2001 (10) TMI 105 - HC - Customs

Summary

Issues Involved:
1. Locus standi of the Commissioner of Customs (Air) to file the writ petition.
2. Maintainability of the writ petition post compliance with the Commission's conditional order.
3. Whether the case falls within the definition of "Case" u/s 127A(b) of the Customs Act.
4. Whether the case involves smuggling or fraud committed on the department.

Summary:

1. Locus Standi of the Commissioner of Customs (Air):
The court determined that the Commissioner of Customs (Air) is "a person aggrieved" and has locus standi to file the writ petition. The court referenced the Division Bench judgment in Central Board of Film Certification v. Yadavalaya and Another, which held that the term "person aggrieved" should be given the widest possible meaning. The Commissioner of Customs, who initiated the investigation and issued the show cause notice, has the right to challenge the Settlement Commission's order.

2. Maintainability of the Writ Petition Post Compliance:
The court rejected the contention that the writ petition is not maintainable due to the compliance with the Commission's conditional order of depositing additional customs duty. The payment of additional duty does not preclude the petitioner from questioning the jurisdiction of the Commission. The court held that mere compliance does not estop the petitioner from challenging the Commission's power to entertain the application.

3. Definition of "Case" u/s 127A(b) of the Customs Act:
The court examined the definition of "Case" u/s 127A(b) and concluded that the present case does not fall within this definition. The court noted that the second respondent did not disclose the mobile phones until detected by the department, indicating a case of mis-declaration and smuggling rather than mis-classification. The court referenced the Supreme Court judgment in Collector of Customs, New Delhi v. Shaila Kapoor, which held that undeclared goods in a Bill of Entry are considered smuggled.

4. Smuggling or Fraud Committed on the Department:
The court found that the case involves outright smuggling and fraud committed on the department. The second respondent's actions were not a bona fide mis-classification but a deliberate act of smuggling. The court referenced the Supreme Court judgments in Commissioner of Income Tax, Madras v. Express Newspapers Ltd. and Kuldeep Industrial Corporation v. Income Tax Officer, which emphasized that the Settlement Commission should not entertain applications where fraud or smuggling is detected by the authorities.

Conclusion:
The writ petition was allowed, and the impugned order of the Settlement Commission dated 15-2-2001 was set aside. The court directed the second respondent to approach the department for a refund of the deposited amount of Rs. 11,56,805/-. The department was instructed to consider the representation and pass orders within three weeks from the date of receipt of the representation.