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TMI Blog2011 (2) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... Madurai for three months, orders could not be pronounced. For getting certain clarifications, the matters were again posted before this court on 22.2.2011. After getting those clarifications, the matters were reserved for judgment. 3.The writ petitioner in W.P.No.7931 of 2006 M/s.Asianet Satellite Communications Limited (for short ASCL) originally filed O.P.No.27493 of 2002 before the High Court of Kerala at Ernakulam, seeking for a prayer to set aside the order, dated 13.8.2002 passed by the Customs and Central Excise Settlement Commission at Chennai insofar as it had directed the petitioner ASCL to remit a sum of Rs.1,94,00,860/- as differential duty in the course of fulfillment of export obligation as per the licence granted to them, dated 23.12.1993. They also sought for a direction to the Settlement Commission to accept fulfillment of export obligation on the basis of a consolidated statement furnished by them and also for a direction to the second respondent Director General of Foreign Trade (DGFT), New Delhi to discharge the letter of undertaking given by the petitioner in compliance with conditions of EPCG license and also to order discharging the bank guarantee furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal 1,24,18,543 US Dollars to 77,89,491 US Dollars to be achieved within a period of five years from the date of issuance of the licence. The Bank guarantee for a sum of Rs.3,90,55,765.83 was executed by the ASCL on the basis of the original value of licence taking consideration which remained unabated. They also executed a legal undertaking as per condition No.5 of the licence for the discharge of duty liability in the event of failure in fulfilling the export obligation. 7.It is the case of the ASCL that despite their best efforts in realising the foreign exchange through the service of cable TN network to the residents of Kerala, they had to face a number of legal disputes from the small time cable operators. Therefore, they could not fulfill the obligation as agreed to. They had approached the DGFT for extension of period for fulfillment of export obligation. It was agreed upto 22.12.1999. Further efforts to get further extension pursuant to the notice issued, dated 6.4.1999 was not responded by the DGFT even though the original value of the bank guarantee remained unaltered even after the export obligation was lowered by DGFT. It was sufficient enough to cover the quantum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te TV services in Kerala through their various schemes during the period upto 26.4.2000. 10.A statement dated 26.4.2000 was submitted to the DRI enclosing the certificate received from various banks detailing the quantum of revenue earned by them upto 26.4.2000. A show cause notice was issued on 30.6.2000 by the DRI, Calicut in respect of imports made through Chennai Sea Port. Two other show cause notices were also issued for clearing goods from the other ports such as Thoothukudi and Thiruvanandapuram. The show cause notices contained the details regarding the Bill of Entry. CIF value duty foregone amount, interest. But, however the show cause notice dated 30.6.2000 issued by the DRI, Calicut demanded duty of Rs.2,05,65,192/- together with interest at 24% in respect of imports made through Chennai Sea Port. The total duty foregone covered by all the three show cause notices worked out to Rs.5,53,23,579/- and interest upto 31.10.2000 worked out to Rs.7,89,27,268/-. 11.In respect of the show cause notices, the ASCL filed four separate settlement applications before the Customs and Central Excise Settlement Commission at Chennai purported to be under Section 127-B of the Customs Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any immunity from the payment of interest. Both parties were aggrieved by the order of the Settlement Commission. 13.While attacking the order, it was the stand of ASCL that the Commission's direction to pay the amount of Rs.1,94,00,860/-, the differential customs duty relatable to unfulfilled portion of export obligation was illegal. The Commission having clothe with extensive power under Chapter XIV-A of the Customs Act and under Section 127B, it enables an application to be made by making full and true disclosure of duty liability to have the case settled. Under Section 127F, the Settlement Commission shall also have power vested in an officer of the Customs under the Customs Act. In terms of Section 127F(2), the Commission has extensive jurisdiction to exercise its power to deal with the function of any officers of customs from the date at which the application under Section 127B was preferred until an order is passed under Section 127J of the Act. Therefore, it has got full power to grant immunity. The power is also given to the Commission to waive levy of any interest otherwise statutorily leviable under the Customs Act. The order passed by the Settlement Commission under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the service rendered by the petitioner which need not be doubted. The money outflow in favour of the petitioner in various NRE accounts are accompanied by a corresponding diminution on account of the concerned in the different banks, authorised dealers in foreign exchange. Therefore, the nexus between the EPCG licence and earning in the foreign exchange has been clearly established. Hence the Settlement Commission should have accepted the stand of the ASCL that they had fulfilled 50% of the duty obligation. When the ASCL gave an undertaking to discharge the export obligation by furnishing the bank guarantee, it was originally fixed at Rs.3,90,55,765.83 on the basis of the original export obligation projected as per the licence. A revision in the value of