2015 (8) TMI 531 - HC - Customs

Settlement of case True and full Disclosure Petitioner challenges order passed by respondent-1 by which, applications seeking immunity by way of settlement of disputes, came to be dismissed on ground of failure of petitioners to make full and true disclosure of duty liability under Section 127(B)(1) Held that - fundamental requirement of application under Section 127-B was full true and candid disclosure by applicant of liability to pay duty which was not disclosed before proper officer Significantly, these include particulars of dutiable goods in respect of which applicant admits short levy, on account of mis-declaration or undervaluation Petitioners accepted only 11.89% of total liability demanded by department based on documentary evidence Petitioners were admittedly given sufficient opportunities to come up with true and full disclosure of their liability, however, right from inception, petitioners have been dodging matter without participating in settlement proceedings Petitioners have not failed to make true and full disclosure of their duty liability in their applications, but have also failed to provide required co-operation to Bench to settle case in true spirit of settlement Therefore, considering facts and circumstances of case and more particularly, lack of co-operation on part of petitioners for settlement of their case, Commission has rightly held that it was fit case for sending it back to original authority for disposal in accordance with law Decided against petitioner.

Summary

Issues Involved:
1. Validity of the Customs, Central Excise & Service Tax Settlement Commission's order.
2. Full and true disclosure of duty liability by the petitioners.
3. Cooperation of the petitioners with the Settlement Commission.
4. Maintainability of the application before the Settlement Commission.
5. Alleged undervaluation of imported goods.
6. Compliance with principles of natural justice.

Detailed Analysis:

1. Validity of the Customs, Central Excise & Service Tax Settlement Commission's Order:
The petitioners challenged the order dated 29.12.2014 by the Settlement Commission, which dismissed their applications for settlement on the grounds of failure to make full and true disclosure of duty liability under Section 127(B)(1) of the Customs Act, 1962. The Commission concluded that the petitioners failed to provide the required cooperation to settle the case in the true spirit of settlement, thus sending the case back to the Commissioner of Customs for adjudication.

2. Full and True Disclosure of Duty Liability by the Petitioners:
The Commission found that the petitioners did not make a full and true disclosure of their duty liability. The petitioners admitted liability only to the extent of Rs. 1,98,33,832, which is 11.89% of the actual duty liability of Rs. 16.82 crores demanded by the department based on documentary evidence. The petitioners claimed the imported goods were of inferior quality, but there was no scientific proof provided to support this claim.

3. Cooperation of the Petitioners with the Settlement Commission:
The petitioners were found to have failed to provide the required cooperation to the Commission. Despite multiple opportunities and adjournments, the petitioners did not participate actively in the settlement proceedings. They delayed the process by requesting adjournments and failing to provide necessary documents or responses in a timely manner.

4. Maintainability of the Application before the Settlement Commission:
The petitioners argued that their application was maintainable as the CBI issued summons after the filing of the application and no other court was handling the case. However, the Commission found that the petitioners did not disclose the registration of a case under the Prevention of Corruption Act, which should have been brought to the Commission's notice during the settlement proceedings.

5. Alleged Undervaluation of Imported Goods:
The department seized consignments and documents indicating gross undervaluation of imported carbide tips and hollow drill rods. The petitioners' explanation that the goods were stock lots, seconds, and made from recycled materials was not substantiated with evidence. The Commission found the petitioners' disclosure insufficient and inconsistent with the evidence.

6. Compliance with Principles of Natural Justice:
The Commission provided several opportunities for the petitioners to present their case and make full disclosures. The petitioners' repeated requests for adjournments and delays indicated a lack of genuine interest in settling the case. The Commission's decision to proceed and reject the application was based on the petitioners' failure to utilize the opportunities given, thus not violating principles of natural justice.

Conclusion:
The High Court upheld the Settlement Commission's order, finding it well-reasoned and supported by valid records. The petitioners' writ petitions were dismissed, and the case was sent back to the Commissioner of Customs for adjudication in accordance with the law. The Court emphasized the petitioners' lack of cooperation and failure to make true and full disclosure as critical factors in the decision.