2010 (7) TMI 1132 - HC - Customs

Issues Involved:
1. Whether the application filed for settlement without full and true disclosure on the part of the petitioner is entertainable.
2. Whether the Settlement Commission has the power of adjudication.
3. Whether the petitioner made a full and true disclosure in the settlement application.
4. Whether the Settlement Commission can adjudicate the matter and arrive at a correct figure in case of discrepancy in the amount payable.
5. Whether the rejection order passed by the Settlement Commission can be interfered with by the High Court in a proceeding under Article 226/227 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Whether the application filed for settlement without full and true disclosure on the part of the petitioner is entertainable:
The court emphasized that full and true disclosure of duty liability is a mandatory requirement under Section 127B of the Customs Act, 1962. The petitioner's disclosure of Rs. 8,11,471/- was deemed without any basis, and the revised amount of Rs. 25,02,435/- was not accepted by the petitioner. The court cited the judgment in Optigrab International v. Government of India, which held that full and true disclosure is a mandatory requirement. Therefore, the application without such disclosure was not entertainable.

2. Whether the Settlement Commission has the power of adjudication:
The court noted that the Settlement Commission's role is to settle cases based on full and true disclosure by the applicant. In Australian Foods Ltd. v. Commissioner of Central Excise, Chennai-II, it was held that the Settlement Commission does not have the power to decide questions on assessment. The court affirmed that the Settlement Commission could reject the application at the preliminary stage if full and true disclosure is not made.

3. Whether the petitioner made a full and true disclosure in the settlement application:
The court found that the petitioner did not make a full and true disclosure. The petitioner's initial disclosure of Rs. 8,11,471/- was not substantiated, and even after the revised amount of Rs. 25,02,435/- was determined, the petitioner was unwilling to pay. The court referenced the decision in Commissioner of Income-tax v. Income-tax Settlement Commission, where it was held that voluntary disclosure must be true and fair, and the application must contain full and true disclosure from the outset.

4. Whether the Settlement Commission can adjudicate the matter and arrive at a correct figure in case of discrepancy in the amount payable:
The petitioner's counsel argued that the Settlement Commission could adjudicate and arrive at the correct figure in case of discrepancies. However, the court held that the Settlement Commission's role is not to adjudicate but to settle cases based on full and true disclosure. The court referenced the decision in New Bharat Rice Mill v. Union of India, which upheld the Settlement Commission's discretionary powers and emphasized that such powers must be exercised diligently and reasonably.

5. Whether the rejection order passed by the Settlement Commission can be interfered with by the High Court in a proceeding under Article 226/227 of the Constitution of India:
The court held that the rejection order passed by the Settlement Commission could not be interfered with under Article 226/227 of the Constitution of India. The court cited the decision in Kashish Silk Mills Pvt. Ltd. v. Union of India, where it was held that the High Court should not interfere with the Settlement Commission's order if it was passed diligently and reasonably. The court also referenced the decision in Light Engg. Corporation v. Union of India, which supported the view that the Settlement Commission's orders should not be interfered with unless there is a clear violation of statutory provisions.

Conclusion:
The writ petition was dismissed. The court directed the Revenue to finalize the adjudication proceedings within three months from the date of receipt of the order. The court found no perversity in the Settlement Commission's order and upheld the requirement for full and true disclosure in settlement applications.

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