2007 (4) TMI 273 - HC - Customs

Summary

Issues Involved:
1. Territorial Jurisdiction of the High Court.
2. Legality of the Settlement Commission's Order.

Summary:

1. Territorial Jurisdiction of the High Court:
The petitioner challenged the order dated 20th April 2006 by the Settlement Commission, Customs and Central Excise, Mumbai, u/s 226 of the Constitution of India. The core issue was whether the Bombay High Court had the territorial jurisdiction to entertain the petition. The petitioner argued that since the Settlement Commission was located in Mumbai, the Bombay High Court had jurisdiction. Conversely, the Revenue contended that the substantial cause of action arose within the jurisdiction of the Madras High Court, where the factory was located, and the show cause notices were issued. The Court noted that the intrinsic and substantial cause of action was within the jurisdiction of the Madras High Court, emphasizing the doctrine of "forum conveniens." The Court declined to exercise territorial jurisdiction, stating that even if a small part of the cause of action arises within its jurisdiction, it may not be a determinative factor compelling the Court to decide the matter on merit.

2. Legality of the Settlement Commission's Order:
The petitioner company, successor to M/s. Pradeep Drug Company Ltd. (P.D.C.L.), was served with show cause notices for evasion of duty. The petitioner admitted partial duty liability and approached the Settlement Commission, which settled the case for Rs. 1,52,16,978.00, directing the petitioner to pay the remaining amount with interest and penalty. The petitioner sought to set aside the order to the extent it required payment of duty in excess of a specified quantity and the imposed penalty. The Court noted that the Settlement Commission is a special forum created under the Act for dispute settlement, and if the settlement is not accepted, the original proceedings are revived. The Court found that the doctrine of merger did not apply in this case, as the order of the Settlement Commission did not merge with the order of any appellate authority.

Conclusion:
The Bombay High Court dismissed the petition, advising the petitioner to approach the appropriate forum, i.e., the Madras High Court, for relief. The dismissal was without prejudice to the petitioner's rights to seek appropriate relief in the appropriate forum.