2003 (1) TMI 652 - Commission - Customs

Issues Involved:
1. Whether the two letters dated 11-07-2002 and 10-08-2002 can be considered as "Show Cause Notices" under Section 127B(1) of the Customs Act, 1962.
2. Whether there is a fresh disclosure of duty liability in the settlement application as required under Section 127B(1) of the Customs Act, 1962.

Detailed Analysis:

1. Whether the two letters dated 11-07-2002 and 10-08-2002 can be considered as "Show Cause Notices" under Section 127B(1) of the Customs Act, 1962:

The primary issue is whether the letters dated 11-07-2002 and 10-08-2002 issued by the customs authorities can be considered as "Show Cause Notices" (SCNs) as contemplated under Section 127B(1) of the Customs Act, 1962.

Arguments by the Applicant:
- The applicant argued that these letters meet the requirements of a SCN because they inform the applicant of the duty liability and the failure to fulfill export obligations.
- The applicant relied on previous orders by the Settlement Commission in similar cases, asserting that the letters satisfy the principles of natural justice by notifying the applicant of the demand.

Arguments by the Revenue:
- The Revenue contended that these letters do not qualify as SCNs because they do not provide an opportunity for the applicant to show cause or make representations against the proposed action.
- The Revenue emphasized that a SCN must be issued in a specific format and explicitly call upon the party to show cause.

Findings:
- The Commission noted that the Customs Act does not prescribe a specific format for issuing a SCN.
- The letters dated 11-07-2002 and 10-08-2002 were found to be precise and unambiguous, detailing the duty amounts and the failure to fulfill export obligations.
- The letters, while addressed to the bank, were also endorsed to the applicant, thereby putting the applicant on notice.
- The Commission concluded that the letters meet the requirements of a SCN as they inform the applicant of the duty liability and provide sufficient detail to understand the case.

Dissenting Opinion:
- One member disagreed, stating that the letters are addressed to the bank and do not ask the applicant to show cause or make representations.
- The dissenting member emphasized that a SCN must be addressed to the person chargeable with duty and must explicitly call for a response.

Majority Decision:
- By a majority decision, the Commission held that the letters dated 11-07-2002 and 10-08-2002 can be considered as SCNs for the purpose of admitting the settlement application under Section 127B(1) of the Customs Act, 1962.

2. Whether there is a fresh disclosure of duty liability in the settlement application as required under Section 127B(1) of the Customs Act, 1962:

The second issue is whether the settlement application contains a fresh disclosure of duty liability that was not previously disclosed to the proper officer.

Arguments by the Applicant:
- The applicant argued that the duty liability disclosed in the settlement application is based on events subsequent to the clearance of imported goods and was not disclosed at the time of filing the Bill of Entry.
- The applicant contended that the failure to fulfill export obligations and the resultant duty liability were first disclosed in the settlement application.

Arguments by the Revenue:
- The Revenue argued that the applicant was fully aware of the duty liability at the time of clearing the imported goods and there is no fresh disclosure in the settlement application.
- The Revenue referred to a circular from the Department of Legal Affairs, asserting that the application does not meet the requirements of Section 127B(1).

Findings:
- The Commission observed that the duty liability disclosed in the settlement application is based on the failure to fulfill export obligations, which is an event subsequent to the clearance of the imported goods.
- The Commission noted that the original Bill of Entry did not contain information about the failure to fulfill export obligations.
- The Commission concluded that the duty liability disclosed in the settlement application is a fresh disclosure not made before the proper officer.

Conclusion:
- The Commission found that the settlement application satisfies the requirements of Section 127B(1) of the Customs Act, 1962.
- The application is allowed to be proceeded with in terms of sub-section (1) of Section 127C of the Customs Act, 1962.
- The applicant is directed to pay the balance amount of Rs. 19,61,014/- within 30 days from the date of receipt of the order and report compliance.

Final Order:
- The application is allowed to be proceeded with by a majority decision.
- The applicant shall pay the balance amount within 30 days and submit proof of payment.
- The Bench acquires exclusive jurisdiction to perform the functions of any officer of customs under the Customs Act, 1962 in respect of this case.

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