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TMI Blog2022 (5) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... owed. - R/SPECIAL CIVIL APPLICATION NO. 8995 of 2019 - - - Dated:- 19-1-2022 - HONOURABLE MR. JUSTICE J.B.PARDIWALA AND HONOURABLE MS. JUSTICE NISHA M. THAKORE MR. SHALIN MEHTA, LD. SR. ADVOCATE FOR GUPTA LAW ASSOCIATES FOR THE PETITIONER MR DHAVAL D VYAS AND MR NIKUNT K RAVAL FOR THE RESPONDENT ORDER PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA 1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs; (A) That Your Lordship may be pleased to issue a Writ Certiorari or any other appropriate writ, direction or order, quashing and setting aside Final Order No.F-3458-3459/CUS/2018 SC (PB) dated 26.12.2018 (Annexure K ) and letter dated 28.05.2019 (Annexure O ) passed by the Settlement Commission, Delhi and modifying Final Order No.F- 3458-3459/CUS/2018 SC (PB) dated 26.12.2018 by settling the case at Rs.1,94,48,576/-; (B) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, order or direction thereby directing the Settlement Commission, Delhi to allow deduction claimed by the Petitioner, and accordingly, modify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of import of goods subject to the condition that such imported goods are resold in the domestic market on payment of the Sales tax or VAT. As the goods imported by the writ applicant were subsequently sold in the domestic market on payment of the Sales Tax/VAT or GST, as the case may be, the writ applicant had from time to time claimed the benefit of refund under the said notification for various such consignments. 2.5 On 01.07.2017, a new taxation regime came to be introduced in India and the Goods Service Tax came to be implemented thereby replacing the erstwhile Central Excise and Sales Tax regime. In terms of the provisions of the new GST regime, as a transitional provision, an assessee was made eligible for claiming input tax credit of the CVD and SAD paid on the imported goods, lying in possession of the assessee which were meant to be supplied on payment of the GST under the new regime. On the date of the introduction of the new GST regime, the petitioner had various quantities of such imported goods on which the writ applicant had paid the CVD and SAD and therefore in terms of the transitional provision, the writ applicant filed the required TRANS-1 Form thereby cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed under the 2 Bills of Entry as detailed in the Annexure IB should not be re-determined at Rs.1,90,98,408/- as per the provisions of the Section 14 of the Customs Act, 1962 read with Rule 5 of the Customs valuation (Determination of value of imported goods) Rules, 2007. (iv) The import goods PU Leather valued at Rs.17,47,41,743/- (details as per Annexure I) should not be held liable for confiscation as per the provisions of Section 111 (m) of Customs Act, 1962. (v) 1,09,876.5 meters of the import goods, i.e, PU Leather valued at Rs.1,19,32,913/- covered under Bill of Entry No.2088636 dated 14.05.2017 seized under seizure memo dated 29.06.2017, should not be confiscated as per the provisions of Section 111(m) of Customs Act, 1962; (vi) 10,259 rolls of import goods, i.e, PU Leather valued at Rs.6,20,53,915/- detained as per the Panchnama dated 19.06.2017 handed over to Shri Anil Aggarwal, Stock Manager, M/s. Pradeep Impex, Delhi vide Supratnama dated 19.06.2017 should not be confiscated as per the provisions of Section 111 (m) of Customs Act, 1962 (vii) Differential duties of customs aggregating to Rs.3,07, 03,348/- (Rupees Three Crore Seven Lakh Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, directing the writ applicant to pay the differential amount along with interest. In response to the same, the writ applicant filed a detailed reply dated 06.04.2018 explaining that the said amount attributable to the SAD and CVD would have to be refunded and/or given back as credit to the writ applicant and thus, the entire situation qua the said amount was completely revenue neutral. Hence, it was prayed that the deposit of the said amount may not be insisted. 2.12 In the meantime, as the period of 14 days elapsed from the date of issuance of the notice, the application filed by the writ applicant was deemed to be admitted on 12.04.2018. On the basis of the subsequent Misc. Application filed by the writ applicant, the case of the writ applicant was transferred from the Additional Bench, Mumbai to the Principal Bench of the Settlement Commission, Delhi vide order dated 16.05.2018. 2.13 In response to the application for settlement filed by the petitioner, the DRI submitted its comments vide communication dated 23.05.2018 contesting the deduction claimed by the writ applicant. 2.14 The Settlement Commission, thereafter, passed an order on 26.12.2018 thereby ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red from various calculation mistakes. The writ applicant, therefore, preferred Misc. Application on 14.01.2019 for rectification of such mistake. 2.17 However, the Settlement Commission disposed of the said application vide letter dated 28.03.2019 holding that there was no mistake while passing the aforesaid final order. 2.18 In such circumstances, referred to above, the writ applicant is here before this Court with the present writ application. 