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TMI Blog2013 (8) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act - On earlier occasion, the company was visited with a penalty imposed by the Settlement Commission for irregularity in imports - There was no irregularity in the Commission’s order in imposing penalties on the company and the two Directors - the provisions of Chapter XIVA nowhere provided that the Commission cannot increase the penalty from what was originally imposed when a party might file an application for settlement - the Commission had a special power to waive prosecution under certain circumstances - the Commission while exercising such powers, granted total immunity from prosecution to the company as well as to the two Directors - With the narrow scope of judicial review available in a writ petition - there was no reason to interfere. The Commission took into consideration irrelevant and extraneous materials - The conclusion of the Commission that assesses were habitual offenders was not based on any material on record - the decision of the Commission in this respect was required to be reconsidered - the court was not concerned with the ultimate decision but the decision-making process - the process was vitiated on account of irrelevant considerations hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -6-97 Porbandar Steam Coal F-14/ 11-6-97 20000 29628040 3626827 20037/ 29-8-97 Porbandar Steam Coal F-29/ 24-11-97 23776 36766541 5570131 Porbandar Steam Coal F-45 18-2-98 224 360670 54642 Total Duty Foregone 9251600 2.3 It is not in dispute that the company was required to export agreed quantity of Clinker against such imports of raw material within 18 months from the import. 2.4 It is not in dispute that Saurashtra Cement did not fulfil the full export obligation against such imports. The export obligation of clinker against the imports of raw material allowed in terms of quantity and FOB value of exports were as under :- Licence No. Import Allowed Export Obligation Item Qty. (MTs) CIF Value (Rs.) Item Qty. (MTs) FOB Value (Rs.) 19993 Coal 20000 34413330 Clinker 100000 108565520 20037 MR Bricks Coal 36 24000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to Rs. 92,51,600.00 (Rupees Ninety two lakhs fifty one thousand six hundred only) under licences No. 20037, dated 29-8-1997 and 19993, dated 3-6-1997 along with the interest @ 24% p.a. should not be recovered from M/s. SCL under provision of Notification No. 30/97 dated 1-4-1997 read with proviso to the Section 28 and Section 143A of the Customs Act, 1962. III. A penalty should not be imposed on M/s. Saurashtra Cements Limited, under Section 112 Section 114A of the Customs Act, 1962 for violation of conditions of the Notification No. 30/97, dated 1-4-1997 and Foreign Trade (Development Regulation) Act, 1992. IV. A personal penalty should not be imposed on Shri M.S. Gilotra, Managing Director and Shri B.L. Kalwar, President of M/s. Saurashtra Cements Ltd., Ranavav under Section 112 read with Section 140 of the Customs Act, 1962 for willfully and knowingly abetting and abetting the violations of the conditions of the advance licences and misuse of the DEEC Scheme. Notification No. 30/97, dated 1-4-1997, Foreign Trade (Development Regulation) Act, 1992. V. A Voluntary partial payment of Government dues made by M/s. Saurashtra Cement Ltd., Ranavav so far vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of value. Any recovery of unpaid duty, therefore, must co-relate to the undischarged portion of the obligation and not for the entire imports made. The company, therefore, contended that against such licence, the correct value of duty foregone on the steam coal imported comes to Rs. 66,64,222/-. 2.11 The petitioners No. 2 and 3 i.e. the Director and the President of the company also filed replies opposing the show-cause notice proceedings. It is not necessary to take detailed note of the contents thereof. 2.12 Upon completion of the hearing arising out of the said show-cause notice dated 26-3-2001, the adjudicating officer passed his order-in-original on 31-10-2001. The Commissioner held that the company had failed to discharge its export obligation and thereby breached the conditions of DEEC licence. He also held that the Directors of the company, the other two notices, were also responsible for such acts of the company and, therefore, liable for penal action under Section 112 of the Customs Act, 1962. 2.13 In the result, the Commissioner passed the following order : - 60. In view of the above findings, and in the facts and circumstances of the case, I pass the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 50,000/- (Rupees Fifty Thousand only) 2.14 Saurashtra Cement and the Directors filed separate appeals challenging such order of the adjudicating officer before the Customs, Excise and Service Tax Appellate Tribunal ( the Tribunal , for short). The Tribunal in its order dated 30-11-2004 noticed that though substantial portion of export obligation in one of the licences was discharged by the company, duty demand was based on the full amount of duty foregone. The Tribunal, therefore, remanded the proceedings to the Commissioner observing that the proposal to confirm the duty on the entire quantity of raw material imported cannot be upheld. The Tribunal was of the opinion that the demand shall have to be worked out de novo. The Tribunal further observed that the consequent penalties, if any, required to be imposed, would need redetermination in view of the demands to be reworked in light of the order of redetermination of duty . The Tribunal did not give any decision as regards Section 143A of the Customs Act, 1962 and whether or not the bond was to be enforced with interest. Such issues were left open for both sides to agitate in the de novo proceedings. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant is @ 15% and not 24%. The interest shall be charged from the date it was due till the date(s) of payment of the duties. The Revenue shall calculate the interest liability at simple rate of 15% under intimation to the applicant and adjust the same against the interest amount already paid. After adjustment balance amount, if any, shall be dealt with as provided hereunder. Penalty : The Bench observes that the applicant has been a habitual offender. Against the SCN issued on 15-1-2001 by DRI, a penalty of Rs. 3 lakhs was imposed on it by this Bench [2003 (156) E.L.T. 307 (Sett.Comm)] vide order dated 1-10-2002 as it had been a party to a high sea sale for import of Steam Coal under DEEC Scheme, though the Advance Licence under which the imports were effected had expired. Against for misuse of conditions of Notifn. No. 30/97-Cus., dated 1-4-1997 in importing Coal, MR Bricks and Paper bags penalties were imposed not only on its sister concerns, namely M/s. Gujarat Sidhee Cements Ltd. but also on the co-applicants therein, namely S/Shri B.L. Kalwar and M.S. Gilotra who are also co-applicants in the present case. Accordingly, for the repeat offence, the Bench imposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 16011071.00 2425513.00 Total Duty Foregone 13174972.00 3.1 The details of export obligation in terms of quantity and value of the finished product are as under :- Licence No. Date Import Allowed Export Obligation Item Qty. (MTs) CIF Value (Rs.) Item Qty (MTS) FOB Value (Rs.) 20071 26-9-97 Coal 7200 17633716.00 Cement 36000 55728000.00 MR Bricks 10,800 20108 16-10-97 Coal 1000 15130440.00 Clinker 50000 58500000.00 MR Bricks 15 20109 16-10-97 Coal 1000 15130440.00 Clinker 50000 58500000.00 MR Bricks 15 20110 16-10-97 Coal 1000 15130440.00 Clinker 50000 58500000.00 MR Bricks 15 20111 16-10-97 Coal 1000 15130440.00 Clinker 50000 58500000.00 MR Bricks 15 20112 16-10-97 Coal 1000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirm the demand of Customs duty amounting to Rs. 1,31,74,972/- on M/s. GSCL under the provision to Section 28 of the Customs Act, 1962 and order to cover the same from them alongwith interest amount at the appropriate rate as per provision of Section 28AB of the Customs Act, 1962. The amount of Rs. 70,48,593/- already paid as mentioned in SCN and there after by M/s. Gujarat Sidhee Cement Ltd., should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. The Deputy Commissioner, Customs, Porbandar should verify the duty amount paid so far and payable and also calculate the interest amount thereon at the rate as prescribed by the Government. (iv) I also impose penalty under Section 112(a) read with 140 of the Customs Act, 1962 on the following persons 1. Shri B.L. Kalwar, President Rs. 50,000/- (Rupees Fifty Thousand only) 2. Shri M.S. Gilotra, M.D. Rs. 50,000/- (Rupees Fifty Thousand only) 3.5 Such order was challenged by the company and its Directors by filing separate appeals before the Tribunal. The Tribunal by its common order (by virtue of which it disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndi to evade the payment of duty and in the light of the same, their conduct is not clean and needs to be taken cognizance of. Accordingly, the Bench imposes penalty of Rs. 12.50 lakh on the applicant. For the same reasons, penalty of Rs. 12.50 lakhs each is also imposed on S/Shri B.L. Kalwar and M.S. Gilotra respectively (the co-applicants). The Bench grants immunity both to the applicant and the co-applicants from prosecution. This order of settlement shall be void in terms of sub-section (9) of Section 127C of the Act, if the Settlement Commission subsequently finds that it has been obtained by fraud or misrepresentation of facts. 3.8 It is this order the petitioners have challenged before us in the present petition. 4. On the basis of our documents on record, learned senior counsel Shri Mihir Thakore for the petitioners submitted that the Settlement Commissioner committed a grave error in enhancing the personal penalties against the companies as well as its Directors manifold. He submitted that in case of Saurashtra Cement and its Directors, the Commissioner had imposed penalty of Rs. 50,000/- each only on the two Directors and no penalty was imposed against the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted a grave error in taking note of the earlier defaults of Saurashtra Cement and the present parallel proceedings in case of the other company to enhance the penalties. 4.3 With respect to the scope of judicial review against a decision of the Settlement Commission, the counsel relied on the following decisions :- (1) Jyotendrasinhji v. S.I. Tripathi and Others reported in 1993 Supp (3) SCC 389 (2) M/s. R.B. Shreeram Durga Prasad and Fatehchand Nursing Das v. Settlement Commission (IT WT) and Another reported in (1989) 1 SCC 628 (3) Kuldeep Industrial Corporation and Others v. Income Tax Officer and Others reported in (1997) 3 SCC 377 (4) Sanchit Bansal and Another v. Joint Admission Board and Others reported in (2012) 1 SCC 157 We would advert to these decisions at a later stage. 5. On the other hand, learned senior counsel Shri R.J. Oza for the Department opposed the petitions. He submitted that the scope of judicial review against a decision of the Settlement Commission is extremely narrow. The decision on Saurashtra Cement has a certain finality attached to it. This court in exercise of writ jurisdiction, therefore, would not interfere with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y liability. Secondly, the provisions do not provide that the Settlement Commission while considering an application for settlement, must confine itself to the duty demand or the monetary penalties imposed by the departmental authorities. It would, thus, appear that it is always open for the Settlement Commission to suitably modify the duty demand and monetary penalties imposable under the Act, of course, subject to the limits provided in the Act itself. 