2014 (12) TMI 609 - HC - Customs

Application for settlement - Failure to make full and true disclosure and non-cooperation on the part of the petitioners - Held that - It cannot be disputed that an applicant before the Settlement Commission is obliged to make a full and true disclosure in its application and also cooperate with the Commission. This is so as the basis of Chapter XIVA of the Act is meant for an assessee suffering from contriteness. Therefore, the proceeding before the Settlement Commission is not adverserial. However, in this case the petitioners proceeded on the basis that in law they were not required to produce the original purchase invoice of the lessor of the barge as the issue to be settled is a dispute between the Customs Department and the petitioners as formulated in the show cause notice. The petitioners having accepted the valuation made in the show cause notice and the report of the Commissioner of Customs made before the Settlement Commission, no interference in respect of valuation of the barge is called for. When the entire duty liability and interest as demanded in the show cause notice has been paid by the assessee, it is not possible for the Settlement Commission to conclude that the petitioners have not cooperated or not disclosed full and true facts in their application for settlement. However, it must be pointed out that in the facts existing in the above case, the Court held that the revenue was unable to point out what cooperation has not been extended. - applicant is required to make a full and true disclosure and also cooperate with the Commission. However, as the petitioners have now provided the purchase invoice dated 16 August 2006, it would be appropriate for the Commission to consider the same and pass an order - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenge to order of Settlement Commission under Customs Act, 1962 for rejection of application for settlement due to alleged failure in disclosure and non-cooperation.

Analysis:
1. Facts Leading to the Petition:
- Petitioners imported a barge in 2006 under a customs notification.
- Initially, the value of the barge was declared at US $ 64,40,750.
- Subsequently, it was found that the actual value was US $ 69,98,667, leading to a show cause notice for differential duty.
- Petitioners admitted the underpayment and sought settlement with immunity from penalties.
- Customs Commissioner recommended adjudication without immunity.

2. Settlement Commission Proceedings:
- Settlement Commission requested the purchase invoice from the foreign exporter, which was not provided by the petitioners.
- Commission dismissed the application citing lack of full disclosure and cooperation.
- Petitioners argued that the duty and interest demanded had been paid in full.
- Later, they obtained the purchase invoice showing a lower value of the barge.

3. Arguments and Decision:
- Petitioners contended that the Settlement Commission exceeded its jurisdiction by rejecting the settlement application.
- Revenue argued that the rejection was justified due to lack of full disclosure and cooperation.
- Court emphasized the need for full disclosure and cooperation in settlement proceedings.
- Referred to a previous case where full payment of duty was deemed sufficient cooperation.
- Court noted that the new purchase invoice was not presented before the Settlement Commission.

4. Court's Decision:
- The Court set aside the Commission's order and directed reconsideration with the new purchase invoice.
- Emphasized the importance of full disclosure and cooperation in settlement proceedings.
- Directed the Settlement Commission to pass appropriate orders based on the new evidence provided.

Overall, the Court allowed the petition, highlighting the significance of complete disclosure and cooperation in settlement proceedings under the Customs Act, 1962. The judgment underscores the need for transparency and adherence to procedural requirements in resolving customs disputes through settlement mechanisms.