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TMI Blog2017 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitions, a common order dated 27th March, 2015 has been assailed by the respective Petitioners by which the Settlement Applications filed by all the Writ Petitioners were rejected by Respondent No.4 - Settlement Commission. 3. As far as Writ Petition No.9494 of 2015 is concerned, the Petitioners were the Applicants before the Settlement Commission. As far as Petitioners in the other Writ Petitions are concerned, they were all Co-Applicants. This is how all the Writ Petitioners before us have assailed this common order dated 27th March, 2015. 4. For the sake of convenience, we shall refer to the facts in Writ Petition No.9494 of 2015. (a) Petitioner No.1 is a proprietary firm registered under the Indian Partnership Act, 1932 and carrying on business of trading in imported goods. Petitioner No.2 is the Proprietor of Petitioner No.1. Respondent No.1 is the Union of India and Respondent Nos.2 and 3 are the Officers of Respondent No.1 exercising powers and discharging duties conferred upon them under the provisions of the Customs Act, 1962. Respondent No.4 is the Settlement Commission which is constituted under the provisions of section 32 of the Central Excise Act, 1944 and inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow-cause notice dated 31st October 2013. The said Applications were filed by the Petitioners on 27th May, 2014. The Petitioners and other importers paid the entire differential duty without interest prior to and during the pendency of the Applications, in respect of the goods imported by them. Similarly other importers also filed their respective Applications for settlement before the Settlement Commission in respect of the imports made by them under their respective IECs admitting the duty on the imports made by them. Thereafter, the defects pointed out by the Registry of the Settlement Commission were also rectified. (f) On 1st August 2014, the Settlement Commission (Respondent No.4) issued notice to the Petitioners and others informing them that the hearing of the case is fixed on 28th August, 2014 on the issue of the admissibility of the Applications. However, on that day, the matters were adjourned and new date was fixed on 28th October, 2014. (g) Pending the hearing of the above Settlement Applications, a Corrigendum / Addendum dated 8th August, 2014 was issued by Respondent No.2 whereby the demand made pursuant to the said show-cause notice dated 31st October 2013, inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioners would have elected to proceed with the adjudication proceedings. Therefore, the objection of the Department regarding maintainability of Applications before the Settlement Commission was devoid of any merit, was the submission. (i) After considering the written submissions filed by Respondent No.2 as well as the Petitioners, the Settlement Commission, by its impugned order dated 27th March, 2015 rejected the Applications filed by all the Writ Petitioners as inadmissible under section 127B of the Customs Act, 1962. It is in this light that the Petitioners are before us assailing the impugned order. 5. Mr Prakash Shah, learned counsel appearing on behalf of the Petitioners, submitted that the impugned order is clearly untenable and unsustainable in law and is liable to be quashed and set aside by us. He submitted that Chapter XIV-A of the Customs Act, 1962 deals with settlement of cases. Section 127B of the Act allows any importer / exporter or any other person to approach the Settlement Commission by way of a Settlement Application for settlement of his case. This, of course has to be done before the adjudication of the show-cause notice which would be the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Customs having jurisdiction, and the Commissioner shall furnish the report within a period of 30 days of receipt of communication from the Settlement Commission. He submitted that if the Application was not allowed or deemed to be allowed to be proceeded with, there would have been no occasion for the Settlement Commission to call for a report as contemplated under section 127C(3). 7. Mr. Shah thereafter brought to our attention to section 127C(5) which stipulates that after examination of the record and the report received under sub-section (3) and after giving the Applicant and Respondent No.2 a hearing as well as examining such further evidence as may be placed 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 under subsection (3) or sub-section (4). He submitted that this order as contemplated under section 127C(5), is a final order, which is an order passed on merits and not an order passed under section 127C(1) which is on the admiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be paid within 30 days from passing of the final order in view of the difficulty faced in calculating the interest. 10. In addition to the aforesaid, Mr Prakash Shah submitted that assuming without admitting that the Settlement Applications of the Petitioners were inadmissible, it was incumbent upon the Settlement Commission to dismiss the Applications of the Petitioners without recording any finding on merits and without looking legality or validity of the Corrigendum / Addendum issued. By giving findings on this Corrigendum, the Petitioners' right to raise all contentions before the Adjudicating Authority with reference to the same have been foreclosed by the impugned order, was the submission. In view of all these facts, Mr Prakash Shah submitted that the impugned order is liable to be set aside and the matter be remanded back to the Settlement Commission for a de novo hearing and on merits. 