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TMI Blog2022 (3) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... No.SC(C)-1 at Serial No.6 where the petitioners were required to submit the details of show cause notice issued to the petitioners, the petitioners referred to affidavit-in-reply-cum-notice from the respondent Commissioner which refers to investigations and seizure by DRI and their submissions placed on record and informing the case of alleged mis-declaration of material particulars intended for clearing mis-declared goods for home consumption in contravention of Rule 11 of Foreign Trade (Regulation) Rules, 1993, Section 46 of the Customs Act, 1962 - In paragraph 6 (c) of the said Form, the petitioners were required to disclose the duty demanded in the show cause notice. The petitioners stated that it was not quantified. In paragraph 10 of the said Form, the petitioners on their own mentioned the amount of duty which is payable according to the petitioners, without there being any quantification by the respondents. In the absence of a notice to show cause a mandatory jurisdictional requirement is not fulfilled. In absence of a notice to show cause, the Settlement Commission cannot assume jurisdiction. An assessee cannot by his own act of waiving the issuance of a notice to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioners was not an application which could be adjudicated upon by the Settlement Commission under Section 127B of the Customs Act, 1962 - the said application filed by the petitioners without complying with the mandatory requirements under Section 127B(1) read with Rules being a defective application, was not maintainable at that stage and was premature. The Settlement Commission thus even otherwise could not have entertained such application based on self made laws of the petitioners by treating the affidavit-in-reply filed by the respondents in earlier writ petition as deemed written show cause notice. The Settlement Commission once again by letter dated 10th February 2022 signed by the Superintendent addressed to the petitioners pointed out the defects that neither there was any show cause notice in the instant case nor the same was pending before any adjudicating authority and thus it did not satisfy the definition of case in terms of section 127A(b) of the Customs Act, 1962. The respondents once again clarified that in view of those defects/deficiencies, it did not satisfy the condition for an application under section 127B(1) of the Customs Act, 1962 - the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishra and Mr.Ram M. Ochani for the Respondent Nos.1 to 4. Mr. Jitendra B. Mishra for the Respondent No.5. Judgment :-(Per R.D. Dhanuka, J.) Rule. Mr.Jetly, learned senior counsel for the respondent nos.1 to 4 waives service. Mr.Jitendra Mishra, learned counsel for the respondent no.5 waives service. By consent of parties, petition is heard finally. 2. By this petition filed under Article 226 of the Constitution of India, the petitioner seeks a writ of certiorari for quashing and setting aside the impugned notices dated 2nd February 2022 and 10th February 2022 issued by the respondent no.4 and the order dated 16th February 2022 issued by the respondent no.3. The petitioner also seeks a writ of mandamus to direct the Additional Bench, Settlement Commission, Mumbai to call for a report along with the relevant records from the respondent no.2-Commissioner of Customs in terms of Section 127C(3) and to consider and deal with the said application for interim settlement and to pass an appropriate order after complying with the principles of natural justice and the provisions of the Customs Act, 1962. Some of the relevant facts for the purpose of deciding this petition are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fine and penalty arising from the said deemed written Show Cause Notice received on or about 6th January 2022. 6. The petitioners also sought permission for filing and processing the Shipping Bills under Sections 50 and 51 for export of the seized goods against the said Export Orders under Section 74(1) of the Customs Act, 1962 and prayed for the provisional release of the seized goods pending final adjudication. The petitioners annexed copies of TR6 Challans dated 28th January 2022 in respect of the payment of ₹ 12,07,804/- and ₹ 10,91,827/- deposited by the petitioners. The petitioners also produced TR6 Challan showing the payment of ₹ 1100/- towards fees for filing an application for settlement under Section 127B of the Customs Act, 1962. On 31st January 2022, the petitioners forwarded a copy of the order passed by this Court dated 28th January 2022 in Writ Petition No.8751 of 2021 allowing the petitioners to withdraw the said writ petition with liberty to avail all the remedies available in law. 7. On 2nd February 2022, the Superintendent, Additional Bench, Settlement Commission informed the petitioners that on scrutiny of the purported application, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 2nd February 2022 from the Superintendent and the reply dated 7th February 2022 from the petitioners, once again pointed out the defects in the said application and made it clear that if there was no written reply received within five days from the date of the said letter, the Commission was at liberty to decide the matter on the basis of the material contained in the application. It was further mentioned that the said communication was issued with the approval of the Commissioner, Customs Central Excise and Service Tax Settlement Commission, Additional Bench, Mumbai. 11. On 14th February 2022, the petitioners through their advocate s letter to the Chairman/Vice-Chairman and other Members of Settlement Commission requested the Settlement Commission to allow the said application to be proceeded with and call for a report with relevant records from the respondent Commissioner as provided under Section 127C(3) and to pass appropriate orders under Section 127C(4) to the learned Commissioner (Investigation) or may proceed for passing orders under Section 127C(5) in accordance with law. 12. The Commissioner by communication dated 16th February 2022, once again referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. 