2001 (9) TMI 368 - Commission - Customs

Issues Involved:
1. Classification and misdeclaration of imported goods.
2. Eligibility for settlement under Section 127B of the Customs Act, 1962.
3. Payment of additional customs duty and interest.
4. Immunity from prosecution and penalties.
5. Jurisdiction and authority of the Settlement Commission.

Issue-wise Detailed Analysis:

1. Classification and Misdeclaration of Imported Goods:
The main applicant imported two CT/e scanners with optional accessories but declared them as parts for computer tomography scanners in the Bills of Entry. The SCN alleged that this misdeclaration was intended to derive undue pecuniary advantage by paying lower customs duties. The correct classification of CT/e scanners under chapter sub-heading 9022.12 attracted higher duties compared to parts for manufacture of CT/e scanners.

2. Eligibility for Settlement under Section 127B of the Customs Act, 1962:
The applicants contended that they had no ulterior motive and admitted the additional duty liability as demanded in the SCN. The Revenue argued that since the additional duty and interest were already paid, no dispute was pending, and thus the case did not merit admission. However, the Commission held that the pendency of a "proceeding" under the Customs Act, not necessarily a "dispute," was sufficient for eligibility. The show cause notice indicated that a proceeding was still pending.

3. Payment of Additional Customs Duty and Interest:
The applicants admitted and paid the additional customs duty of Rs. 19,97,698 and interest of Rs. 1,18,220 during the investigation. The Commission considered whether an application could be entertained when the duty amount demanded in the SCN had already been paid. It was concluded that the payment made during the investigation should be treated as a deposit until the assessment process was complete.

4. Immunity from Prosecution and Penalties:
The Revenue's contention that the applicants sought settlement only for immunities was addressed. The Commission noted that the process of settlement involves disclosure of additional customs duty payable and the manner of evasion, benefiting both the applicant and the Revenue. The decision on granting immunities would be taken in terms of Section 127H of the Customs Act, 1962, and admission of the application did not automatically guarantee immunities.

5. Jurisdiction and Authority of the Settlement Commission:
The Commission held that with the passing of the order, it acquired exclusive jurisdiction to exercise the powers and perform the functions of any Customs Officer under the Customs Act, 1962, in relation to this case. This was in accordance with sub-section (2) of Section 127F of the Customs Act, 1962.

Separate Judgments:
A dissenting opinion was provided by one member, K.P. Sridhara Raman, who argued that the application should disclose a duty liability not previously disclosed and accept an additional amount of customs duty payable. He emphasized that the acceptance of additional duty should be in excess of Rs. Two lakhs, payable after filing the application, and not merely seeking immunities. However, the majority opinion prevailed, allowing the applications to be proceeded with.

Conclusion:
The Settlement Commission allowed the applications to proceed under Section 127C(1) of the Customs Act, 1962, and adjusted the amount already paid during the investigation towards the admitted additional duty liability. The Commission acquired exclusive jurisdiction over the case, emphasizing the procedural and substantive aspects of settlement under the Customs Act.

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