2004 (11) TMI 430 - Commission - Customs

Summary

Issues: Settlement of duty liability under the Customs Act, 1962; Misuse of Advance Licence Scheme; Export of inferior substitute material; Violation of licence conditions; Transfer of jurisdiction; Immunities from fine, penalty, and prosecution.

Settlement of Duty Liability:
The judgment pertains to the settlement of duty liability under the Customs Act, 1962. The applicant, a company, imported garlic under an Advance Licence Scheme for duty-free import. However, investigations revealed that the imported goods were diverted and sold in the domestic market, violating licence conditions. The applicant admitted a duty liability of Rs. 1,18,29,593 and had already paid Rs. 1,18,00,000 during investigations. The Settlement Commission allowed the adjustment of the deposited amount against the admitted duty liability, directing the applicant to pay the balance amount of Rs. 29,593.

Misuse of Advance Licence Scheme:
The case involved the misuse of the Advance Licence Scheme by the applicant. Intelligence reports indicated that the applicant exported inferior substitute material mis-declared as garlic powder. Investigations revealed that the goods imported duty-free were diverted and sold in the domestic market for profit, contrary to the conditions of the licence. Samples of the exported goods confirmed inferior quality with high ash content and earthly matter. The applicant admitted the duty liability related to these activities.

Transfer of Jurisdiction:
Following a request from the applicant, the jurisdiction of the case was transferred from Addl. Bench Chennai to Addl. Bench Mumbai for the part of the demand arising from imports made through Chennai port. The Addl. Bench Mumbai assumed jurisdiction over the entire case covered by the Show Cause Notice, facilitating a comprehensive review and settlement process.

Immunities from Fine, Penalty, and Prosecution:
The Settlement Commission granted full immunity to the applicant and co-applicants from fines, penalties, and prosecution under the Customs Act, 1962. This immunity was based on the applicant's full and true disclosure of duty liability, cooperation during proceedings, and the plea that they were cheated by the supporting manufacturer. The Commission emphasized that the immunities were granted under Section 127H of the Act.

Final Settlement and Conditions:
The Commission settled the duty liability at Rs. 1,18,29,593, with the applicant having already paid a significant portion. Immunities were granted from fines, penalties, and prosecution, while the applicant was directed to pay simple interest at 10% per annum for the financial gain derived by not paying duty when due. The order specified conditions for calculating and paying the interest within 30 days. The settlement order would be void if obtained through fraud or misrepresentation of facts, ensuring compliance and integrity in the settlement process.