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TMI Blog2022 (12) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 1995, the interest rate was prescribed and, therefore, was known. Thus, merely because in the case of Rexnord Electronics [ 2008 (3) TMI 8 - SUPREME COURT ] , the interest rate was specified, and in the present case, it is stated as applicable as per law, the law laid down in the case of Rexnord Electronics will not cease to apply to this case. Thus the liability of the Petitioner to pay interest in this case originated from the bond furnished by it and it was rightly held by the Settlement Commission as being contractual. The Commission has rendered the finding that liability of the Petitioner to pay interest was under the bond; therefore, Settlement Commission has no jurisdiction to waive interest liability . Impact of economic crisis / recession in East Asian countries - frustration of contract beyond the control of the petitioner - HELD THAT:- , the Commission held that the economic recession and financial crisis are not such an unique phenomena, and are generally anticipated by prudent businessmen. The Commission rightly observed that those in business are expected to be ready to overcome such a situation. Though the Petitioner had started the unit after two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st-import conditions. The Petitioner received a show cause notice dated 28 July 2000 issued by the Deputy Commissioner of Custom(App), Mumbai, calling upon the Petitioner to pay Rs. 1,24,11,789/- towards Custom Duty and Rs. 1, 38,78,080/- towards interest. It was alleged in the Show Cause Notice that the Petitioner has failed to fulfill the export obligation stipulated under the license granted to the Petitioner in terms of Notification dated 5 June 1995. Petitioner received another notice on 16 January 2001 for proposing confiscation of goods, recovery of customs duty amounting to Rs. 1,44,80,420/- with the interest of Rs. 1,69,73,886/- till 15 December 2000 along with interest rate @24% per annum. A Bank Guarantee of Rs. 62,05,895/- executed at the time of import was encashed on 6 June 2000 by the Respondent. 4. While these proceedings pursuant to show cause notices were pending, Petitioner applied to Settlement Commission under section 127B of the Customs Act, 1962, for settlement of cases covered under show cause notices. Petitioner sought immunity in respect of the liability of the interest. This prayer was opposed by Respondent Department. The Settlement Commission held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the East Asian Countries, the Settlement Commission held that it was not of such nature that difficulties posed by the financial crisis could not be overcome by the business community or foresee such eventuality. Accordingly, Settlement Commission rejected the Petitioner's prayer for grant of immunity and disposed of the proceedings by the impugned order dated 22 March 2011. Challenging this order, Petitioner is before us. 8. We have heard Mr A.M. Vernekar, learned Counsel for the Petitioners and Mr Pradeep Jetly, learned Senior Advocate for the Respondents. 9. Mr A.M. Vernekar, the learned Counsel for the Petitioners, reiterated the stand before the Settlement Commission and contended as follows. Though it is correct that the Settlement Commission would not have jurisdiction to waive that interest which is payable under contract such as a bond, but in the present case, the bond executed by the Petitioner would show that the Petitioner has nowhere admitted a specific rate of interest as was in the case of Rexnord Electronics and Controls Ltd and the case of Commissioner of Custom(Port) v Settlement Commission, Cus C.Ex 2005 (179) E.L.T.386 (Cal.) where a specific r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to interest applicable as per law in the bond is @ 24% under the Notification of 5 June 1995 and thus it becomes a part of the bond. Therefore, there is no error in the view taken by the Settlement Commission. The Settlement Commission has dealt with the argument regarding the economic crisis in East Asian countries, and Commission was correct in holding that the situation was not unavoidable and, in addition, it cannot be equated to a natural disaster. These being a finding of fact need not interfered in writ jurisdiction. There is no merit in the Petition, and it be rejected. 11. First, we take up the contention of the Petitioner regarding the immunity from levy of interest under Section 127H of the Customs Act. Petitioner imported goods by 8 November 1995. In terms of the conditions of the Notification dated 5 June 1995, the Petitioner had executed a bond that he will duly undertake to pay duty along with interest in the event of failure to fulfill the post-import conditions. The Petitioner had submitted a bond stating that the Petitioner would pay on demand or without demand Rs. 1,24,11,789/- 'with interest as applicable as per law'. The Settlement Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate below 10% and not extending 36% per annum as per Central Government may by notification in the official gazette. By Notification dated 5 June 1995, amended with effect from 5 September 1995, the interest rate was prescribed and, therefore, was known. Thus, merely because in the case of Rexnord Electronics, the interest rate was specified, and in the present case, it is stated as applicable as per law, the law laid down in the case of Rexnord Electronics will not cease to apply to this case. 15. Thus the liability of the Petitioner to pay interest in this case originated from the bond furnished by it and it was rightly held by the Settlement Commission as being contractual. The Commission has rendered the finding that liability of the Petitioner to pay interest was under the bond; therefore, Settlement Commission has no jurisdiction to waive interest liability .The Settlement Commission correctly followed the decision in the case of Rexnord Electronics and Controls Ltd, and held that it had no jurisdiction to grant immunity for interest as it was in terms of the bond. We, therefore, find no error in the view taken by the Commission. 16. As regards the second contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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