2019 (1) TMI 1728 - Commission - Customs

Maintainability of Application for settlement of dispute - the applicant Maheshchandra Sharma had been penalized earlier in another case of the applicant - Section 127L of Customs Act - HELD THAT - It is a fact that Maheshchandra Sharma was imposed with a penalty in a case M/s. Anika Global Impex wherein the application for settlement was disposed of by an Order. The finding recorded in the order as it concerns imposition of penalty on Maheshchandra Sharma - It will be thus seen that Maheshchandra Sharma was imposed with penalty due to his role in undervaluation leading to evasion of duty and rendering the impugned goods (in the case of M/s. Anika Global Impex) liable to confiscation. It is notable that the findings of the Bench do not concern the status of Maheshchandra Sharma-whether de facto owner or otherwise. The statements of Maheshchandra Sharma and also of his son Aditya Sharma (in M/s. Anika Global Impex case) were recorded under Section 108 of the Act and are admissible as evidence against them. It was not the case of Maheshchandra Sharma that these statements were ever retracted. In view of Section 127L of the Act, Maheshchandra Sharma is not entitled to apply for settlement in the present case of M/s. Aditya International Trade Co. He being the proprietor of M/s. Aditya International Trade Co., both are legally indistinguishable and both the applications cannot be proceeded with under Section 127B of the Act. The applications for settlement are not admitted.

Summary

Issues:
Application for settlement under Section 127L of the Customs Act - Maintainability of applications due to penalty imposed on applicant in another case - Role of applicant as de facto owner - Confessional statement recorded by DRI - Bar contained in Section 127L of the Act - Disentitlement from applying for settlement - Legal status of applicant in previous case - Admissibility of statements under Section 108 of the Act - Findings of the Bench in the present case.

Analysis:

The judgment by the Settlement Commission, Mumbai, involved the application for settlement of a dispute by M/s. Aditya International Trade Co. and its proprietor, Maheshchandra Sharma, arising from a show cause notice demanding Customs duty, interest, and penalty under the Customs Act, 1962. The Commission found that the applications were not maintainable under Section 127L of the Act due to the penalty imposed on Maheshchandra Sharma in a previous case. The Commission issued a notice to explain why the applications should not be rejected based on this bar.

During the hearing, Maheshchandra Sharma argued that he was wrongly designated as a de facto owner in the previous case and had no personal interest or benefit from the firm in question. He contended that the penalty imposed on him should not disentitle him from applying for settlement in the present case. However, the Commission noted that he was penalized in the previous case for his role in undervaluation and evasion of duty, regardless of his status as a de facto owner.

The Commission emphasized that the status of Maheshchandra Sharma as a person, rather than a de facto owner, was considered under Section 127L of the Act. The confessional statement recorded by DRI was deemed admissible as evidence, and the Commission highlighted that the statements were not retracted. Despite arguments regarding the informal arrangement between Maheshchandra Sharma and his son to save time, the penalty was imposed based on his actions leading to undervaluation.

Ultimately, the Commission concluded that Maheshchandra Sharma was not entitled to apply for settlement in the present case due to the penalty imposed in the previous case. Both Maheshchandra Sharma and M/s. Aditya International Trade Co. were considered legally indistinguishable, leading to the rejection of the applications for settlement under Section 127B of the Act. The judgment reaffirmed the application of the legal provisions and the findings of the Bench in addressing the issues raised during the proceedings.