jay Shree Industries (supra) wherein on similar facts, the High Court clarified by analysing the meaning of duty, penalty and fine and came to a conclusion that redemption fine under Section 34 of the Central Excise Act is only a payment akin to penalty and, therefore, a declarant is entitled to the waiver of redemption fine under Section 129 of SVLDR Scheme. The very same issue also arose before the Gujarat High Court in Synpol Products Pvt. Ltd. (supra) and the High Court in paragraph 4.[5] of the said decision recorded that the Revenue has accepted that waiver of fine is allowed under the Scheme although Section 129 (1) of the said Scheme does not refer to fine and the said stand of the Revenue is in line with the clarifications, press release and flyers issued by the Board. The Coordinate Bench of this Court in HP Adhesives Limited (supra) has also accepted the decisions Gujarat and Allahabad High Court mentioned above. Therefore, our view, the basis of rejection that waiver of redemption fine is not covered is required to be rejected. 3.[8] The reliance placed by Respondents on paragraph 10 of the decision of the Gujarat High Court in Synpol Products Pvt. Ltd. (supra) to justify their rejections is not acceptable since the issue before us is interpretation of Section 121 (d) which defines "amount of duty" which is the phrase used in Section 123 which defines "tax dues", whereas the observations made in paragraph 10 of the Gujarat High Court is in connection with the definition of the phrase "amount in arrears" defined by Section 121 (c). In the instant case, the provisions of Section 121 (c) is not applicable since Petitioner No.1-Firm has filed an appeal which has not attained finality and, therefore, none of the clauses of Section 121 (c) of the Scheme applies to Petitioner's case. Therefore, on facts the observations in paragraph 10 of the Gujarat High Court is not applicable to the case before us.”

38. On the other hand, the decision referred to by Mr. Harpreet Singh, ld. Counsel in Manpreet Engineering and Construction Company v. Union of India & Ors. 2016 (44) STR 384 (JHAR) primarily holds that no language can be added into a scheme since such schemes would be liable to be strictly interpreted by the Court. Further, it has also been held that the scheme is also not to be interpreted liberally and no leniency can be granted.

39. The Court has considered the overwhelming decisions which have been cited on behalf of the Petitioner, as also the arguments made on behalf of the Respondents.

40. In the judgments discussed above, all High Courts have taken the view that redemption fine would be covered under duty, interest and penalty and a separate mention of redemption fine was not required either under SVLDR Scheme-I or in terms of the Sections in the scheme itself.

41. The scheme of the Central Excise Act, 1944 reveals that whenever there is non-payment of excise duty in respect of any goods, there can be various consequences. There can be seizure of goods and/or relevant material, a redemption fine can be imposed for release of goods. Such seizure or imposition of redemption fine, is nothing but a fine being paid due to nonpayment of duty. Once the duty itself gets settled under the SVLDR Scheme, it would not be appropriate to interpret the Scheme in a manner that would be contrary to the intention thereof.

42. The discharge certificate that is to be issued by the Department upon payment of duty in terms of the scheme is for waiver of entire duty, interest or penalty and redemption fine would be part of these three terminologies, as has been rightly interpreted by the CBIC itself in its flyer and FAQs.

43. Tax payers who may not understand complex terminologies in a taxing statute heavily rely upon the FAQs or publicity material published by the CBIC to understand such Schemes. Hence, responsibility has to be borne by the Department to such FAQs/Publicity material which are followed as guidance by the tax payers and arguments to the contrary would not be tenable.

44. Under such circumstances, this Court is of the opinion that when penalties and interest are being waived under the SVLDR Scheme but the redemption fine is not waived, as is being argued by the Respondents, such an interpretation would go contrary to the fundamental purpose and the raison d'être of the SVLDR Scheme itself. In the opinion of this Court, the purpose of the SVLDR Scheme is to give a finality to a particular dispute and not to keep the aspect relating to redemption fine pending. Seizure cases are also no exception to this.

45. This Court concurs with the view of various other High Courts discussed above that redemption fine would be waived, once a tax payer has availed of the benefits of the SVLDR Scheme and has paid the amount in terms thereof. Once the payment is made, benefits of the Scheme would also extend to Seizure/Confiscation cases.

46. Accordingly, the Department shall also issue to the Petitioners, the discharge certificates with respect to SCN-1 dated 12th March, 2014 in terms of Section129 of the SVLDR Scheme, within a period of two months.

47. The petitions are allowed in these terms. Pending applications, if any, are also disposed of.

PRATHIBA M. SINGH JUDGE SHAIL JAIN JUDGE SEPTEMBER 8, 2025/kp/ss (corrected and released on 17th September, 2025)