2013 (6) TMI 556 - HC - Customs

Order of the Settlement Commission - misdeclaration - knitted fabrics / woven fabric - utilization of DFRC licence for the payment of the balance duty - confiscation and penalty - held that - The petitioners admitted to the misdeclaration of the description of the goods in their application, but sought to saddle the responsibility upon the foreign supplier for having mistakenly sent woven fabrics without an order. The Settlement Commission has taken a justifiable view in rejecting the defence which was termed as nothing but a lame or feeble excuse. Both on the issue as to whether the petitioners should be permitted to avail of a DFRC licence to pay the balance of the duty and on the extent of the fine imposed in lieu of confiscation, we find merit in the contention of the petitioners that no reasons have been indicated in the order of the Settlement Commission. The order of the Settlement Commission notes in Paragraph 14.2 the submission of the Jurisdictional Commissioner that a blanket opinion as to whether DFRC licences can be used for debit could not be furnished without actually verifying the details of the licences such as date of issue, date of expiry, name of the licence holder and conditions mentioned in the licence. This part of the arguments of the Revenue was, in our view, fair and proper. The Settlement Commission indicated no reasons for rejecting the plea. We are of the view that the matter would necessitate the Settlement Commission to have a fresh look on this aspect. - matter remanded back.

Summary

Issues:
1. Challenge against final order of Settlement Commissioner under Customs Act, 1962.
2. Rejection of DFRC license utilization, excessive fine in lieu of confiscation, and penalty imposition without reasons.

Analysis:
1. The judgment deals with a petition challenging a final order of the Settlement Commissioner under the Customs Act, 1962. The Settlement Commission found that the petitioners had concealed woven fabrics in consignments declared as knitted fabrics, leading to confiscation under Sections 111(i) and 111(m) with a duty liability of Rs. 80,58,731. The Commission directed payment of the balance amount, interest under Section 28AB, a fine of Rs. 15 lakhs, and penalties on the petitioners.

2. The petitioners challenged the order on three grounds: rejection of DFRC license utilization without reasons, imposition of an excessive fine in lieu of confiscation, and penalty imposition lacking reasons. The Revenue supported the Settlement Commission's order. The Court addressed the penalty issue first, upholding the penalty imposed due to the petitioners' misdeclaration but showing leniency for admitting the mistake and disclosing the duty liability truthfully.

3. On the issue of DFRC license utilization and excessive fine, the Court found merit in the petitioners' contention that the Settlement Commission did not provide reasons for its decision. The Court noted the lack of reasoning for rejecting the DFRC license plea and the excessive fine imposed. The Court highlighted the need for a fresh examination by the Settlement Commission on these aspects to ensure proper consideration of relevant facts and circumstances.

4. Consequently, the Court remitted the proceedings to the Settlement Commission for reconsideration on two issues: allowing DFRC license utilization for paying the balance duty liability and modifying the excessive fine in lieu of confiscation in line with Section 125(1) proviso. The Settlement Commission was directed to pass a fresh order after considering submissions and in accordance with the law, without disturbing the rest of the original order. No costs were awarded in the matter, and the petition was disposed of accordingly.