2007 (10) TMI 83 - HC - Customs

Object of Settlement Commission is to enable the Dept. to recover duty in dispute in all possible ways at an early time Hence even cases of fraud, smuggling etc are allowed to come in purview of Section 127-B of Custom Act So settlement application is maintainable

Issues Involved:
1. Legality of the Settlement Commission's order admitting the appellant's application under Section 127-B of the Customs Act, 1962.
2. Applicability of Section 127-B to cases involving smuggling and deliberate mis-declaration.
3. Compliance with the conditions stipulated under Section 127-B and its proviso.

Issue-wise Detailed Analysis:

1. Legality of the Settlement Commission's order admitting the appellant's application under Section 127-B of the Customs Act, 1962:

The appeal challenges the order of the learned single Judge dated 18.10.2001, which quashed the Settlement Commission's order dated 15.2.2001 admitting the appellant's application under Section 127-B of the Customs Act, 1962. The learned single Judge held that the case did not fall within the ambit of Section 127-B, making the Settlement Commission's order unsustainable. The appellant contended that their application met all the requirements of Section 127-B, while the respondent argued that the provision only applied to bona fide importers and not to cases involving calculated evasion of duty.

2. Applicability of Section 127-B to cases involving smuggling and deliberate mis-declaration:

The court examined whether the Settlement Commission's power under Section 127-B extended to cases of smuggling and deliberate mis-declaration. It was noted that Section 127-B allows for the settlement of cases involving customs duty, including those where a show cause notice has been issued. The court found that the term "case" under Section 127-A includes proceedings for levy, assessment, and collection of customs duty, which can encompass cases involving smuggling. The court rejected the respondent's contention that the provision did not apply to smuggling cases, emphasizing that the statutory framework allowed for the settlement of such disputes.

3. Compliance with the conditions stipulated under Section 127-B and its proviso:

The court meticulously analyzed whether the appellant's application complied with the conditions outlined in Section 127-B and its proviso:
- Condition No.(i): The appellant had filed a bill of entry, satisfying the requirement.
- Condition No.(ii): A show cause notice was issued by the proper officer, meeting this condition.
- Condition No.(iii): The additional amount of duty accepted exceeded Rs. 2 lakhs.
- Condition No.(iv): The appellant's application was in the prescribed form and disclosed the duty liability and the manner in which it was incurred.
- Proviso Conditions: The goods involved were not subject to Section 123, nor related to any offense under the Narcotic Drugs and Psychotropic Substances Act, 1985. The application was not for interpreting the classification of goods under the Customs Tariff Act, 1975. Although the application was filed within 180 days of seizure, the court cited the Supreme Court's ruling in Narsingh Das Tapadia, which held that such timing did not vitiate the proceedings.

The court concluded that all statutory requirements under Section 127-B and its proviso were met. It also noted that the Settlement Commission's powers, including provisional attachment, re-opening completed proceedings, and granting immunity from prosecution, supported the inclusion of cases involving smuggling within its purview.

Conclusion:

The court set aside the learned single Judge's order and restored the Settlement Commission's order admitting the appellant's application. The appeal was allowed, affirming that cases involving smuggling and deliberate mis-declaration could be settled under Section 127-B, provided all statutory conditions were satisfied.

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