2002 (8) TMI 688 - Commission - Customs

Settlement Commission's Authority to Vary Duty Liability Beyond SCN Amount

IN RE: CREST COMMUNICATION LTD.

The Settlement Commission has the authority to vary the duty liability beyond the amount mentioned in the Show Cause Notice (SCN) based on a full and true ... Settlement of case Issues Involved:1. Disclosure of more than the amount mentioned in the Show Cause Notice (SCN) by the applicant.2. Variation of the admitted liability by the Settlement Commission.3. Construction of the term 'on 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 Commissioner.'4. Authority of the Settlement Commission to increase the amount of duty disclosed in the application.Issue-wise Detailed Analysis:1. Disclosure of More Than the Amount Mentioned in the SCN:The applicant has the inherent right to disclose any amount above Rs. 2 lakhs as the disclosure is related to the assessment documents and not the SCN. The SCN may not cover all issues or the entire amount since the applicant has exclusive knowledge of the unpaid duties. Thus, the applicant can disclose more than the amount mentioned in the SCN.2. Variation of the Admitted Liability by the Settlement Commission:The Settlement Commission can vary the amount indicated by the applicant as admitted liability. This is because the Commission's role is to ensure a full and true disclosure of the duty liability, which may involve examining facts and legal provisions beyond the SCN. The Commission is not limited to the amount disclosed in the application but can consider all relevant matters connected with the case.3. Construction of the Term 'on 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 Commissioner':The term 'matters covered by the application' refers to facts and evidence disclosed in the application. 'Any other matter relating to the case not covered by the application' refers to facts and evidence related to the case but not disclosed in the application, which can be brought out in the report of the Commissioner. The Commission must consider these reports to determine the correct duty liability.4. Authority to Increase the Amount of Duty Disclosed:The Settlement Commission has the authority to increase the amount of duty disclosed in the application. This includes correcting calculation mistakes, addressing new issues arising during settlement proceedings, and ensuring the duty liability is determined in accordance with the law. The Commission's decision must be based on the correct and proper application of the Customs Act, ensuring the applicant has made a full and true disclosure.Dissenting Opinion:One member dissented, arguing that the Commission should not go beyond the SCN. The dissenting member emphasized that the Commission's role is to settle within the limits of the SCN and that the law does not empower the Commission to enhance the duty liability beyond what is stated in the SCN. The dissenting opinion also highlighted that the Commission can return the case to the department if the applicant does not make a full and true disclosure.Conclusion:The majority view prevails, allowing the Settlement Commission to consider and vary the duty liability beyond the SCN amount, ensuring a full and true disclosure by the applicant. The Additional Bench, Mumbai, is instructed to dispose of the case of M/s. Crest Communication Ltd. in light of these decisions.