2006 (6) TMI 436 - Commission - Customs

Summary

Issues:
1. Settlement of Customs duty liability and related immunities.

Analysis:
The judgment revolves around the settlement of Customs duty liability by a company accused of diverting imported inputs and manufactured items in violation of Customs Act provisions. The company, a 100% EOU florist, faced a duty demand of Rs. 96,32,846/- along with penalties. Initially admitting to a duty of Rs. 10,00,000/-, the company later reconciled differences with the Revenue, resulting in a reduced duty of Rs. 91,23,063/-. The company paid Rs. 27,40,929/- before final admission, with the remaining Rs. 63,82,134/- to be paid in instalments by a specified date.

The Settlement Commission admitted the case and allowed the company to pay the remaining duty in instalments. Despite compliance and payment, the Revenue contended that the company's conduct did not merit immunity from penalties, interest, or prosecution. The case was heard, with the company pleading for immunity based on timely duty payments and compliance, while the department argued against immunity due to alleged dilatory tactics and misleading actions by the company.

The Bench considered the fraudulent diversion of imported inputs, violation of exemption notification conditions, and under-valuation of goods by the company. Despite the company's denial of charges and some calculation errors acknowledged by the Revenue, the evasion period from 1999 to 2003 raised concerns. The Bench referenced a previous case to highlight that delayed duty payment, attempts to mislead, and violations of exemption conditions warranted interest payment but acknowledged the company's cooperation in settling the duty.

Ultimately, the Bench settled the Customs duty liability at Rs. 91,23,063/-, with the company granted immunity from interest exceeding 10% on the settled duty. Immunity from penalty, fine, and prosecution was extended to the main applicant, with the co-applicant also granted the same immunities. The settlement terms emphasized that fraud or misrepresentation would void the agreement, with immunities granted under Section 127H(1) of the Customs Act, 1962, subject to the Act's provisions in this regard.