2017 (12) TMI 106 - HC - Customs

Doctrine of merger - Settlement Commission in exercise of its power conferred under Section 127-I (1) of the Customs Act, 1962, sent the case back to the adjudicating authority for adjudication in accordance with the provisions of the Customs Act - whether the subject matter of the show cause notice issued to the petitioner is a fit case for settlement before the Commission? - Held that - Admittedly, all the records are available in Chennai, in the office of the Settlement Commission and the petitioner has sought for issuance of writ of certiorari, to quash the order passed by the Settlement Commission, which was passed at Chennai and this Court has got jurisdiction to entertain this writ petition. The present writ petition is for writ of certiorari and the correctness of the order passed by the Settlement Commission is to be decided. The impugned order has not been passed on the merits of the petitioner s claim for settlement, but the application has been rejected on the ground that the petitioner failed to provide the required cooperation to the Settlement Commission to settle the case in a true spirit of settlement. The facts recorded by the Settlement Commission in paragraph 7.4 shows the conduct of the petitioner. It appears that the authorized representative, who was engaged by the petitioner, did not extend full cooperation. That apart, there has been change of the authorized representative. There is every justification on the part of the Settlement Commission for having refused to entertain the application. However, one more reason assigned by the Commission in Paragraph 7.8 of the impugned order is that the petitioner failed to make full and true disclosure in the application for settlement. However, this conclusion is not supported by adequate findings. Thus, it can be safely concluded that the application was rejected for non-cooperation. In such circumstances, it cannot be stated that the revenue would be prejudiced or put to difficulty for appearing before the Settlement Commission at Chennai, especially when the respondents admit that the Chennai Bench of the Settlement Commission exercises jurisdiction over the State of Andhra Pradesh. The matter is remanded to the respondent for fresh consideration with a specific direction to the petitioner to extend the full cooperation for the disposal of the matter by the Settlement Commission without seeking for adjournment on vexatious or untenable grounds - petition allowed by way of remand.

Issues Involved:
1. Challenge to the proceedings of the Customs, Central Excise & Service Tax Settlement Commission.
2. Preliminary objection regarding the maintainability of the writ petition based on the Doctrine of Forum Conveniens.
3. Full and true disclosure and cooperation by the petitioner before the Settlement Commission.
4. Jurisdiction of the High Court to entertain the writ petition.

Detailed Analysis:

1. Challenge to the proceedings of the Customs, Central Excise & Service Tax Settlement Commission:
The petitioner challenged the Settlement Commission's order dated 18.08.2016, which sent the case back to the adjudicating authority. This decision was based on the grounds that the petitioner did not make a "true and full disclosure" of the duty liability and failed to cooperate with the Settlement Commission. The petitioner admitted to the duty amount of ?38,00,498/- and interest of ?4,21,582/- but the Settlement Commission found the disclosure insufficient and cooperation lacking.

2. Preliminary objection regarding the maintainability of the writ petition based on the Doctrine of Forum Conveniens:
The respondents argued that the writ petition should be dismissed based on the Doctrine of Forum Conveniens, as the substantial cause of action arose in Andhra Pradesh, not within the jurisdiction of the Madras High Court. They cited several cases, including *Kusum Ingots & Alloys Ltd. vs. Union of India*, to support their argument that the Court should refuse to exercise its jurisdiction if a significant part of the cause of action arose outside its territory.

3. Full and true disclosure and cooperation by the petitioner before the Settlement Commission:
The Settlement Commission's decision to send the case back was partly due to the petitioner's alleged failure to make a "full and true disclosure" and lack of cooperation. The court noted that while the Settlement Commission mentioned the lack of full disclosure, it did not provide specific reasons for this conclusion. However, the Commission did document the petitioner's lack of cooperation, including the conduct of the authorized representative.

4. Jurisdiction of the High Court to entertain the writ petition:
The petitioner argued that the writ petition was maintainable in the Madras High Court as the order under challenge was passed by the Chennai Bench of the Settlement Commission. The court considered precedents, including *Sanjos Jewellers v. Syndicate Bank*, which allowed challenges to orders passed by authorities within its jurisdiction. The court also referenced decisions like *Union of India vs. Adani Exports Ltd.* and *M/s.Ambica Industries vs. Commissioner of Central Excise*, which supported the petitioner's position.

Conclusion:
The court concluded that the writ petition was maintainable, emphasizing that the Settlement Commission's order did not merge with any other order and was independent. The court found that the petitioner should not suffer due to the fault of their authorized representative and decided to exercise its discretion to entertain the writ petition. The court allowed the writ petition, set aside the impugned order, and remanded the matter to the Settlement Commission for fresh consideration, directing the petitioner to extend full cooperation. No costs were imposed, and the connected miscellaneous petition was closed.

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