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TMI Blog2003 (2) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... ant imported capital goods and cleared them under cover of 2 Bills of Entry (Bs/E) No. 04832 dated 8-3-97 and 68946 dated 8-12-97 through Custom House, Chennai. The imported capital goods were assessed extending the benefit of Customs Notification 28/97-Cus. dated 1-4-97. As per the Customs Notification above referred, the export obligation was to be discharged in a phased manner by achieving export obligation of 10%, 20%, 30% and 40% at the end of the 2nd, 3rd, 4th and 5th year from the date of issue of the licence. Again, as per condition (2) of the above said notification, the importer is to execute a bond in such form and for such sum and with such surety or security as may be specified by the Assistant Commissioner or Dy. Commissioner of Customs, binding himself to fulfill export obligation equivalent to 4 times the CIF value of the goods imported or for such higher sum as may be fixed by the licencing authority. However, since the applicant herein failed to achieve the export obligation cast on them as per the EPCG licence granted to them and the Customs Notification in question, the impugned SCN dated 2-1-2002 was issued by the DC, Customs, demanding differential duty forego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel of the applicant broadly reiterated the pleas in the application and pleaded that possibly because of the Board s Customs Circular No. 53/2002 dated 20-8-2002 issued from file No. 607/16/2001. DBK, the Revenue is pleading that the applicant had disclosed the liability even earlier to the proper officer, which is not correct. It was further pleaded that if in the case of EPCG Scheme, to which Customs Notification 28/97 is applicable, a view is taken that the applicant had disclosed the duty liability in as much as they knew and declared tariff classification, rate of duty and the value of goods, in every case of conditional notification the applicant would be aware of the liability but for the concessional conditional exemption, as similar details are disclosed in every case, even when benefit of conditional exemption is sought for. 6. The Representative of Revenue submitted that the duty involved has been realized by the Revenue by enforcing Bank Guarantee (BG) and that interest cannot be waived by the Settlement Commission as the Customs Notification provides for collection of interest. It was further urged that if the interest liability is discharged by the applicant, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocate appeared for the applicant, while Shri M.K. Banak, Appraiser appeared for the Revenue. The Revenue has also submitted their comments on the settlement application in their letter C1/MISC.10/2002-legal(Sea) dated 6-9-2002. In addition, the Revenue also filed a written submission on 13-1-2003. 9. Shri V. Lakshmikumaran, advocate, submitted that the issue as to whether the disclosures made in the settlement applications in cases of default under DEEC/EPCG scheme is a fresh disclosure, had come up for detailed examination earlier also before the different Benches of the Settlement Commission. The Settlement Commission has been admitting and settling such applications. He drew attention to the order passed by the Customs Central Excise Settlement Commission, Additional Bench, Mumbai in M/s. Bell Granito Ceramica Limited, 2001 (133) E.L.T. 495 (Sett. Comm.). He added that in the said order, the Mumbai Bench had exhaustively dealt with the relevant issue and concluded that the Commission has jurisdiction to entertain such applications. He pleaded that even though, the said order was prior to the opinion of the M/o Law relied on by the Revenue now, this issue came to be furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given its deepest thought to the submissions by both the parties. As for Revenue s reliance on the opinion of the Department of Legal Affairs circulated in the Circular No. 53. dated 20-8-2002, referred to above and the contention that the applicant was fully aware of the duty liability even while clearing the imported goods and hence there is no fresh disclosure of the duty liability in the settlement application, it is observed by the Bench that in Collector of Central Excise, Patna v. Usha Martin Industries, 1997 (94) E.L.T. 460 (S.C.), the Apex Court discussed the binding nature of the Departmental circulars. They ve held, inter alia, that an appellate authority is not bound by instructions given by the Board. In Collector of Central Excise, Bombay v. Kores (India) Ltd., 1997 (89) E.L.T. 441 (S.C.) also, the Apex Court held that a Tariff Advice or Trade notice issued by the Board certainly does not bind the Tribunal or the Courts. The said rulings will equally apply to Settlement Commission as well, being a quasi-judicial body. Hence, the Bench is not bound by the Board s Circular. But still, the legal validity of the various issues contained in circular No. 53 referred supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sec. 2 of the Act the term proper officer is defined as one who is assigned the functions to be performed under the Act by the Board or the Commissioner. As per Sec. 46(1) of the Act, a B/E has to be filed in the prescribed format for clearance of any imported goods. The format is prescribed under the B/E (Forms) Regulations, 1976. Based on the declarations made in the prescribed format of the B/E, the Assessing Officer (AO) completes the assessment as per Sec. 17 of the Act. Accordingly, the AO is the proper officer in an assessment proceeding referred to under sub-section (1) of Sec. 127B of the Act. Therefore, since case for settlement refers to pending assessment proceedings or subsequent pending appeals there on, the disclosure to be made in the settlement application in excess of that made before the proper officer , can only mean a disclosure (in the settlement application) , not made before the assessing officer. 