2010 (3) TMI 497 - HC - Customs

Settlement of case - The Appellant is a manufacturer and exporter of ready made garments. The Appellant firm availed certain duty free cotton yarn/fabrics without paying duty for such imports. Notice was issued to the Appellant on 28-10-2008 directing to state whether the Appellant has fulfilled all the conditions laid down under Section 127-B of the Customs Act. Single common application filed in respect of case covered by three Show Cause Notices issued by three different commissionerate. Application for settlement held as not maintainable in impugned order as additional amount of duty accepted less than Rs. 3 lakhs when cases treated separate. Each and every application to have a notice and additional duty liability admitted more than Rs. 3 lakh for every application. Held that expression case in section 127A(b) of Custom Act1962 not referring to multiple proceedings before different authorities. Three SCNs to be considered as three different cases and cannot be clubbed or additional duty liability not exceeds Rs. 3 lakhs. Section 127B not satisfied and application for settlement not maintainable. Impugned order of Single Judge sustainable.

Issues Involved:
1. Maintainability of the Settlement Application under Section 127-B of the Customs Act.
2. Interpretation of the term "case" under Section 127-A(b) of the Customs Act.
3. Clubbing of multiple show cause notices.
4. Violation of Principles of Natural Justice.
5. Applicability of Section 219 of the Criminal Procedure Code.
6. Liberal vs. strict interpretation of Section 127-B and Section 127-A(b).
7. Infringement of Article 21 of the Constitution of India.

Detailed Analysis:

1. Maintainability of the Settlement Application under Section 127-B of the Customs Act:
The appellant filed a single application for settlement covering three show cause notices with a total duty liability of Rs. 6,35,585/-. The Settlement Commission held that the application was not maintainable as the show cause notices were issued by three different Commissionerates and did not meet the prerequisite of an additional amount of duty exceeding Rs. 3 lakhs for each notice as required under Section 127-B(1)(b) of the Customs Act.

2. Interpretation of the term "case" under Section 127-A(b) of the Customs Act:
The appellant argued that the term "case" should be interpreted to include any proceeding under the Act, irrespective of territorial jurisdiction. However, the court held that Section 127-A(b) refers to any proceeding pending before an adjudicating authority and does not imply multiple proceedings before different authorities. Thus, the term "case" does not support the appellant's interpretation.

3. Clubbing of multiple show cause notices:
The appellant contended that the three show cause notices should be treated as one case. However, the court observed that the notices were issued by different Commissionerates and were therefore separate cases. The court rejected the argument for clubbing the notices, stating that Section 127-A(b) does not refer to multiple proceedings before different authorities.

4. Violation of Principles of Natural Justice:
The appellant claimed a violation of natural justice as no opportunity for oral hearing was provided. The court noted that the appellant did not request a personal hearing in its written reply. The court concluded that the Settlement Commission's consideration of the written reply sufficed, and there was no violation of natural justice.

5. Applicability of Section 219 of the Criminal Procedure Code:
The appellant argued for the applicability of Section 219 of the CrPC, which allows for the clubbing of cases involving similar offences within a year. The court dismissed this argument, stating that Section 219 of the CrPC is irrelevant to the Customs Act, which deals with separate cases for each show cause notice.

6. Liberal vs. strict interpretation of Section 127-B and Section 127-A(b):
The appellant urged for a liberal interpretation of the provisions. The court emphasized that Chapter XIVA of the Customs Act, being an exception to the normal procedure, must be construed strictly. The court held that the provisions of Section 127-B and Section 127-A(b) are to be strictly interpreted, especially in cases involving deliberate evasion of duty.

7. Infringement of Article 21 of the Constitution of India:
The appellant argued that not clubbing the show cause notices infringed on its liberty under Article 21. The court rejected this argument, stating that each show cause notice was a separate case with a reasonable classification, and thus, there was no infringement of Article 21.

Conclusion:
The court dismissed the writ appeal, upholding the order of the single judge and the Settlement Commission. The court ruled that the Settlement Application was not maintainable as it did not meet the requirements of Section 127-B of the Customs Act. The court also held that there was no violation of natural justice or infringement of Article 21, and the provisions of the Customs Act must be strictly construed.

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