a)The assessee admitted clandestine removal of goods before SetCom but it sent the case back to adjudicating authority.
b)The adjudicating authority had confirmed clandestine removal of goods based on admission of assessee before SetCom.
c)Thus, the issue that arose before the High Court was: Whether revenue was required to establish clandestine removal, despite the same having been admitted by assessee before SetCom?
The High Court held in favour of assessee as under:
1)Even in view of section 32L(2) of Central Excise Act, 1944 whatever had been admitted by assessee while submitting settlement application under section 32E(1), straightway, couldn’t be said to be admission on behalf of assessee accepting clandestine removal of goods.
2)If the contention on behalf of the department had been accepted, in that case there would be no question of further adjudication by the Central Excise Officer. 3)Once application or proceedings before SetCom failed, the Central Excise Officer was required to adjudicate the case in entirety. Thus, adjudication was required and mere reliance on admission before Settlement Commission was not sufficient. Hence, department's contention was to be rejected – COMMISSIONER V. MARUTI FABRICS  47 taxmann.com 298 (Gujarat)