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TMI Blog2016 (9) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... s not correct on the part of the of the Settlement Commission (the majority view) to reject the Settlement Applications of the Petitioners on the ground of non payment of any admitted duty and interest as required under Section 127B. Classification of goods - reclassification of the fitments to the Pontoon, alongwith the Pontoon - grounds of rejection - Held that: - In view of the fact that the Settlement Commission itself had allowed the Settlement Applications of the Petitioners to be proceeded with under section 127C would only mean that at the threshold itself, the Commission was satisfied that the Settlement Applications filed by the Petitioners was not made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975. This apart, it was also the case of the Petitioners that they are not disputing any classification as proposed by the Revenue in the SCN. - the Settlement Applications filed by the Petitioners could not have been rejected on this ground, as well. Matter remanded to the Settlement Commission to decide the Settlement Applications filed by the Petitioners on merits and in accordance with law and uninfluenced by any views of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89011040. The fitments like the crane, accommodation module, fenders etc were assessed separately and a Customs Duty of ₹ 65,41,741/- was inadvertently paid on the said fitments. (b) Thereafter, the Directorate of Revenue Intelligence ( DRI ), Jamnagar initiated certain investigations leading to seizure of the said Barge / Pontoon on 24th October, 2011. For provisional release of the same, the Applicant deposited a sum of ₹ 50 lakhs on 28th October, 2011 and thereafter the seized Barge / Pontoon was provisionally released. During the investigation being done by the DRI, it dawned on the 1st Petitioner that a mistake had occurred, in as much as they had paid customs duty on the equipment and fitting charges separately which otherwise were part of the main Barge / Pontoon, as was evident from the Bill of Entry No. 755132 dated 24th March, 2007. According to the Petitioners, the Barge having been classified in CTH 89011040, no duty should have been paid on whole of the Barge including the equipment thereof by virtue of they being covered under Item No. 352 of Notification No. 21/2002. (c) Be that as it may, the Petitioners thereafter received a common SCN dated 9th F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file its report within seven days. Finally, the Revenue filed its report vide its letter dated 15th April, 2014 which was received by the office of the 3rd Respondent on 19th May, 2014. In answer to the said report, the Petitioners also filed their detailed written submissions (which are annexed at Exhs I , J and K to the Petition). (g) Thereafter, final hearing of the Settlement Applications was conducted on 9th October, 2014 wherein the Petitioners made detailed arguments and also relied upon several decisions not only of the Settlement Commission, Chennai Bench but also of different High Courts, including one of this Court. After hearing the parties, the Settlement Commission (Respondent No.3) passed its final order on 31st October, 2014 (the impugned order). As mentioned earlier, the Settlement Commission comprised of three Members. One Member of the Settlement Commission settled the case of the Petitioners and ordered that (i) since the duty was settled at ₹ 43,80,845/- and Petitioners had already paid more than this amount, no further amount was payable on this score; (ii) since excess payment has been made in this case, there was no question of payment of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission issued a notice dated 29th October, 2013 to the Petitioners, wherein a specific query / discrepancy was raised that the Petitioners had not deposited the full duty along with interest and the same was a mandatory requirement before their Settlement Applications could be entertained by the Settlement Commission. In light of this, the Petitioners were asked to give their written explanation within a period of 7 days. In reply to this notice, the Petitioners, by their letter dated 7th November, 2013 stated that the Petitioners had already erroneously paid an amount of ₹ 65,41,741/-, at the time of clearance of the Barge covered by Bill of Entry No.755132 dated 24th March, 2007. Additionally the Petitioners had paid a sum of ₹ 50,00,000/- on 28th October, 2011 towards customs duty during investigations. The Petitioners therefore stated that the amounts already paid were far more than what was demanded under the SCN and interest accrued thereon. This explanation of the Petitioners was duly accepted by the 3rd Respondent and thereafter an order was passed on 12th November, 2013, ordering that the Settlement Applications be allowed to be proceeded with. This being the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985) has been committed f. The present application is not made for interpretation of the classification of the goods under the Customs Tariff Act, 1975 g. The present application is not barred by Section 127L of the Customs Act, 1962 (emphasis supplied) 7. He, therefore, submitted that the Petitioners had never disputed the classification as proposed by the Revenue and this finding of the majority view of the Commission is wholly perverse. For all the aforesaid reasons, he submitted that the impugned order cannot be sustained and the same ought to be set aside and the Settlement Applications filed by the Petitioners be remanded back to the 3rd Respondent for being decided afresh after giving a de novo hearing to the Petitioners. 