14. In this case, the two Bills of Entry have been assessed in terms of Customs notification 28/97 dated 1-4-97. The undertaking given in the bond/bank guarantee is only to safeguard duty in the event of any failure to comply with conditions of the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application be entertained, as in all such cases, the applicant would have known his liability but for the concession. Since an application can be made only on receipt of a SCN, the detection and the investigation by the Revenue has to naturally precede any application for the settlement. Therefore, Revenue s unearthing of the failure to fulfill the conditions of the notification which culminates in the issue of the SCN, cannot also be held against an applicant to bar his application for settlement on the ground that the Revenue has already detected the evasion. 15. The Bench concludes, therefore, that the benchmark for comparison of additional disclosure of duty liability is the disclosure first made in the B/E before the proper officer, namely, AO, as has been held by the Principal Bench of the Settlement Commission in the case of Jagmohan Singh, 2002 (142) E.L.T. 490 (Sett. Comm.). The issue raised by Revenue in the current proceedings had also come up for detailed examination before the Addl. Bench, Mumbai in Bell Granito Ceramica Ltd., 2001 (133) E.L.T. 495 (Sett. Comm.) and the ratio laid down therein squarely applies to this case also. The opinion of the Law Ministry cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessment is based on condition notification with or without built-in safeguards or otherwise, it cannot be said that the duty has not been assessed and paid. In other words, not withstanding the guarantee furnished by the applicant for fulfillment of conditions specified in the notification, the levy, assessment and collection of duty liability is complete. The Commission also examined the format SC(C)-1 filed by the Applicant. A perusal of different columns make the intention of legislature clear as to the nature of disclosure contemplated. The Court has examined the relevance and importance attached to the format. In the case of Pali Devi Others v. Chairman, Managing Committee and another, 1996 (93) SC 296, the Hon ble Supreme Court has observed as below : thus on account of the preponderance of authority, Sections 20(2) and 2(1) had to be read along with the Rules and Form VI to lean in favour of the view that both past and present employees were entitled to move in the matter. Such would be a purposive approach, which would carry out the necessary amendment of the statute, for which the Rules and the Form lend a hand to carry out the objectives of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of goods for home consumption in terms of Section 47 of the Act. Thus, as held by the Hon ble Andhra Pradesh High Court in the case of M/s. Delta Paper Mills Limited v. Collector of Central Excise, Guntur, 1995 (77) E.L.T. 544 (AP) (in para 24 of judgment) .....under Article 265 of the Constitution of India, no tax shall be levied or collected without any authority of law and that Article 265 contemplates two stages - One is levy of tax and the other is the collection of tax and that levy of tax includes declaration of liability and assessment, namely, quantification of liability. After the quantification of the liability follows the collection of tax. It should be only by authority of law . 18. The issue agitated is whether after such assessment and clearance from customs control, any re-assessment is involved or possible under the Act before confirming demand and recovery of differential duty as in the instant case. As already mentioned above, the Andhra Pradesh High Court has held in M/s. Delta Paper Mills Limited case that assessment is quantification of liability and that the quantification of liability follows collection of liability, that it should be only by an auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bear the full duty incidence, but for the concession/exemption availed and to determine the differential duty due, which is nothing but an act of assessment before any recovery proceedings. As observed by the Hon ble Supreme Court in the aforesaid case of Jacksons Thevara, the Revenue would be justified in re-assessing the duty due, on the quantities of imported goods corresponding to the export obligation failure (even if no formal order of assessment is issued on the Bill of Entry) in the given set of facts, as against the bond amount, which would be equal to the full duty foregone on the entire clearance, more as a security, presuming the worst eventuality of the importer failing to comply with port importation conditions in respect of entire import. Hence, the plea of the Revenue that no re-assessment is involved before demanding a differential duty in the instant case would not be correct in law. 21. Accordingly, referring to the specifics of this case, the applicant had declared in their B/E No. 04832 dated 8-9-97, the description of the imported goods, their value and other details and assessment has been made extending the benefit of notification 28/97 dated 1-4-97. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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