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TMI Blog2003 (7) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 204/92. When the Customs authorities initiated proceedings for recovery of duty, the petitioners have approached the Settlement Commission. Before the Settlement Commission, the petitioners have not disputed the jurisdiction of the Customs authorities to initiate proceedings under the Customs Act for recovery of customs duty. Therefore, the question to be considered is, having not disputed the jurisdiction of the Customs authorities to initiate proceedings under the Customs Act, is it open to the petitioners to challenge the grant of interest. Since, there was breach of the terms of the Exemption Notification, the customs authorities were entitled to recover the duty with interest. Merely, because the Commission erroneously or otherwise had not levied interest in his order, it cannot be said that the Customs authorities had no jurisdiction to recover interest. If the petitioners were satisfied with the order of the Commissioner of Customs, there was no need for them to approach the Settlement Commission. Once the petitioners have voluntarily chosen the jurisdiction of the entire issue by the Settlement Commission afresh, in the light of the disclosure made by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, recovery of duty liability and adjustment thereof with interest was well within the jurisdiction of the Settlement Commission. Such order cannot be said to be in breach of principles of natural justice as sought to be faintly canvassed by the learned Counsel for the petitioners. We do not think it necessary to examine those contentions in view of the terms of bond executed by the petitioners wherein petitioners held themselves liable to pay duty with interest. The terms and conditions of bond are very much binding on the petitioners. In the absence of legislative guidelines it was well within the jurisdiction of the Settlement Commission to direct recovery of duty with interest as the bond prescribes recovery of duty with interest from the licence holder. So far as rate of interest determined by the Settlement Commission is concerned, the same cannot be said to be arbitrary looking to the prevailing bank rate on deposits. It is not in dispute that rate of interest awarded by the Settlement Commissions is much below rate prescribed in the bond. In the circumstances, no fault can be found with order of the Settlement Commission. In the result, petition is dismissed with no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for short) but withdrew the same for making application to the Commission in terms of the provisions of Section 127M of the said Act. 5.Accordingly, the application for settlement of the case before the Commission was taken up for hearing and on 23-8-2002, the Commission was to pleased to admit the application and allowed the same to be proceeded with. During the course of final hearing, the advocate for the petitioner conceded that he is agreeable to settle the case on the basis of the report of the Commissioner (Investigation) except claiming deduction in relation to the mistakes apparent from the records as pointed out by him. 6.The Settlement Commission vide its order bearing No. 21/2000 - Customs, dated 3/10th May, 2002 settled the case on payment of admitted amount duty liability in the sum of Rs. 1,17,41,107.86 and further ordered that the same shall be adjusted from and out of deposit made by the petitioners, in the sum of Rs. 1,25,12,000/- during the course of investigation. The Commission was also pleased to grant immunity from imposition of fine and penalty and from the prosecution under the provisions of the said Act and Indian Penal Code, 1860. The Commission, furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence violative of Article 265 of the Constitution of India. Learned Counsel for the petitioners addressed this Court in detail with the assistance of various decided cases as indicated hereinabove. 11.During the course of hearing, learned Counsel for the petitioner has placed before us one Customs Circular bearing No. 53/2000, dated 20th August, 2002, issued by the Board of Central Excise and Customs, hereinafter referred to as ('the circular' for short) reading as under : "It has come to the knowledge of Board that the Mumbai Bench of Settlement Commission has entertain and finally settled duty liability in cases involving default in export obligation under Advance/EPCG Schemes. Under Advance licence EPCG Schemes, at the time of import of goods, the licence holder is made aware of his duty liability and to ensure fulfilment of specified obligation, he gives Bond/BG to DGFT/Customs. The said bond/BG clearly lays down that duty concession/exemption under Advancer Licence/EPCG Schemes is being extended to the licence holder provided that he fulfils the specified export obligation and in the event of failure he would be liable to pay differential customs duty plus interest @ 24% pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. In this premise, he submits that the Commission has no jurisdiction to impose liability of interest. The ultimate submission of the petitioners is that question of granting or awarding interest in such types of cases by the Settlement Commission is without jurisdiction and, therefore, the impugned order to the extent it awards interest be set aside. 