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2004 (8) TMI 116 - HC - Central ExciseImports duty free Non-alloy Steel Billets and Non-alloy Steel Wire Rods - Jurisdiction of the Settlement Commission under Chapter XIV(A) of the Customs Act, 1962 - Power of the Commission to waive interest chargeable under the Customs Act and Rules - Justification of the Commission in waiving interest above 10% on a pro-rata basis - HELD THAT - In this case going by the statement in the application made out by the importer, the Commission has rightly entertained the application, since it has considered in great details, whether the conditions mentioned in Section 127B of the said Act has been fulfilled or not. I accept the argument of Mr. Kapoor (the learned Additional Solicitor General) that the Commission will have lawful jurisdiction to exercise its power under the aforesaid Chapter, if an application discloses full and true duty liability which has not been disclosed before the appropriate officer, the manner in which such liability has been incurred, the additional amount of duty of customs accepted to be payable by him on any ground whatsoever. The Commission found that the importer respondent fulfilled all the conditions. It is further found that there was full and true disclosure of the duty liability of the additional customs duty accepted to be payable by the importer. The Commission with clarity has held that entire amount of the duty is chargeable and leviable, but for exemption, is the additional duty to be paid. In my view the Commission has jurisdiction to decide the question of entertainability and/or maintainability of the application and when it has decided with reasons which do not seem to be absurd, this Court will not substitute its own reasoning. It seems to me it has wrongly equated payability of interest under the bond with the expressed provision of the said Act. Unlike Civil Court the waiver either of full or of partial interest in contractual bargain cannot be granted by the Commission without consent of both the parties. To clarify the position had it been a case of chargeability or payability of interest under expressed provision of the Act the Commission would have jurisdiction. This point once was brought for decision before Bombay High Court in the case of Pratibha Syntex Ltd. v. Union of India 2003 (7) TMI 78 - HIGH COURT OF JUDICATURE AT BOMBAY . Their Lordships of the Division Bench however did not deal with the same as the facts and situation of the case did not warrant. It is true the bond was furnished in connection with the statutory notification and but has got force of deal of private character. The power of waiver is relatable to the interest chargeable under the Act. However, subsequently it was found that the rate of interest stipulated in the bond was reduced to 15 per cent on and from October, 2002, in place of 24 per cent. This reduction can be termed to be variation of the terms of the Contract subsequently and this has not been rejected by the importer. Since the importer committed breach, they are to pay interest at the rate of 15 per cent from the date of the submission of Bill of Entry on the total amount of duty up-to-date of payment of first instalment and thereafter on pro rata basis till entire payment having been made. As far as direction for nullification of entries made in DEEC Book and revalidation of adverse licenses is concerned the same is also without jurisdiction because the same has to be dealt with under the different Act, not under Customs Act, 1962. The learned Commission has no power to do so. Accordingly, this direction is set aside. Thus both the applications are disposed of.
Issues Involved:
1. Jurisdiction of the Settlement Commission under Chapter XIV(A) of the Customs Act, 1962. 2. Power of the Settlement Commission to waive interest chargeable under the Customs Act and the Rules. 3. Justification of the Commission in waiving interest above 10% on a pro-rata basis. Summary: 1. Jurisdiction of the Settlement Commission: The first issue examined whether the Settlement Commission had jurisdiction to entertain the application u/s 127B of the Customs Act, 1962. The Commission had previously decided on 20th March 2003 that the importer fulfilled all conditions for maintaining the application. This decision was not challenged. The Court held that the Commission had jurisdiction to entertain the application, as it had made a detailed assessment of the conditions u/s 127B and found them to be fulfilled. The principle of waiver and estoppel was applied, as the Revenue accepted the order without demur. 2. Power to Waive Interest: The second issue was whether the Commission had the power to waive interest. The Court noted that the Settlement Commission under the Customs Act, 1962, has the express power to waive interest u/s 127H, unlike the Settlement Commission under the Income-tax Act, 1961. The Court rejected the argument that the Commission lacked this power, emphasizing that legislative intent cannot be overridden by external opinions, such as those from the Law Ministry. 3. Justification for Waiving Interest: The third issue addressed whether the Commission was justified in waiving interest above 10% on a pro-rata basis. The Court found that the Commission's power to waive interest is limited to interest chargeable under the Act, not under contractual obligations like bonds. The bond in question required a 24% interest rate, reduced to 15% from October 2002. The Court held that the Commission could not waive this contractual interest without both parties' consent. The importer was directed to pay interest at 15% from the date of the Bill of Entry submission until full payment. Other Directions: The Court also set aside the Commission's direction for nullification of entries in the DEEC Book and revalidation of advance licenses, stating that these matters fall under different legislation, not the Customs Act, 1962. Conclusion: Both writ petitions were disposed of with no order as to costs.
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