9. The Settlement Commission is a special body constituted for the purpose of settlement of revenue cases. It is well-recognized that the order that the Settlement Commission passes would be effective only for that particular case and would not bind the department in later years. The Settlement Commission is not even obliged to give reasons. It thus does not lay down any law of binding nature. It, of course, passes an order which would be effective and binding between the parties of that case. 10. The nature of scope of judicial review of a High Court under Article 226 of the Constitution or of the Supreme Court under Articles 32 or 136 of the Constitution calling in question an order of Settlement Commission came up for consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in Section 245-D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same - Whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud malice which, of course, constitute a separate and independent category. Reference in this behalf may be had to the decision of this Court in R.B. Shreeram Durga Prasad and Fatechand Nursing Das v. Settlement Commission (IT and WT) which too was an appeal against the orders of the Settlement Commission. Sabyasachi Mukharji, J., speaking for the Bench comprising himself and S.R. Pandian, J. observed that in such a case this Court is concerned with the legality of procedure followed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a quasi-judicial act in violation of the principles of natural justice is void or of no value. In Ridge v. Baldwin and Anisminic Ltd. v. Foreign Compensation Commission the House of Lords in England has made it clear that breach of natural justice nullifies the order made in breach. If that is so then the order made in violation of the principles of natural justice was of no value. If that is so then the application made for the settlement under section 245-C was still pending before the Commission when the amendment made by Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objections of the Commissioner. Dr. V. Gauri Shankar, appearing for the revenue, did not seriously contest that position. He accepted the position that the law as it is, after the amendment authorizes the Commission to consider and overrule the Commissioner s objection. He also very fairly, in our opinion and rightly accepted the position that the appellant was entitled to be heard on the Commissioner s objections. It appears to us, therefore, if that is the position then, in our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt setting aside the order passed by the Settlement Commission when it was found that the assessee had not made full and true disclosure before the Commission. The Apex Court rejected the assessee s objection to the interference made by the High Court in exercise of writ jurisdiction making the following observations :- 47. As regards the argument of the learned counsel for the assessee that the scope of judicial review being limited, the High Court should not have interfered with the order of the Settlement Commission in exercise of its power under Article 226 of the Constitution, in our opinion, the argument is stated to be rejected. Having conceded before the High Court that the assessee was not pressing the point of maintainability of the writ petition before the High Court, the assessee cannot be now permitted to resile from its earlier stand and raise the same issue before us. Even otherwise, as stated above, we have no hesitation in observing that the manner in which the assessee s disclosures of additional income at different stages of proceedings were entertained by the Settlement Commission, rubbishing the objection of the Commissioner that the assessee had not made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by an administrative authority exercising discretion vested in it, cannot be interfered in judicial review unless it is shown that exercise of discretion itself is perverse or illegal. (iv) A mere wrong decision without anything more is not enough to attract the power of judicial review; the supervisory jurisdiction conferred on a Court is limited to seeing that the Tribunal functions within the limits of its authority and that its decisions do not occasion miscarriage of justice. (v) The courts cannot be called upon to undertake the government duties and functions. The court shall not ordinarily interfere with a policy decision of the State. Social and economic belief of a judge should not be invoked as a substitute for the judgment of the legislative bodies. (See Ira Munn v. State of Illinois.) 17. Despite such narrow confines of judicial review of the decision of the Settlement Commission, it is undeniable that the jurisdiction under Article 226 of the Constitution is not totally ousted. In a given situation if the Settlement Commission has taken into consideration irrelevant facts and such consideration has gone into its decision-making process resulting int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- each. Thus, the Commission revised the total penalty to Rs. 37,50,000/-, all put together. In doing so, the Commission took into consideration the separate application filed by Saurashtra Cement Ltd. as also penalty of Rs. 3,00,000/- imposed on Saurashtra Cement with respect to its earlier default which order was passed in October, 2002. The Commission noted that in addition to Saurashtra Cement filing its settlement application, the present company i.e. Gujarat Sidhee Cement had also applied for settlement. The Commission noted that the two Directors are common in both the companies. The Commission, therefore, recorded that the company and the Directors are habitual offenders and are importing the same goods adopting similar modus operandi to evade payment of duty. The Settlement Commission taking cognizance of such facts imposed heavy penalties. 20. To our mind, the Commission took into consideration irrelevant and extraneous materials. It is not in dispute that insofar as Gujarat Sidhee Cement is concerned, this was the first default. It is not in dispute that the imports made by Saurashtra Cement and Gujarat Sidhee Cement were in close proximity and both companies had pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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