2020 (3) TMI 204 - HC - Customs

Validity of the order of Settlement Commission, the JDGFT - Advance License Scheme - extension of time limit for discharge of export obligation, denied - Partial relief of immunity granted from levy of interest and penalty on payment of 10% at interest - HELD THAT - The Central Government has Issued Notification No. 46/2013- Customs dated 26.9.2013. The said notification has amended the a host of Notifications including Notification No 204/92-Customs dated 19.5.1992 wherein it has been stated that in a case of default in export obligation, when the duty on goods is paid to regularise the default, the amount of interest paid by the importer shall not exceed the amount of duty if such regularisation has been dealt in terms of Public Notice of the Government of India in the Ministry of Commerce No. 22 (RE-2013)/2009-2014 dated 12th August, 2013 - However, in the present case the Settlement Commission had exercised its discretion the as per the provision as it stood at that point of time and granted partial waiver of interest. There are no infirmity in the exercise of discretion vested with the settlement commission while granting partial waiver to the petitioner at that point of time - Since the petitioner had wrongly assumed that it could challenge the impugned order of the 1st respondent Settlement Commission perhaps under a mistaken notion, I am not inclined deny and dilute the benefit which was conferred to the petitioner under impugned order of the 1st respondent Settlement Commission. Petitioner is therefore directed to pay interest within a period of 30 days from date of receipt of copy of this order failing which the 2nd respondent will be entitled to proceed under Section 127 H of the Customs Act, 1962 as if no immunity was granted - petition disposed off.

Summary

Issues:
1. Interpretation of Customs Act, 1962 regarding levy of interest and penalty.
2. Immunity from penalty and waiver of interest under Customs Act, 1962.
3. Discretion of Settlement Commission in granting partial waiver of interest.
4. Applicability of court decisions on interest liability.
5. Finality of Settlement Commission's order and consequences of non-compliance.

Analysis:
1. The petitioner imported goods under the Duty Exemption Entitlement Certificate (DEEC) Scheme and was issued Advance Licenses in 1993 to import goods duty-free. The petitioner failed to fulfill the export obligation, leading to a show cause notice for payment of duty amounting to Rs. 48,18,110/-, later re-quantified to Rs. 39,25,511/- by the 2nd respondent.
2. The petitioner approached the 1st respondent Settlement Commission under the Customs Act, 1962, admitting liability and seeking immunity from penalty and waiver of interest. The Settlement Commission granted immunity from penalty but directed the petitioner to pay simple interest at 10% on the duty foregone, which the petitioner contested through a writ petition.
3. The Settlement Commission's decision to grant partial waiver of interest was upheld, citing its discretion and the statutory framework in place at that time. The Commission's exercise of discretion was found to be valid, considering the relevant provisions and notifications under the Customs Act, 1962.
4. The petitioner relied on various court decisions to argue against the interest liability, but the court found that the issue had already been addressed by the Supreme Court in a previous case, where it was held that interest payable under a bond executed by the importer was mandatory and could not be waived by the Settlement Commission.
5. The court emphasized the finality of the Settlement Commission's order under the Customs Act, 1962, and warned the petitioner of consequences for non-compliance. The petitioner was directed to pay the interest within a specified period, failing which the authorities could proceed as if no immunity had been granted, in accordance with the provisions of the Act.