16. Learned senior counsel invited our attention to the correspondence addressed by the petitioners to the respondents and would submit that though several judgments and the provisions of law were referred in the correspondence and also in the application made before the Settlement Commission, the respondent nos.3 and 4 have not dealt with the said provisions and case laws relied upon by the petitioners in the impugned communication. 17. Learned senior counsel for the petitioners placed reliance on the order dated 27th November 2009 passed by the Settlement Commission in case of M/s. Venture Impex and would submit that the said order would apply to the facts of this case. Though in that matter, there was no show cause notice issued by the respondents, the Settlement Commission entertained the application filed under Section 127B of the Customs Act, 1962. He placed reliance on the order dated 31st March 2006 passed by Division bench of this Court in Writ Petition No.1243 of 2006 in case of Omega Intl. Vs. Union of India Anr. and would submit that this Court, in the said judgment, had directed that the affidavit of Assistant Commissioner of Customs (P) be treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under the said provision. 22. It is submitted that the issuance of show cause notice is not a sine qua non for the purpose of quantification of the duty. Under Section 127C(5) of the Customs Act, 1965, powers of the Settlement Commission are very wide. Under Section 127C(1), the Commissioner has no power to return any application to the petitioners. The application either can be rejected or admitted. Under Section 127F, the Settlement Commission has all the powers which are vested in an officer of the Customs under the said Act or Rules made thereunder in addition to the powers conferred under the said Chapter V of Central Excise Act, 1944. He submits that once the application for settlement is admitted or deemed to have been admitted, all powers are vested in the Settlement Commission and not in the Superintendent or Commissioner. 23. Learned senior counsel strongly placed reliance on Section 127H and would submit that the Settlement Commission has power to grant immunity from prosecution and penalty. The respondents cannot deprive the petitioners from immunity from prosecution and penalty by returning the application filed for Settlement. He submits that under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the respondents is by way of an administrative order. There is no quantification of payment of duty or penalty or interest or any further action proposed by the respondents till date against the petitioners nor any such amount is demanded till date. He submits that as on today, there is no adverse order against the petitioners and thus no cause of action for filing application for settlement. He submits that under Section 127B (1) proviso (a), issuance of show cause notice was mandatory for filing an application under the said provision which condition is not complied with by the petitioners. In absence of any such show cause notice, the petitioners at the first instance could not have filed any such application under Section 127B(1) of the Customs Act, 1962. 27. It is submitted that if the respondents issue any show cause notice in future, the petitioners can always file an application for settlement under the said provision subject to compliance of other conditions mentioned therein. Investigation against the petitioners are incomplete. The respondents had only placed in the affidavit-in-reply in the earlier petition what came to light during the course of investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission- ( 1) The Central Government shall, by notification in the Official Gazette, constitute a Commission to be called the [Customs, Central Excise and Service Tax Settlement Commission] for the settlement of cases under this Chapter and Chapter XIVA of the Customs Act, 1962 (52 of 1962). (2) The Settlement Commission shall consist of a Chairman and as many Vice-Chairmen and other Members as the Central Government thinks fit and shall function within the Department of the Central Government dealing with Customs and Central Excise matters. (3) The Chairman, Vice-Chairman and other Members of the Settlement Commission shall be appointed by the Central Government from amongst persons of integrity and outstanding ability, having special knowledge of, and experience in, administration of customs and central excise laws : SECTION 32A. Jurisdiction and powers of Settlement Commission- (1) Subject to the other provisions of this Chapter, the jurisdiction, powers and authority of the Settlement Commission may be exercised by Benches thereof. (2) Subject to the other provisions of this section, a Bench shall be presided over by the Chairman or a Vice-Chairman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other provisions of this Chapter, the special Bench shall sit at a place to be fixed by the Chairman. SECTION 32B. Vice-Chairman to act as Chairman or to discharge his functions in certain circumstances. C.4. Rule 2(d) of the Customs and Central Excise Settlement Commission Procedure, 2007 notified vide Notification No. 1/2007/SC(PB) dated 31.05.2007 (as amended). RULE 2. Definitions. - Unless the context otherwise requires; (d) Commission means the Customs and Central Excise Settlement Commissioner instituted under Section 32 of the Central Excise Act, and include any Bench exercising or discharging the powers or functions of the Commissioner; CUSTOMS ACT, 1962 - Section 127A. Definitions In this Chapter, unless the context otherwise requires, - (a) Bench means a Bench of the Settlement Commission; (b) case means any proceeding under this Act or any other Act for the levy, assessment and collection of customs duty, pending before an adjudicating authority on the date on which an application under subsection (1) of section 127B is made: Provided that when any proceeding is referred back by any Court, Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of thirty days of the receipt of communication from the Settlement Commission : Provided that where the Principal Commissioner or Commissioner of Customs does not furnish the report within the aforesaid period of thirty days, the Settlement Commission shall proceed further in the matter without the report of the Principal Commissioner or Commissioner of