goods permitted to be imported and consequent reduction of export obligation to be fulfilled was not reflected against the corresponding diminution in the bank guarantee. But the ASCL was directed to keep the bank guarantee for the entire amount. Therefore, the Settlement Commission should have directed the DGFT to extent the time for fulfillment of the export obligation, especially when the activities of the company continues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Settlement Commission had failed to note that as per paragraph 102 of Handbook of procedures for the period from May, 1992 to March, 1997, there is provision to demand interest at the rate of 24%. unless interest was also paid along with the export obligation, no discharge certificate need be issued by the DGFT. 18.It was further submitted that the Commissioner had merely relied upon the DGFT's letter, dated 5.10.2000 for holding that the ASCL had achieved 14% of the export obligation. Therefore, computing liability to Rs.4,63,46,499/- and that interest was not chargeable under the Customs Act was erroneous. This had brought substantial revenue loss to the Government. Instead of settling the matter in such a hurry, the Commission should have waited for discharge certificate. The DGFT can issue such discharge certificate only if the interest is paid with duty foregone and the importers are bound to produce such discharge certificate to the Customs. The licence holder was fully aware of his duty liability and must ensure fulfillment of specified export obligation as he had already executed a letter of undertaking and bond as well as bank guarantee to the DGFT and bond to the Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to para 46-A. In view of this amendment, the provisions of para 46-E of the Policy become relevant." 21.In respect of issue No.2, in paragraph 10.2.4, the Commission had answered as follows: "10.2.4.The applicant has stated that the DGFT was still considering their request. However, the matter cannot be kept pending for an unduly long time defeating the very objective of the Settlement mechanism. While the applicant has not submitted any such certificate, DGFT in their letter 20/316/94/EPCG111/1246, dt.5.10.2000 to DC, Tuticorin has stated that the applicant has achieved 14% (approximately) of the export. This has been reiterated in their letter no.20/316/94/EPCG111/565, dt.15.6.2001 to a specific query from this office. Even though there are letters from DGFT entertaining doubts on whether the activities undertaken by the applicant amounted to exports; this letter dt.15.6.2001, or the earlier one dt.5.10.2000 have not been withdrawn by DGFT. The Bench is therefore, constrained to hold the export obligation achievement as 14% only. Even though these letters have computed the export performance upto 30.6.1998 only, as seen from the annexure to Form 10C submitted by the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o fulfill export obligation. The stand taken by the Commissioner of Customs and Central Excise, Cochin is correct in that the provisions to charge interest for delayed payment of duty came to be incorporated in the Customs Act in September, 1996, whereas, the impugned imports took place much prior to that. During the period when the applicant imported the capital goods i.e., July 94 to Dec. 95, there was no provision in the Customs Act to levy interest for delayed payment of duty nor under Notification No.160/92-Cus. under which the import in question was assessed. In fact, citing the judgements of the Hon'ble High Courts at Madras and Andhra Pradesh, this Bench has taken a similar view on an application filed by M/s.Ganapathy Smelters reported in 2001 (133) ELT 251 (SETT. COM). The Commissioner of Customs (Sea Port), Chennai has stated that the interest has not been demanded u/s 28 of Customs Act and hence the applicant's argument on this score is under a mistaken impression by linking to the date from when the Section relating to demand of interest came to be incorporated in the Customs Act. No doubt, the SCN does not quote Sec.28 for the demand of interest but, it does not also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this Court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this Court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this Court under Article 136. A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is a limitation which this Court imposes on itself having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review. Maybe, there is also some force in what Dr Gauri Shankar says viz., that the order of the Commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not be permitted to accept what is favourable to him and reject what is not. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in these appeals is that the order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant. The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised. The Commission has interpreted the trust deeds in a particular manner. Even if the interpretation placed by the Commission on the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be a violation of the provisions of the Income Tax Act. It is equally clear that the interpretation placed upon the said deeds by the Commission does not bind the authorities under the Act in proceedings relating to other assessment years." Since the ASCL has made full and true disclosure before the Commission, the Commission having exercised its jurisdiction, the same cannot be interfered with. 30.The argument of the learned Senior Counsel that while pointing out the limited scope of judicial review available to this court in attacking the order of the Settlement Commission, yet the ASCL itself wants relief from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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