2006 (12) TMI 159 - HC - Customs

Jurisdiction on the Settlement Commission - Composite order - cut and polished diamond - absence of filing of bill of entry as contemplated under the proviso to Section 127C(1) - HELD THAT - It is the case of the Revenue that the Special Leave Petition filed against the decision of this Court dated 21st July, 2005 is pending before the Apex Court. Therefore, when this Court has already ruled that the application filed by Manish Kalvadiya is maintainable, it is not open to the revenue to contend that the Settlement Commission was in error in entertaining the application filed by Manish Kalvadiya. Accordingly, the first argument of Mr. Jetly is liable to be rejected. It is pertinent to note that in the application filed by M/s. I.P. Patel Co., relating to cut and polished diamond no additional amount of duty has been disclosed and they have referred to the amount offered by Manish Kalvadiya in respect of cut and polished diamonds. By the impugned order, the Settlement Commission has held that in view of composite show cause notice issued, the reliefs granted to Manish Kalvadiya in cut and polished diamond will be applicable to M/s. I.P. Patel and Co. as a co-noticee in respect of cut and polished diamond. In our opinion, when the order passed by the Settlement Commission is a composite order, it will not be proper to hold that it is restricted to Manish Kalvadiya alone. Moreover, even in the case of Manish Kalvadiya, the Settlement Commission has not given any finding as to whether the enhanced duty liability accepted by Manish Kalvadiya represents the correct duty liability. In this view of the matter in our opinion, it is just and proper to set aside the impugned order and remit the matter back to the Settlement Commission with a direction to decide it afresh in accordance with law, leaving all the contentions of both the sides open. Accordingly, the impugned order is quashed and set aside and the matter is remitted back to the Settlement Commission to decide the applications filed by the parties independently and in accordance with law. All contentions of all the parties are kept open. Both the petitions are disposed of accordingly with no order as to cost.

Issues:
Challenging order of Settlement Commission under Customs Act, maintainability of application without filing bill of entry, applicability of relief granted to one party on another co-noticee, interpretation of composite show cause notice, setting aside and remitting the matter back to Settlement Commission for fresh decision.

Analysis:
1. Challenging Settlement Commission's Order: The judgment involves two petitions arising from an order passed by the Settlement Commission under the Customs Act. The Revenue challenged the order dated 9th November, 2005, which admitted the application filed by one party seeking enforcement of the order. The key contention was whether the Settlement Commission had jurisdiction to entertain the application without the filing of a bill of entry as required under Section 127C(1) of the Customs Act.

2. Maintainability of Application: The Court addressed the argument raised by the Revenue that the application was not maintainable due to the absence of a bill of entry. It was noted that the Court had previously ruled in favor of the application's maintainability, setting aside the Settlement Commission's earlier decision. The Court held that the Revenue could not contest the Commission's jurisdiction based on the filing of the bill of entry, as the Court had already determined the application's maintainability.

3. Applicability of Relief to Co-Noticee: Another issue raised was whether the relief granted to one party could be applied to a co-noticee. The Settlement Commission had extended the relief granted to the applicant to the co-noticee based on a composite show cause notice. The Court referred to previous decisions to analyze this issue, emphasizing that each party should settle its own cause of action independently.

4. Interpretation of Composite Show Cause Notice: The Court examined the show cause notice, which involved two separate issues related to different parties. It was observed that the co-noticee had not disclosed additional duty liability in their application. The Settlement Commission's decision to apply the relief granted to one party to the co-noticee was challenged based on the independent causes of action for each party.

5. Setting Aside and Remitting the Matter: Ultimately, the Court quashed and set aside the impugned order, remitting the matter back to the Settlement Commission for a fresh decision. The Court directed the Commission to decide the applications independently and in accordance with the law, leaving all contentions open for both parties. The judgment clarified that a composite order should not be restricted to one party and highlighted the need for a proper assessment of duty liability.

6. Final Disposition: The Court made the rule absolute in one writ petition and dismissed the other as not pressed. Both petitions were disposed of with no order as to costs, concluding the detailed analysis of the issues involved in the judgment.

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