13.Per contra, Shri R.V. Desai, learned Counsel appearing for the Revenue though tried to spell out from the provisions in the Customs Act so as to justify the impugned order passed by the Settlement Commission to the extent it directs payment of interest but found it difficult to take his submission any further faced with circular of the Board pressed into service by the learned Counsel for the petitioners; wherein the Board has clarified that the Settlement Commission is authorised or empowered only to entertain applications for settling disputes in those matters where the party had not made full and true disclosure of his duty liability before proper officer. In the cases involving default in discharge of export obligations under Advance Licence or/EPCG Schemes, the licence holder is well aware of his duty liability as such it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on before the Assistant Collector of Customs binding himself to pay on demand the amount of duty leviable if the conditions of the Notifications are not complied with. In the present case, it is not in dispute the imported goods were cleared without payment of duty as per Notification No. 204/92. It is not in dispute that the bond and the legal undertaking given by the petitioners to the Licensing Authority and produced before the Customs authorities at the time of the clearance of the goods did contain a clause to the effect that if the export obligation is not fulfilled, then the customs duty payable on the goods cleared under Notification No. 204/92 shall be paid with interest at the rate specified therein. It is also not in dispute that the petitioners have committed breach of the licence granted to them and have also committed breach of the conditions attached to Notification No. 204/92. When the Customs authorities initiated proceedings for recovery of duty, the petitioners have approached the Settlement Commission. Before the Settlement Commission, the petitioners have not disputed the jurisdiction of the Customs authorities to initiate proceedings under the Customs Act for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faced was faced by the Apex Court in the case of Sheshank Sea Foods Pvt. Ltd. v. Union of India - 1996 (88) E.L.T. 626 (S.C.) wherein, it was contended that the Customs authorities had no right or authority nor did the Customs Act, 1962 empower them to go into question relating to the utilisation of raw materials that had been imported by the appellants under Advance Licences granted to them under the duty exemption scheme. That the duty exemption scheme under which licence had been issued was a Code by itself and excluded any investigation by the Customs authorities. That the bond that had been executed by the appellants pursuant to licences had also provided for action by the licensing authority as such Customs authorities had no jurisdiction to investigate any breach of licences. In reply, it was contended by the Customs authorities in that case that the raw materials had been imported by the appellants therein without payment of duty and availed benefit of an exemption Notification dated 30th April, 1988 (No. 110/1988). The terms and conditions thereof had been violated. The investigation of the exemption notification as well as licences had been violated by the appellants as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te in terms of the said section, the Apex Court was of the view that breach of the terms of the licence would also constitute breach of terms of these Exemption Notification empowering the Customs Authority to investigate. It was also held that if the exemption notification upon which petitioners had obtained clearance of goods without payment of customs duty was breached then in that event. In terms of Section 111(o) of the Act, the Customs Authorities were entitled to investigate in terms of the said section. 19.Turning to the facts of the present case, it is not in dispute that petitioners have as a fact committed breach of exemption Notification No. 204 of 2002, dated 19-5-1992 in addition to the breach of Advance Licences. If that be so, following the line of reasoning of the Apex Court one can safely say that the Customs authorities were well within their jurisdiction to issue show cause notice and adjudicate upon duty liability arising therefrom. If the Customs authorities had a power to determine duty liability, in that event, logically it must follow that the Settlement Commission has the same power. 20.In the above premise, in our view, the circular issued by the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner. It was thus clear that the petitioners have committed breach of the exemption notification as well as the terms of the licences. In this view of the matter, no further opportunity was required to be given to the petitioners. The admission of the petitioners would bind them. Therefore, recovery of duty liability and adjustment thereof with interest was well within the jurisdiction of the Settlement Commission. Such order cannot be said to be in breach of principles of natural justice as sought to be faintly canvassed by the learned Counsel for the petitioners. 23.The rival parties addressed us on extenso so far as the absence of substantive provision under the Act authorising Customs authorities to levy interest on duty liability in the peculiar facts of this case. We do not think it necessary to examine those contentions in view of the terms of bond executed by the petitioners wherein petitioners held themselves liable to pay duty with interest. The terms and conditions of bond are very much binding on the petitioners. In the absence of legislative guidelines it was well within the jurisdiction of the Settlement Commission to direct recovery of duty with interest as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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