Customs. (4) Where a report of the Commissioner called for under sub-section(3) has been furnished within the period specified in that sub-section, the Settlement Commission may, after examination of such report, if it is of the opinion that any further enquiry or investigation in the matter is necessary, direct, for reasons to be recorded in writing, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of Benches thereof in all matters arising out of the exercise of its powers, or of the discharge of its functions, including the places at which the Benches shall hold their sittings. Section 127M. Proceedings before Settlement Commission to be judicial proceedings Any proceedings under this Chapter before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196, of the Indian Penal Code (45 of 1860). Section 127N. Applications of certain provisions of Central Excise Act- The provisions of Chapter V of the Central Excise Act, 1944 (1 of 1944) in so far as it is not inconsistent with the provisions of this Chapter shall apply in relation to proceedings before the Settlement Commission under this Chapter. The Customs Central Excise Settlement Commission Procedure, 2007- RULE 4. Signing of notices, etc. - (i) any requisition, direction, letter, authorization, order or written notice to be issued by the Commission shall be signed by the Chairman or a Vice-Chairman or any other Member of the Commission or by the Secretary; (ii) nothing in sub-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Cases) Rules, 2007 indicates that in the said Form No.SC(C)-1 at Serial No.6 where the petitioners were required to submit the details of show cause notice issued to the petitioners, the petitioners referred to affidavit-in-reply-cum-notice from the respondent Commissioner which refers to investigations and seizure by DRI and their submissions placed on record and informing the case of alleged mis-declaration of material particulars intended for clearing mis-declared goods for home consumption in contravention of Rule 11 of Foreign Trade (Regulation) Rules, 1993, Section 46 of the Customs Act, 1962. 35. In paragraph 6 (c) of the said Form, the petitioners were required to disclose the duty demanded in the show cause notice. The petitioners stated that it was not quantified. In paragraph 10 of the said Form, the petitioners on their own mentioned the amount of duty which is payable according to the petitioners, without there being any quantification by the respondents. In paragraph 17 of the Annexure-A, the petitioners alleged that they have placed on record the deemed written show cause notice and also the remand application filed by DRI seeking remand of co-accused before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before an adjudicating authority on the date on which an application under sub-section (1) of section 127B is made. In this case, there is no show cause notice issued by the respondents to the petitioners and thus no proceedings for levy, assessment and collection of customs duty is pending before an adjudicating authority on the date when the petitioners applied for settlement under Section 127B of the Customs Act. In our view, such application for settlement of cases under Section 127B could be filed only in respect of the case within the meaning of Section 127A(b) i.e. in pending proceedings before an adjudicating authority for levy, assessment and collection of customs duty on which the said application under Section 127B(1) was made by the petitioners. The said application filed by the petitioners under Section 127B was thus not maintainable at that stage on this ground also. 39. Proviso (a) to Section 127B(1) of the Customs Act clearly provides that no application under Section 127B(1) shall be made unless show cause notice has been issued to him by the proper officer. Rule 3 of the Customs (Settlement of Cases) Rules, 2007 clearly provides for the manner of filing an ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant has filed a Bill of Entry or a shipping bill, in respect of the import or export of such goods, as the case may be, and in relation to such Bill of Entry or shipping bill, a show cause notice has been issued to him by the proper officer . These conditions have to be cumulatively fulfilled and are mandatory. If an application has to be filed to the Settlement Commission, there is no question of the applicant waiving the notice to show cause. Accepting such a contention would defeat the Parliamentary intent. The issuance of a notice to show cause is an important stage and when it is made a jurisdictional requirement in the absence of which even an application cannot be made an applicant cannot set up a waiver of such a condition. Parliament has legislated by requiring that no application under Section 127B(1) can be made unless a notice to show cause has been issued. 44. It is held that in the absence of a notice to show cause a mandatory jurisdictional requirement is not fulfilled. In absence of a notice to show cause, the Settlement Commission cannot assume jurisdiction. An assessee cannot by his own act of waiving the issuance of a notice to show cause confer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espectful agreement with the views expressed by the Madras High Court. 47. Madras High Court in case of Optigrab International Vs. Government of India, 2010 (253) E.L.T. 722 (Mad.) has held that Chapter XIVA of the Customs Act, being an exception to the normal procedure contemplated under the Act and occurring in a fiscal statute, has to be necessarily construed strictly. The scope of the proceedings cannot be unduly enlarged. It is held that allowing of settlement applications means there may not be any penal proceedings and confiscation. In such circumstances, when the applicant seeks to avail benefit of settlement, the provisions of Section 127A and 127B are to be strictly construed. In our view, since the petitioners had not complied with the mandatory requirement, the application for settlement under Section 127B of the Customs Act filed prior to issuance of show cause notice by the respondents, the said application filed by the petitioners was not an application which could be adjudicated upon by the Settlement Commission under Section 127B of the Customs Act, 1962. 