2020 (11) TMI 442 - HC - Customs

Rejection of Application for Settlement of Case - Revision / Reduction of declared value during the course of hearing - It was the contention of the respondent that since the imported goods are notified under Section 123 of the Customs Act, it was not open for the petitioner to settle the case under Section 127B of the Act. HELD THAT - The petitioner had originally admitted the liability of ₹ 83,27,539/- and interest of ₹ 23,82,092/-. However, during the course of hearing, the petitioner wanted to reduce the aforesaid amount to ₹ 77,81,844/- and the proportionate interest to ₹ 15,50,791/- vide their letter/submission dated 12-6-2015. The petitioner therefore wanted the 1st respondent to order refund of ₹ 15,92,037/- along with interest of ₹ 8,31,301/- - It is evident that the petitioner has not clearly explained its stand. Instead the petitioner has changed its stand and thereby tried adjudication of dispute by the 1st respondent Settlement Commission which is not warranted. Since there is no clarity in the stand of the petitioner, the 1st respondent Settlement Commission was constrained to dismiss the application stating that the petitioner has raised the several contentious arguments which cannot be considered. Since there is no scope for the second opportunity to settle the case before the 1st respondent Settlement Commissioner by filing fresh application, one more chance can be given to the petitioner to settle the case by accepting the amounts that was originally offered as admitted the liability by the petitioner. The case is remitted back to the 1st respondent Settlement Commission to pass a fresh order within a period of six months from the date of receipt of a copy of this order - petition allowed by way of remand.

Issues Involved:
1. Rejection of application for settlement under Section 127B of the Customs Act, 1962.
2. Applicability of Section 123 of the Customs Act, 1962.
3. Maintainability of the application before the Settlement Commission.
4. Petitioner's inconsistent stand on admitted liability.

Detailed Analysis:

1. Rejection of Application for Settlement under Section 127B of the Customs Act, 1962:
The petitioner challenged the Final Order dated 16-7-2015, which rejected the application for settlement under Section 127B of the Customs Act, 1962. The petitioner had imported Cotton Woven Fabrics, notified under Customs Notification No. 98/2009-Cus., dated 11-9-2009. The Show Cause Notice issued questioned the declared value and classification of the imported goods, proposing a duty demand of ?2,10,10,983/-. The petitioner admitted a liability of ?83,27,539/- and interest of ?23,82,092/-, totaling ?1,07,09,631/-.

2. Applicability of Section 123 of the Customs Act, 1962:
The respondent raised a preliminary objection regarding the maintainability of the application under Section 127B, citing the 3rd proviso, which bars applications related to goods notified under Section 123. The petitioner argued that the restriction applies only if the goods are smuggled, which was not the case here. The Settlement Commission, however, rejected the application on the merits, stating that the petitioner did not come with full disclosure and a spirit of surrender.

3. Maintainability of the Application before the Settlement Commission:
The Settlement Commission referred to the decision in In Re: Idris Y. Porbunderwala, which clarified that applications are not per se barred for goods listed under Section 123 unless the goods are seized on reasonable belief of being smuggled. The Commission can determine the applicability of Section 123 based on the facts and circumstances. The petitioner's application was rejected on the ground that the issue was complex and should be adjudicated by the proper officer after appreciating the facts and evidence.

4. Petitioner's Inconsistent Stand on Admitted Liability:
Initially, the petitioner admitted liability of ?83,27,539/- and interest of ?23,82,092/-. However, during the hearing, the petitioner sought to reduce the amount to ?77,81,844/- and interest to ?15,50,791/-, requesting a refund of ?15,92,037/- and interest of ?8,31,301/-. This change in stance led to the rejection of the application by the Settlement Commission, as the petitioner did not provide a clear and consistent explanation.

Conclusion:
The court set aside the impugned Final Notice dated 16-7-2015 and remitted the case back to the Settlement Commission for a fresh order within six months. The maintainability issue was left open for the Settlement Commission to decide. The respondent was allowed to file objections within thirty days. The writ petition was disposed of with no cost, and connected miscellaneous petitions were closed.

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