8. On the other hand, Mr. Jetly, learned counsel appearing on behalf of the Respondents, sought to support the impugned order. He submitted that in the facts of the present case, admittedly the Petitioners had not paid the amount of duty along with interest thereon as demanded in the SCN. The Petitioners were, therefore, guilty of not complying with the mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs (i.e. on 22nd October, 2013), section 127B read as under:- 127-B. Application for settlement of cases. - (1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this chapter) may, in respect of a case, relating to him make an application, before adjudication to the Settlement Commission to have the case settled, in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, under-valuation or inapplicability of exemption notification or otherwise and such application shall be disposed of in the manner hereinafter provided: Provided that no such application shall be made unless,- (a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of such goods, as the case may be, and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an Application before the Settlement Commission in such form and in such manner as specified by the rules and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability is incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by the rules. Clause (c) of the 1st proviso to sub-section (1) of section 127B clearly stipulates that no such Settlement Application shall be made unless the Applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28AB. We must mention here that in the year 2014, Section 127B was amended and inter alia the words section 28AB , appearing in clause (c) of the 1st proviso to section 127B(1) was substituted with the words section 28AA . The 4th proviso to Section 127B(1) stipulates that no Settlement Application under this sub-section shall be made for interpretation of the classification of the goods under the Customs Tariff Act, 1975. 12. Thereafter comes section 127C which prescribes the procedure to be followed on receipt of a Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Settlement Commission shall within a period of 14 days from the date of the notice, by an order, allow the Application to be proceeded with or reject the Application. Reading the provisions of sections 127B and 127C, it is clear that before the Application is allowed to be proceeded with, the Settlement Commission has to be satisfied that the mandatory requirements as set out in section 127B are complied with. It is only once this threshold is crossed, that the Settlement Application is allowed to be proceeded with by the Settlement Commission. 14. In the facts of the present case, it is an admitted fact that a notice was issued on 29th October, 2013 to the Petitioners as contemplated under Section 127C(1) and the Petitioners were called upon to give a written explanation whether the Settlement Applications filed by them fulfill the criteria as laid down under Section 127B of the Customs Act, 1962 and also inform the Commission whether the bar as set out under Section 127L of the Customs Act, 1962 is applicable in their cases. This notice was duly replied to by the Petitioners, by their letter dated 7th November, 2013. By this detailed reply, the Petitioners not only answe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finding to be incorrect. Firstly, under Section 127B, before the Settlement Applications are allowed to be proceeded with, the Settlement Commission has to be satisfied that by virtue of the Settlement Applications, the Petitioners are not seeking interpretation of the classification of the goods under the Customs Tariff Act, 1975. Such a declaration was categorically given by the Petitioners in their reply dated 7th November, 2013 before the Settlement Commission ordered that the Settlement Applications of the Petitioners are allowed to be proceeded with. That apart, the records of the proceedings before the Commission on 26th March, 2014 (Exh. E , page 148 of the paper book), also clearly indicate that the Petitioners were not disputing the change in the classification proposed by the Revenue in the SCN. It is categorically stated that the Petitioners had accepted the classification of the whole Barge with the fittings under Heading 8905 which attracts duty at 5%. This being the case, we are also of the view that the Settlement Applications of the Petitioners could not have been rejected on the ground that the same was only a request to reclassify the fittings to the Barge/Pon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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