2009 (5) TMI 802 - Commission - Customs

Confiscation - baggage rules - wrist watches of de-Grisogono - Section 123 of the Act - jurisdiction of Settlement Commission to entertain application under Section 127B of the Act

Issues Involved
1. Admissibility of the settlement application under Section 127B of the Customs Act, 1962.
2. Applicability of Section 123 of the Customs Act, 1962 to the goods in question.
3. Impact of the amendments made in Section 127B by the Finance Act, 2007.
4. Consideration of the amount deposited by the applicant as customs duty.

Detailed Analysis

1. Admissibility of the Settlement Application
The applicant arrived at IGI Airport, New Delhi, and declared goods worth Rs. 12,000/- in the Disembarkation Card but was found carrying undeclared wristwatches valued significantly higher. The applicant filed a settlement application under Section 127B of the Customs Act, 1962. The Revenue opposed the application on grounds that the applicant did not file a bill of entry and that the Disembarkation Card does not qualify as an "entry" under Section 2(16) of the Act. The Settlement Commission, however, noted that in baggage cases, the law requires only a Disembarkation Card, not a bill of entry. The Commission referenced previous judgments and concluded that the application is admissible as the declaration in the Disembarkation Card suffices for the purposes of Section 127B.

2. Applicability of Section 123
The Revenue argued that the goods in question, being wristwatches notified under Section 123, fall outside the purview of the Settlement Commission. The Commission, however, noted that the goods were intercepted within the Customs area and thus do not require the invocation of Section 123 for establishing their smuggled nature. The Commission referred to the Special Bench Order in Idris Y. Porbundarwala, concluding that the proviso relating to Section 123 does not bar the settlement of baggage cases.

3. Impact of Amendments in Section 127B
The Revenue argued that the amendments to Section 127B by the Finance Act, 2007, render previous decisions of the Settlement Commission and High Courts irrelevant. The Commission disagreed, stating that the amendments do not affect the applicability of Section 127B to baggage cases. It emphasized that the amendments clarified the inclusion of cases of undervaluation within the scope of Section 127B, thus supporting the admissibility of the current application.

4. Consideration of the Amount Deposited
The applicant had deposited Rs. 22,50,000/- with the Court towards customs duty and penalty. The Revenue contended that this amount does not represent customs duty as it was not determined by the proper officer. The Commission held that there is no bar in the Act against depositing duty before the issuance of a Show Cause Notice (SCN). The amount deposited can be appropriated towards the customs duty, interest, fine, and penalty as determined in the settlement proceedings.

Conclusion and Orders
The Settlement Commission settled the case with the following terms:
- Customs duty settled at Rs. 16,16,728/-, to be appropriated from the Rs. 22,50,000/- deposited by the applicant.
- Interest settled at Rs. 2,658/-, with the Revenue allowed to re-calculate and communicate the final amount.
- Imposed a fine of Rs. 2,50,000/- and a penalty of Rs. 2,00,000/-, to be appropriated from the deposited amount.
- Granted immunity from prosecution under the Customs Act, 1962, subject to compliance with the settlement terms.

The Commission directed the applicant to complete all formalities for transferring the deposited amount to the appropriate customs head(s) and instructed the Revenue to assist in this process. The order also clarified that it applies only to the applicant and not to other noticees involved in the case.

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