9911796707
TMI Blog2009 (8) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... t is liable to be set aside. - 1207 of 2002 - - - Dated:- 5-8-2009 - <?xml:namespace prefix = st2 /> Ferdino I. Rebello and D.G. Karnik, JJ. Shri J.J. Bhatt, Sr. Counsel with Mrs. Anjali Chandurkar i/by Kanga Co., for the Petitioner. Shri A.S. Rao, for the Respondent. [Judgment per : Ferdino I. Rebello, J. (Oral)]. - Petitioner imported capital goods for the purpose of processing polyester waste. A show cause notices dated 31-7-1998 and 7-8-1998 were served on the Petitioner. Both the show cause notices called upon the Petitioner to show cause why penalty should not be imposed. The Petitioner filed a reply to both the notices and showed cause. 2. On 29-3-2000 Petitioner filed a settlement application being No. 9 of 2000, under Section 127B of the Customs Act, 1962. In this application, the Petitioner admitted the duty liability as Rs. 1,23,81,895/-. The Petitioner prayed for inter alia (1) waiver of interest, (2) release of two bank guarantees dated 7-9-1994 and 23-1-1995 deposited with the DGFT Mumbai, (3) Permission to pay duty liability in installments, (4) to grant immunity from imposition of any fine and penalty, (5) immunity from prose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commission has to confine itself to the show Clause notice. As mandated by the provisions of Section 127-C(7) and (9), Settlement Commission itself can settle the case and pass such order as it deems fit, providing for demand of duty, interest and penalty. It is submitted that the word "as it deems fit" clearly indicates that irrespective of the fact that the show cause notice proposes only a certain item, say tax, the settlement commission can include items like penalty. The powers of the Settlement Commission it is submitted are not circumscribed by the show cause notice as show cause notice is merely one of the requirements for applying for settlement. 7. We have heard the parties and perused the order of the Settlement Commission. Under Section 124 of the Customs Act, no order confiscating any goods or imposing any penalty on any person shall be made under Chapter XIV unless the owner of the goods or such person is given an opportunity of making representations in writing, informing the grounds on which it is proposed to impose the penalty. Admittedly in the instant case, both the show cause notices did not provide to show cause as to why penalty should not be imposed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner of Customs or the Commissioner (Investigation) under sub section (1) or sub section (6)." "(9) Every order passed under sub section (7) shall provide for the terms of settlement including any demand by way of duty penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud, or misrepresentation of facts." (Emphasis supplied) It would therefore, be clear that the powers of the Settlement Commission to pass an order must be in accordance with the provisions of the Act, in matters covered by the application and any other matter relating to the cases not covered by the application but referred to in the report of the Commissioner of Customs or the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer as the case may be under the Customs Act or Central Excise Act in relation to the case. 9. The Income Tax Act has also similar provisions in the matter of settlement. A similar provision under that Act had come up for interpretation in C.I.T. v. Anjum H. Ghaswala and Others, 252 ITR (1). The Supreme Court observed as under : "23. The Commission in the impugned order placed strong reliance on the wording of Section 245D(6) the language of which, according to the Commission, empowers it to waive or reduce statutory interest because the reintroduction of the expression "interest" in that sub-section. According to the finding of the Commission, the inclusion of the expression 'interest' clearly indicates that the Statute has permitted it to pass such orders as it deems fit in regards to payment of interest when an order under sub-section (4) of Section 245D is made by it. This assumption of the Commission proceeds on the hypothesis that sub-section (6) of Section 245D is a substantive provision. We are unable to agree with this view of the Commission. The substantive provision in regard to settlement in Chapter XIX-A, in our opinion, is sub-section (4) of Section 245D. It is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t passed under Sub-section (4) of Section 245D within the specified time or the extended time." It would thus be clear from the reading of the ratio of the two judgments that no order can be made which will be in conflict with the mandatory provisions of the Act. Was it then open to the Commission to impose penalty when the application for settlement, the "case" before it, there was no demand for penalty, nor in the report of the Commissioner. 10. The provisions for penalty are contained in Chapter XIV of the Act. Section 112 provides for a penalty for improper importation of goods. Section 114 provides for penalty for improper exports of goods. Section 114A provides for penalty in cases of duty not been levied or short levied or interest charged as set out therein. Section 114AA introduced w.e.f. Also provides for penalty in circumstances set out therein. We are not concerned with that provision. Section 116 provides penalty for not accounting for goods. Section 117 provides penalty for contravening the provisions under the Act or abatement not specifically mentioned. These are the provisions under which the penalty can be imposed. We are concerned with an application whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
