Not a very Rewarding Proposal
THIS is the story of a perseverant informer of the Central Excise Department, whose petition was decided by the Gujarat High Court last fortnight.
Amount recovered by the Department: Rs. 1,73,346/-
Advance Reward Paid: Rs. 1 Lakh
Balance Reward Claimed: Rs.22,12,023
The petitioner claims to be an informer, on whose information a raid was carried out and incident of excise duty evasion came to light sometime in 1999.
The petitioner gave a secret information to the officer of Director General,Central Excise Intelligence (DGCEI) regarding illegal act of excise evasion by one VFL, which was manufacturing excisable goods, viz. Polyester staple fiber (PSF) and was removing the said product clandestinely without paying any duty. On the basis of such information, the officers of DGCEI carried out raid at the factory premises of VFL and their raid revealed that indeed it was a case of excise duty evasion on big scale.
On completion of the investigation, show cause notice was issued by the excise authorities, whereby demand of Rs.9,92,31,857/- was raised and upon adjudication, was confirmed by the adjudicating authority. The confirmation of duty was challenged by VFL before the CESTAT. However, the appeal came to be dismissed and hence, demand of duty adjudicated has attained finality.
The petitioner-informer has received an amount of Rs.1,00,000/- as advance reward for the information. He wants the balance of reward due to him which he claims to be more than Rs. 22 lakhs after deducting the one lakh already received.
The case of the petitioner for receiving the final reward on the basis of the adjudication by the adjudicating authority was considered by the Rewards Committee. The decision of the Rewards Committee was communicated under communication dated 19.12.2011. From this communication, it appears that the Rewards Committee has held:-
"The committee finally observed since no additional recovery except Rs.1,73,346/- paid by the party through PLA has been made in this case andRs.1,00,000/- has already been granted and paid to the informer as advance rewarded and recovery proceedings from remaining dues amount to Rs.15,86,60,312/- are pending with the DRT, Mumbai the case is not ripe for grant of final reward at this stage; final reward proposal can be considered only after completion of recovery proceedings in the DRT, Mumbai when additional recovery to the Government take place."
The Department submitted that the instance of giving final reward would only come into existence on the basis of actual recovery made by the Department pursuant to the information given by the informer. It is submitted that in the instant case,what is actually recovered by the Department is an amount of Rs.1,73,000/- and as against this, the petitioner has already received an amount ofRs.1,00,000/- towards the interim reward. He submitted that in view of the fact that the amount is actually not recovered and the recovery to be made by the Department is still subject to the pending proceedings with DRT,Mumbai, where number of claimants appear to have staked their claims against M/s.VFL and therefore, unless those litigations come to an end, thereafter only recovery of the actual amount from M/s.VFL will be possible and depending upon extent of recovery made in the instant case, final reward can be passed.
Without recording its view on the rival submissions, the High Court deemed it fit to dispose of the petition with a direction to the Rewards Committee to give a decision afresh. While doing so, the Rewards Committee will give full opportunity to both the sides to raise all the contentions.
It will be open to all concerned to raise all contentions including the contention that recovery as contemplated in "The Reward Scheme" does not cover the payment of duty by utilizing the cenvat credit.
Can reward be paid for duty recovered by debit entry in the Cenvat account? Board should amend the Scheme to specify whether reward can be given when recovery is made through Cenvat Credit account.