2022 (6) TMI 679 - HC - Customs

Maintainability of application before Settlement Commission - eligibility of petitioner to file the application - re-export of equipments that were imported for its contract with ONGC - Section 127-B of Customs Act - HELD THAT - Plain reading of Section 127-B of the Customs Act, would indicate that the term any other person appearing in the said Section would mean any other person to whom show cause notice has been issued charging him with duty and such any other person can file an application. Use of the words filed bill of entry would not mean that a bill of entry in the case has to be necessarily filed by him. Only requirement is that there must be a case properly relating to applicant with reference to a bill of entry filed and in this case, case relating to petitioner has been pending before proper Officer. Indisputably, a show cause notice had been issued to petitioner and therefore, a proceeding under this Act for the levy, assessment and collection of customs duty was pending before an adjudicating authority when the application under Section 127B was made. A person who may not be an Importer or Exporter, can still file such an application u/s 127-B of the Act before the Settlement Commission if he is served with a show cause notice charging him with duty. Similar view was taken by a Division Bench of Gujarat High Court in MAHENDRA PETROCHEMICALS LTD. VERSUS UNION OF INDIA 2009 (6) TMI 576 - GUJARAT HIGH COURT . The Settlement Commission is directed to examine the application of petitioner on merits and in accordance with law and dispose the application on merits within 12 weeks from today - petition allowed.

Summary

Issues:
1. Eligibility to file an application under Section 127-B of the Customs Act.
2. Interpretation of the term "any other person" in Section 127-B.
3. Rejection of the application by the Settlement Commission.

Analysis:

Issue 1: Eligibility to file an application under Section 127-B of the Customs Act
The petitioners approached the customs authorities to pay customs duty after realizing an error in re-exporting certain equipment. However, the Settlement Commission rejected their application under Section 127-B, stating that only the person who filed a bill of entry could apply. The rejection was based on the interpretation that the applicant must have filed a bill of entry. The petitioners argued that any person served with a show cause notice charging duty is entitled to file an application under Section 127-B, irrespective of filing a bill of entry. The High Court agreed with the petitioners, emphasizing that the term "any other person" in Section 127-B should be interpreted literally. The court referred to a similar view taken by the Gujarat High Court in a previous case and set aside the rejection, directing the Settlement Commission to examine the application on its merits.

Issue 2: Interpretation of the term "any other person" in Section 127-B
The court analyzed the provisions of Section 127-B of the Customs Act, focusing on the term "any other person" who can make an application to the Settlement Commission. The court emphasized that the literal interpretation of this term allows any person served with a show cause notice charging duty to file an application under Section 127-B, even if they have not filed a bill of entry themselves. The court cited previous judgments and interpretations to support this view, highlighting that the key requirement is the issuance of a show cause notice charging duty to the concerned person. The court's interpretation aligned with the broader understanding of the term "any other person" in the context of the Customs Act.

Issue 3: Rejection of the application by the Settlement Commission
The Settlement Commission rejected the petitioners' application primarily on the grounds that the applicant had not filed a bill of entry. However, the High Court found this reasoning flawed and directed the Settlement Commission to reexamine the application on its merits and in accordance with the law. The court emphasized that the eligibility to file an application under Section 127-B should not be solely based on the filing of a bill of entry but on the broader criteria of being served with a show cause notice charging duty. The court's decision to set aside the rejection and instruct a reevaluation of the application highlighted the importance of a comprehensive and inclusive interpretation of the relevant provisions of the Customs Act.

In conclusion, the High Court's judgment focused on the eligibility criteria for filing an application under Section 127-B of the Customs Act, emphasizing the broader interpretation of the term "any other person" and the significance of being served with a show cause notice charging duty. The court's decision to set aside the rejection and direct a reexamination of the application underscored the importance of a fair and inclusive approach in settling customs duty-related cases.