Facts of the Case

The petitioner, Art N Glass India Private Limited, filed a writ petition as part of a batch of connected matters arising from searches conducted by the Directorate General of Central Excise Intelligence on 02.11.2004. During the search at the premises of Art N Glass India Pvt. Ltd., goods valued at ₹9,73,100 were seized. Searches were also conducted at related entities, including Design Glass Works and Nangloi Glass & Plywood Company, and at the residence of Mr. Lokesh Pathak, where cash was seized.

A Show Cause Notice dated 28.04.2005 was issued proposing demand of central excise duty of ₹58,66,596, confiscation of seized goods, confiscation of seized cash, imposition of penalties, and levy of redemption fine in lieu of confiscation.

The Show Cause Notice was adjudicated by an Order-in-Original dated 30.03.2007, which confirmed duty demand, ordered confiscation of goods, imposed penalties, and granted an option to redeem the confiscated goods on payment of redemption fine.

Appeals were filed before CESTAT, which by Final Order dated 09.11.2016, set aside the Order-in-Original and remanded the matter for de novo adjudication without recording any findings on merits.

Issues Involved

Whether cases involving seizure of goods and levy of redemption fine are eligible for settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, whether redemption fine is distinct from duty or penalty for the purpose of the Scheme, and whether the Designated Committee was justified in refusing to issue discharge certificates after settlement of tax dues.

Petitioner’s Arguments

The petitioner contended that since the CESTAT order was only a remand and not a final decision on merits, the Show Cause Notice remained pending and therefore qualified as “tax dues” under the SVLDR Scheme. It was argued that redemption fine is in the nature of penalty and once the prescribed portion of duty is paid under Section 124 of the Scheme, redemption fine stands waived. Reliance was placed on CBIC FAQs, flyers, and judgments of various High Courts holding that redemption fine is covered under the Scheme.

Respondent’s Arguments

The Department argued that cases involving seizure and redemption fine were not covered under the SVLDR Scheme and that the petitioner was ineligible under Section 125(1)(a) of the Scheme as the appeal had been decided prior to 30.06.2019. It was further contended that redemption fine was not expressly mentioned in the statutory waiver provisions.

Court Order / Findings

The Delhi High Court examined the statutory provisions of the Sabka Vishwas Scheme and held that a remand order by CESTAT does not amount to final adjudication on merits. Consequently, the Show Cause Notice dated 28.04.2005 continued to remain pending and qualified as “tax dues” under Section 123 of the Scheme.

On the substantive issue, the Court held that redemption fine is a consequence of non-payment of excise duty and is in the nature of penalty. The Court relied upon authoritative precedents of the Gujarat High Court in Synpol Products Pvt. Ltd., Allahabad High Court in Jay Shree Industries, Bombay High Court in Espee Electrotech LLP, and CBIC explanatory flyers which clearly state that the Scheme grants total waiver of interest, penalty and fine.

The Court held that excluding redemption fine from the benefit of the Scheme would defeat its object of providing finality to legacy disputes and would be contrary to the representations made by the Government through official explanatory material.

Important Clarification

The High Court clarified that seizure cases are not excluded from the Sabka Vishwas Scheme and that redemption fine cannot be treated separately once the underlying duty demand is settled. Upon payment of the amount determined under Section 124 of the Scheme, the declarant is entitled to a discharge certificate under Section 129 granting immunity from further duty, interest, penalty and redemption fine.

Final Outcome

The writ petition filed by Art N Glass India Private Limited was allowed. The Delhi High Court directed the Designated Committee, SVLDRS, Central GST, Delhi West to issue a discharge certificate in respect of the Show Cause Notice dated 28.04.2005, without insisting on payment of redemption fine, within two months. All pending applications were disposed of accordingly.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/75408092025CW106222024_133516.pdf


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