2018 (1) TMI 1456 - Commission - Customs

Maintainability of application before Settlement Commission - Waiver of penalty - immunity from prosecution - Demand of differential Customs duty - contraventions made in respect of imports made through Air Cargo, Bangalore - whether the application is maintainable in terms of provisions of Section 127L(i) of the Customs Act, 1962? - Held that - Section 127L of the Customs Act, 1962 which bars an applicant from approaching the Settlement Commission, if he had been penalized by the Commission previously on ground of concealment of any particulars from the Officer of Customs - The Section envisages that a person who is penalised for concealment of particulars of his duty liability cannot approach the Settlement Commission again. In the instant case, Shri B.M. Rakesh, Managing Partner of M/s. Virddhi Interiors, Bangalore has filed the instant application for Settlement on 4-8-2017. Shri B.M. Rakesh, as Proprietor of M/s. Vainatheya International Agency, Bangalore, and M/s. Vriddhi Interiors, Bangalore had earlier filed their settlement applications for settlement of their dispute arising of the impugned SCN both on 15-3-2017. Settlement Commission disposed the above applications vide Final Order No. 31-32/2017-Cus., dated 31-7-2017 and imposed a penalty of ₹ 1,30,000/-. In its Final Order No. 33-34/2017-Cus., dated 31-7-2017 the Bench imposed a penalty of ₹ 1,10,000/- on M/s. Vriddhi Interiors, Bangalore. Both the above mentioned Settlement Orders were despatched from this Office on 1-8-2017 and received by the applicants on 5-8-2017 and 9-8-2017 respectively as per the applicant. At the time filing of the instant application on 4-8-2017, the applicant was not aware that he was penalised in the application filed earlier emanating out of the same SCN. The Final Orders No. 31-32/2017-Cus. & No. 33-34/2017-Cus., both dated 31-7-2017 of the Settlement Commission will become binding on the applicant from the date of receipt of the Order as decided by various higher judicial fora. The Bench also finds force in the argument of the applicant that the bar imposed under Section 127L of the Customs Act is applicable only in respect of any other matter as envisaged, whereas the current application filed by the applicant is relating to the same matter dealt earlier by the Bench arising out of the same SCN. Thus the Bench holds that the instant application is maintainable under the relevant provisions of the Customs Act, 1962. Whether penalty is imposable on Shri B.M. Rakesh, Managing Partner of M/s. Vriddhi Interiors? - Held that - The entire modus operandi as to how the applicant devised a scheme to evade the payment of applicable Customs duty is discussed in detail. Thus it is seen that the duty evasion has been resorted to by way of wilful misstatement, suppression of facts and misdeclaration of their import values and clearances of import goods. It is the bounden duty of the applicant to pay the customs duty to Government as per the laws laid down. Failure not to do so without any logical and cogent reasons has to be treated as wilful suppression with an intent to evade taxes. Hence, the applicant is liable to penalties as proposed in the show cause notice. Hence penalty is imposable on the applicant as per the provisions of Customs Act invoked in the SCN - keeping in view the full and true disclosure of additional duty liability, co-operation extended during the investigation and the proceedings before the Settlement Commission, the Bench considers this as a fit case for extending partial immunity from penalty to the applicant. Prosecution - Held that - Taking into consideration the facts and circumstance of the case, the Bench considers it a fit case to grant immunity from prosecution to Shri B.M. Rakesh, Managing Partner of M/s. Virddhi Interiors, Bangalore. Application disposed off.

Summary

Issues Involved:
1. Maintainability of the application under Section 127L(i) of the Customs Act, 1962.
2. Imposition of penalty on Shri B.M. Rakesh, Managing Partner of M/s. Vriddhi Interiors.
3. Grant of immunity from prosecution.

Detailed Analysis:

1. Maintainability of the Application:

The core issue was whether the application filed by Shri B.M. Rakesh, Managing Partner of M/s. Vriddhi Interiors, was maintainable under Section 127L(i) of the Customs Act, 1962. This section bars an applicant from approaching the Settlement Commission if previously penalized for concealment of particulars of duty liability. The applicant argued that the bar applies only to "any other matter" and not to the same matter already dealt with by the Commission. The application was filed on 4-8-2017, before receiving the Final Orders dated 31-7-2017, which were received on 5-8-2017 and 9-8-2017 respectively. The Commission agreed with the applicant, noting that the bar under Section 127L applies to different matters, not the same one. Thus, the application was deemed maintainable.

2. Imposition of Penalty:

Shri B.M. Rakesh admitted to undervaluing goods to evade customs duty, as per his statements under Section 108 of the Customs Act, 1962. The investigation revealed a deliberate scheme to evade duty through misdeclaration of import values. The Commission found that the duty evasion was wilful and involved suppression of facts. However, considering the full disclosure and cooperation during the investigation, the Commission decided to impose a partial penalty. A penalty of ?20,000 was imposed on Shri B.M. Rakesh under the provisions invoked in the show cause notice.

3. Grant of Immunity from Prosecution:

Taking into account the circumstances of the case and the cooperation extended by Shri B.M. Rakesh, the Commission granted immunity from prosecution under the Customs Act, 1962. This immunity was granted under Section 127H, with the stipulation that it could be withdrawn if it was later found that material particulars were withheld or false evidence was given.

Order:

The Commission settled the case on the following terms:
- A penalty of ?20,000 was imposed on Shri B.M. Rakesh, to be paid within 30 days of receipt of the order, with proof of payment furnished to the Jurisdictional Commissioner.
- Shri B.M. Rakesh was granted immunity from prosecution under the Customs Act, 1962, specific to this case.
- The immunities granted are subject to withdrawal if it is found that any material particulars were withheld or false evidence was provided.

A copy of the order was provided to Shri B.M. Rakesh and the Jurisdictional Commissioner for implementation, with a caution against using the order for any other purpose without written permission from the Commission.