11. On the other hand, Mr Jetly, learned counsel appearing on behalf of the Revenue, sought to support the impugned order. He submitted that looking to the record before the Court as well as before the Settlement Commission, it was all along the Petitioners who were well aware that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory provisions. The first provision that we would like to reproduce is section 127B. On the date when the Settlement Applications were filed by the Petitioners (i.e. on 27th May, 2014), 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, undervaluation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified 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 has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by the Rules. Thereafter, section 127B(1) stipulates that no such Settlement Application shall be made unless the conditions mentioned therein are complied with. We must at once mention here that section 28-AB was deleted from the Customs Act, 1962 and replaced with section 28-AA w.e.f. 8th April, 2011. Despite this, no corresponding amendment was carried out in section 127B (as reproduced above). Section 127B was amended much thereafter by Finance (No.2) Act, 2014 w.e.f. 6th August, 2014. Hence, even though section 28-AB was deleted from the statute books w.e.f. 8th April, 2011, a reference to the same still continued in section 127B till 6th August, 2014, when section 127B was amended. The reason why we are mentioning this is because when the Settlement Applications were filed by the Petitioners (i.e. on 27th May, 2014), reference to section 28-AB continued in section 127B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting, the Commissioner (Investigation) within fifteen days of the receipt of the report, to make or cause to be made such further enquiry or investigation and furnish a report within a period of ninety days of the receipt of the communication from the Settlement Commission, on the matters covered by the application and any other matter relating to the case : Provided that where the Commissioner (Investigation) does not furnish the report within the aforesaid period, the Settlement Commission shall proceed to pass an order under sub-section (5) without such report. (5) After examination of the records and the report of the Commissioner of Customs received under sub-section (3), and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (4), and after giving an opportunity to the applicant and to the Commissioner of Customs having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin 15 days of the receipt of the report, to make or cause to be made such further inquiry or investigation and furnish a report within a period of 90 days of the receipt of the communication from the Settlement Commission. After this entire procedure is over, sub-section (5) of section 127C stipulates that after examination of the records and the report received either under sub-section (3) and /or sub-section (4) and after giving an opportunity to the Applicant and the Revenue, the Settlement Commission may 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 Principal Commissioner of Customs or Commissioner of Customs and Commissioner (Investigation) under sub-section (3) and/or sub-section (4). 17. Looking at the entire scheme of section 127C, what becomes clear is that it contemplates two orders being passed. The first order is passed under section 127C(1). Whilst passing this order, the Settlement Commission simplicitor examines whether the Settlement Application should be allowed to be proceeded with. If not, then the Settlement Commission rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners on the ground that they are inadmissible under section 127B. 19. However, the matter does not stop here. As the record would indicate that thereafter the Settlement Commission also called for a report as contemplated under section 127C(3). The question of calling for a report only arises once the Settlement Application is allowed to be proceeded with. This is clear from the opening words of section 127C(3) which state "Where an application is allowed or deemed to have been allowed to be proceeded with under sub-section (1), the Settlement Commission shall, within seven days from the date of order under sub-section (1), call for a report.....". If the Settlement Commission was of the opinion that the Settlement Application filed by the Petitioners ought not to be proceeded with, there was no question of calling for any report as contemplated under section 127C(3). The fact that the report was called for by the Settlement Commission under the provisions of section 127C(3) would itself show that the Settlement Applications of the Petitioners were deemed to be allowed to be proceeded with. It was then not open to the Settlement Commission to reject the Settlement Applications on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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