48. In our view, the said application filed by the petitioners without complying with the mandatory r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g before any adjudicating authority and thus it did not satisfy the definition of case in terms of section 127A(b) of the Customs Act, 1962. The respondents once again clarified that in view of those defects/deficiencies, it did not satisfy the condition for an application under section 127B(1) of the Customs Act, 1962. The respondents had made it clear that that if there was no written reply received within five days from the date of the said letter, the Commission was at liberty to decide the matter on the basis of the material contained in the application. It was further made clear that the said letter was issued with the approval of the Commissioner, Customs Central Excise and Service Tax Settlement Commission, Additional Bench, Mumbai. 52. The petitioners however did not cure the said defects as pointed out by the respondents again in the said letter dated 10th February 2022 but raised similar issues which were raised earlier in respond to the communication dated 2nd February 2022 vide their advocate s letter dated 14th February 2022. In these circumstances, the Settlement Commission issued a letter/order dated 6th February 2022 signed by the Commissioner and after refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56. In paragraph 5.4 of the said affidavit, it is averred that the letter addressed by the petitioners advocate dated 14th February 2022 was placed before the Chairman, Customs Central Excise Settlement Commission on 15th February 2022. The Chairman, after perusing the reply had ordered on file on 15th February 2022 as Application be returned pointing out the defects made out above. The application was accordingly returned vide letter dated 16th February 2022. The petitioners did not file any rejoinder controverting these averments made in the affidavit-in-reply nor even bothered to ask for time for filing the affidavit-in-rejoinder. In our view, there is thus no substance in the submission made by Mr.Nankani, learned senior counsel for the petitioners that the application for settlement was not returned by the Settlement Commission but was returned by Superintendent. 57. A perusal of the record clearly indicates that the petitioners themselves have raised various contentions before the Settlement Commission and not before the Superintendent. All such correspondence produced were before the Chairman, Customs Central Excise Settlement Commission and upon his order, reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on procedural technicalities by rejecting the application at the threshold. At the same time, the Settlement Commission also found substantial merit in the contention of the Revenue that the application should not be proceeded with for settlement without ensuring that a proper written show cause notice had been issued after due completion of investigation. 61. After recording these observations in paragraph 10 of the said order, the Settlement Commission categorically took an assurance from the learned advocate for the applicant that they are also willing for final settlement of case after the department would complete the investigation and would finalise the quantification of differential duty involved in mis-declaration/undervaluation and further that the applicant shall abide by the outcome of investigation by Revenue and would pay any additional amount of duty if so demanded. In view of the said assurance, the Settlement Commission considered it appropriate to admit the application and keep further proceedings for final disposal of the settlement application in abeyance till Revenue would complete the investigation for issuance of a proper show cause notice. In our view, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects. Since there was no show cause notice issued by the respondents which is a condition precedent for filing an application for settlement, such application being not in compliance with the provisions of Section 127B read with Rules was not maintainable at the threshold. In any event, in view of those letters addressed calling upon the petitioners to cure the said defects in the application for settlement which were admittedly not cured by the petitioners, there was substantial compliance of Clause 2 of the said Standing Order dated 7th March 2001. 65. In so far as reliance placed on Section 17 of the Customs Act by the learned senior counsel for the petitioners in support of his submission that the petitioners in this case had already self-assessed the duty leviable on such goods and had paid the duties accordingly is concerned, in our view, reliance placed on Section 17 of the Customs Act, 1962 is totally misplaced. For the purpose of attracting the provisions of Section 127B for filing an application for settlement of cases, there has to be an application in respect of the case where show cause notice had been issued to the applicant by the Proper Officer. In our view, till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under Section 127B as and when occasion arises after complying with all the mandatory requirements under the said provisions. 69. In our view, the petitioners on their own could not have assessed the duty payable on the goods which are the subject matter of two Bills of Entry and could not have paid the duty on its own to contend that the said application was maintainable. If the arguments of the learned senior counsel for the petitioners are accepted, any assessee would file an application for settlement by considering even the correspondence exchanged between the parties or affidavit-in-reply filed by the Revenue in another proceedings as show cause notice and based on such show cause notice, would compute the duty and other levy as may be leviable according to the self-assessment of the petitioners so as to claim immunity from prosecution and penalty. In our view, the writ petition is totally devoid of merit. 70. We accordingly pass the following order :- (i) Writ petition is dismissed. Rule is discharged. (ii) It is made clear that if any application for settlement is filed in respect of two Bills of Entry Nos.6414624 and 6414261, both dated 26th November 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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