2009 (7) TMI 404 - HC - Customs

Jurisdiction of Settlement Commission - The petitioner s contention that under a single code it exported goods in a calendar year and hence the same is to be treated as single export cannot be sustained as the requirement as per Section 127B of the Customs Act 1962 is to do export by a bill of entry or shipping bill. Admittedly bill of entry or shipping bill was issued by three authorities and three show cause notices are issued unless the amount mentioned in the show cause notice in a case exceeds Rs. 3 lakhs the Settlement Commission has no jurisdiction to entertain the settlement application under Section 127B under which the petitioner filed the settlement application. - There is no merit in the writ petition and the writ petition is dismissed

Summary

Issues:
1. Whether a common settlement application filed by the petitioner in respect of three show cause notices is maintainable under Section 127B of the Customs Act, 1962?

Analysis:
The petitioner, a leading export house, imported duty-free items for manufacturing and exporting purposes, inadvertently availing duty drawback concession for a negligible quantity of raw materials. The Customs authorities issued three show cause notices for duty drawback violations during 2003-2004, demanding explanations and repayments. The petitioner sought settlement under Section 127 of the Customs Act, 1962, based on the condition that the duty payable exceeds Rs. 3 lakhs and no pending appeals exist. However, the authorities rejected the settlement application, citing that each show cause notice's duty liability was less than Rs. 3 lakhs, making the application non-maintainable under Section 127B.

The respondents argued that each show cause notice's duty liability must exceed Rs. 3 lakhs for a settlement application to be entertained under Section 127B. They contended that the petitioner's single application for three notices, each with duty liabilities below Rs. 3 lakhs, did not meet the statutory requirements. The authorities justified the rejection of the application based on this discrepancy.

The court analyzed Section 127B of the Customs Act, 1962, which mandates that for a settlement application to be considered, the additional duty accepted by the applicant must exceed Rs. 3 lakhs for each show cause notice. In this case, the duty drawback amounts demanded in the show cause notices were below Rs. 3 lakhs individually. Therefore, the court upheld the rejection of the settlement application, stating that the Settlement Commission lacked jurisdiction to entertain the application under Section 127B due to the duty liabilities not meeting the prescribed threshold.

The court dismissed the writ petition, emphasizing that the petitioner's argument of treating the exports under a single code as a single transaction was not tenable. The court reiterated that compliance with the statutory requirements of Section 127B, including duty liabilities exceeding Rs. 3 lakhs per notice, was essential for maintaining a settlement application. Consequently, the court upheld the rejection of the settlement application and dismissed the petition without costs.