3. On 07.05.2019, a Coordinate Bench of this Court passed the following order; The counsel for the petitioner has invited Court's attention to the submission made to the Settlement Commission for indicating the futility of demanding and insisting for revenue neutral demands. The settlement commissioner instead of addressing to it has gone on altogether an alien issue which would not in fact amounting to examining the proposal for settlement and that has rendered final order of the settlement commission dated 20.12.2018 vulnerable. The counsel invited Court's attention to the reasoning part of the settlement commission to support his case. We are of the prima facie view that the settlement commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ applicant has stated that the applicant accepts the charges levied in the Show-cause notice with regard to the valuation of the P.U. Leather cloth (with some reservations). Mr. Vyas submitted that the actual value of the imported goods arrived at in the said show-cause notice is Rs.17,47,41,743/- and on the basis of the said value, the additional duty liability of the writ applicant comes to Rs.3,07,03,348/-. At Para-6.6 of the application made before the Settlement Commission, the writ applicant requested for considering waiver of the partial duty amount (Rs.1,12,54,772/-) demanded under the show cause notice. Para-6.2 to 6.5 are submissions in favour of considering waiver as requested under para-6.6. It is submitted that the writ applicant, before the Settlement Commission, accepted the whole amount of duty liability, i.e, 3,07,03,348/- demanded in the notice. 8. Mr. Vyas would submit that the provisions of Section 32P of the Central Excise Act, 1944 read with the provisions of Chapter XIVA would indicate that the proceedings before the Settlement Commission are judicial proceedings within the meaning of Sections 193 and 228, and for the purpose of Section 196 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to adjudicate the disputed questions. By the nomenclature of the Commission namely Settlement Commission itself is suggestive of the fact that the Settlement Commission is established for settlement of the disputes between the parties and to have settlement without following the normal procedure of adjudication of leading evidence, etc., and assessee approaches the Settlement Commission with a view to get immunity and to save their skin from prosecution provided in the Act for non-payment of the tax which is due and payable by the assessee as per the Department. Under the circumstances, we are afraid to accept the submission of the petitioner that the Settlement Commission has jurisdiction to decide the dispute with respect to either applicability of the Service Tax and/or entering into the questions like the questions raised in the present petition. Therefore, we are of the opinion that with respect to such questions, appropriate remedy would be to proceed with the show cause notice, as the power of adjudication is vested with the appropriate authority. Therefore, technically speaking, proceedings before the Settlement Commission cannot be in strict-senso said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner cannot derive any advantage or benefit from the Commission s Order. Mr. Kantawala, on instructions, states that the petitioner is agreeable to such a course. Further, the petitioner is also agreeable to the Revenue retaining a sum of Rs. 17,61,172/- towards duty but without prejudice to the rights and contentions of both sides. 8. In the circumstances, we set aside not only the order passed by the Settlement Commission, but we also declare that the Settlement proceedings initiated by the Commission are of no legal effect from inception. Let the show cause notice be adjudicated in accordance with law by the Revenue. However, the adjudication will proceed on the clear understanding between the parties and noted above. All contentions of the petitioner insofar as the allegations in show cause notice, however, are kept open. We clarify that we have not endorsed any of the findings in the Settlement Commission s order either. 14. The Delhi High Court in the case of SDL Auto Pvt. Ltd. vs. Commissioner of Central Excise, Faridabad , reported in (2019) 366 ELT 496 speaking through Hon ble Justice Sanjiv Khanna (as His Lordship then was) has observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore passing the final order. Lest there be any confusion or ambiguity, we would observe that statements made in the settlement application, reports, settlement order etc. would be read and taken into consideration as per law. Show cause notices would be decided by the Central Excise Officer on merits after hearing the parties. Observations and findings recorded by us in the present judgment are for deciding the writ petitions. We have not decided the show cause notice on merits. In the facts and circumstances of the case, there would be no order as to costs. 15. In view of the settled position of law as noted above, we accept the principal contention canvassed on behalf of the writ applicant that the Settlement Commission ought not to have gone into the merits of the show-cause notice. If the Settlement Commission was of the view that the writ applicant failed to make full and true disclosure of the duty liability, it should have rejected the settlement application. The writ applicant should have been relegated to suffer and undergo the adjudication mechanism and procedure as per the provisions of the Act. 16. In the result, this writ application is partly allowed ..... 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