2013 (10) TMI 898 - HC - Customs

Settlement of cases - scope of the term adjudicating authority and proper officer - whether recovery proceeding can be said to be a proceeding relating to adjudication as contemplated under Section 127A and 127B of the Customs Act, 1962 - Held that - A bare reading of the definition of adjudicating authority indicates that any authority competent to pass any order or decision under this Act is to be treated as adjudicating authority but does not include the Board Commissioner (Appeals) or Appellate Tribunal, as the case may be. Proper Officer has been defined separately in relation to any functions to be performed under the Act and there is specific assignment of those functions by the Board. The assignment of the functions by the Board is necessary to a proper officer. Any order or decision under this act to be passed by adjudicating authority has to be understood in the context it has been used and cannot include orders passed by proper officer in recovery proceeding when adjudication is over. The provisions contained in Section 127B clinches the issue with respect to the question whether the recovery proceedings pursuant to the order of adjudication which has been passed can be said to be covered for the purpose of enabling an imcumbent to seek the benefit of the provisions contained in Section 127B. It is clearly mentioned in Section 127B that any importer, exporter or any other person in respect of a case relating to him may make an application, however, before adjudication . Once adjudication has been made no application can be filed to avail benefit of the provisions contained in Section 127B(1). So, we need not confuse with respect to the submission based upon the definition of adjudicating authority as expression adjudication has been clearly used and an application under section 127B(1) has to be filed before the adjudication is made - In our opinion as no adjudication proceeding is pending in this case, in our view, Settlement Commission has rightly opined that provision of Section 127B of the Act cannot be invoked for the purpose of settlement of the dues - Decided against assessee.

Summary

Issues Involved: Legality of dismissal of writ application, interpretation of "adjudication" under Sections 127A and 127B of the Customs Act, 1962, and whether recovery proceedings can be considered as adjudication proceedings.

Detailed Analysis:

1. Legality of Dismissal of Writ Application:
The intra-Court appeal questions the legality of the dismissal of the writ application by the Single Bench on 10.8.2012. The primary issue is whether recovery proceedings can be considered as adjudication proceedings under Sections 127A and 127B of the Customs Act, 1962. The appellant contends that the recovery proceeding should be recognized as a pending adjudication proceeding, which would allow them to approach the Settlement Commission. The Single Bench, however, agreed with the Settlement Commission's decision that recovery proceedings do not equate to adjudication proceedings, leading to the dismissal of the writ application.

2. Interpretation of "Adjudication" under Sections 127A and 127B:
The appellant argued that the definition of "proper officer" and "adjudicating authority" should be interpreted to include recovery proceedings as adjudication proceedings. They relied on Section 2(1) and Section 2(34) of the Customs Act, which define "adjudicating authority" and "proper officer," respectively. They further argued that a joint notice under Section 28 for recovery and adjudication by the same authority implies that recovery proceedings should be considered as pending adjudication proceedings. However, the court emphasized that the term "adjudication" as used in Section 127B clearly indicates that an application for settlement must be filed before the adjudication is made. The court stated, "Once adjudication has been made no application can be filed to avail benefit of the provisions contained in Section 127B(1)."

3. Recovery Proceedings vs. Adjudication Proceedings:
The court examined the definitions and provisions related to adjudication and recovery proceedings. It noted that Section 127A(b) defines a "case" as any proceeding under the Act for the levy, assessment, and collection of customs duty pending before an adjudicating authority on the date of the application under Section 127B. Section 127B allows an application for settlement to be made before adjudication. The court concluded that recovery proceedings under Section 142, which deal with the recovery of sums due to the government, do not involve any adjudication order by the adjudicating authority but are instead handled by the proper officer. Therefore, recovery proceedings cannot be considered as adjudication proceedings for the purposes of Sections 127A and 127B.

4. Opportunity of Hearing Before Adjudication Order:
The appellant contended that the adjudication order should be ignored as no opportunity of hearing was granted before its issuance. The court rejected this argument, stating that a notice was issued, and the legality of the adjudication order cannot be challenged before the Settlement Commission. The court asserted, "Settlement Commissioner is competent to entertain application before adjudication," and hence, the submission regarding the lack of hearing was dismissed.

Conclusion:
The court found no merit in the appellant's arguments and upheld the decision of the Single Judge, affirming the Settlement Commission's stance that Section 127B cannot be invoked after adjudication. The appeal was dismissed, and the stay application was also rejected. The court concluded, "In our opinion as no adjudication proceeding is pending in this case, in our view, Settlement Commission has rightly opined that provision of Section 127B of the Act cannot be invoked for the purpose of settlement of the dues."