2023 (4) TMI 1150 - HC - Customs

Bar on application before the settlement commission - scope of the term 'any other matter' u/s 127L - whether the bar under Section 127L would be, at all, applicable in the present case? - Misclassification of the imported goods by the petitioner - application dismissed without hearing the petitioner - whether the procedure adopted by the Bench in dismissing the application without hearing the petitioner is appropriate? HELD THAT - The present case is no exception. It is for this reason and bearing in mind the spirit and objective of Chapter XIV-A, that Legislature imposes a bar upon parties to approach the Settlement Commission in any other matter in three specified situations - (i) Where a penalty is imposed on the assessee on the ground of concealment of particulars of duty liability. (ii) Conviction of an offence and (iii) Remand of the case to the proper officer under Section 127I. The phrase ' any other matter ' is relevant here. While the petitioner emphasises upon the word ' other ' to state that the bar applies only to a cause of action different from that in regard to which the first application was filed, is disagreed. The phrase ' any other matter ', in my considered view, would bar an assessee from approaching the Settlement Commission ever, in the three situations set out under clauses (i) (ii) (iii) in Section 127L(1). This is by way of a caution/deterent, to ensure that an assessee who approaches the Settlement Commission comes with a full and true disclosure placing all cards on the table in the spirit in which that Chapter must be seen to apply - In the present case, the case of the petitioner has been found to attract penalty and a sum of Rs.4,50,000/- imposed. In such an event, the bar under Section 127L would apply on all fours. Thus, merely because the petitioner has chosen to style the application culminating in the impugned order as a fresh application does not mean that the Settlement Commission has to close its eyes to the relief sought and the lineage of the matter, particularly the bar under Section 127 L that must be strictly enforced. In the present case, the petitioner is well aware of the duty that has been imposed in respect of 17 addtional transactions as amended by the subsequent corrigendum. The petitioner has also settled the duty demand acquiescing to the fact of wrongful classification by it at the original instance - In such circumstances, the petitioner ought to have, even at the original instance, included those transactions in the ambit of settlement application and hence having failed to do so cannot be granted a second innings merely to obtain the benefit of waiver. Petition dismissed.

Summary

Issues Involved:
1. Misclassification of imported goods and seizure.
2. Demand notice and show cause notice for duty.
3. Settlement of demand notice.
4. Application to Settlement Commission and subsequent rejection.
5. Applicability of Section 127L bar.
6. Maintainability of writ petition under Article 226 versus 227.

Summary:

1. Misclassification of Imported Goods and Seizure:
The petitioner, a company importing chemicals, faced action by the Directorate of Revenue Intelligence for misclassifying goods, leading to the seizure of a consignment at Nhava Sheva Port, Mumbai.

2. Demand Notice and Show Cause Notice for Duty:
A show cause notice dated 25.06.2018 was issued demanding duties for consignments imported at Nhava Sheva Port and Chennai port for the period June 2014 to July 2017, totaling INR 1,58,75,497. Prior to this, a demand notice dated 30.03.2018 was issued for 17 bills of entry, which the petitioner settled with interest on 14.08.2020.

3. Settlement of Demand Notice:
The petitioner settled the demand notice dated 30.03.2018, including interest and modifications made by a corrigendum dated 05.12.2018. The demand notice also proposed re-classification, confiscation under Section 111(m), and penalties under Section 112(a)/114(a) of the Customs Act, 1962.

4. Application to Settlement Commission and Subsequent Rejection:
The petitioner filed an application to the Settlement Commission on 04.07.2019, addressing only the transactions under the show cause notice dated 25.06.2018. The Settlement Commission settled the matter on 07.07.2020, imposing differential duty, interest, and a penalty of Rs.4,50,000/-. The petitioner then filed another application on 14.08.2020 for the 17 transactions covered by the demand notice dated 30.03.2018, which was rejected by the Settlement Commission on 19.08.2020, citing the bar under Section 127L.

5. Applicability of Section 127L Bar:
The court examined whether the bar under Section 127L, which prevents subsequent applications for settlement in cases of penalty for concealment, conviction, or remand, applied. The court concluded that the bar under Section 127L applied since the petitioner had been penalized for concealment of duty liability.

6. Maintainability of Writ Petition under Article 226 versus 227:
The petitioner argued for the maintainability of the writ petition under Article 226, citing the need for a hearing before rejection. The respondents contended that the appropriate remedy was under Article 227. The court decided to address the legal issue without delving into the technicalities of Articles 226 and 227.

Conclusion:
The court dismissed the writ petition, holding that the bar under Section 127L applied, and the petitioner could not seek a second settlement application for the same matter. The court emphasized the need for full and true disclosure in settlement applications and upheld the Settlement Commission's decision.