Settlement Commission may return a matter when admitted duty liability is unpaid and cooperation in settlement fails.

Where applicants before the Settlement Commission default in the instalments fixed for admitted duty liability and fail to demonstrate a realistic present or future capacity to pay, the Commission may conclude that they are not cooperating in the settlement process. Unsupported assertions that a secured creditor will assume assets and liabilities, or that future business recovery will clear the dues, are insufficient. On that basis, the matter may be returned to the proper officer for disposal under the Customs Act as if no application under Section 127B had been made, under Section 127-I.

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Issues: Whether the applicants had the present and future to discharge the admitted duty liability and cooperate with the Settlement Commission, and whether the cases should therefore be sent back to the proper officer.

Analysis: The applicants had defaulted in payment of the monthly instalments fixed by the Commission and the outstanding duty liability remained substantial. The Commission found the plea that the secured creditor would take over the assets along with the liabilities to be unsupported, and rejected the expectation that future business recovery would enable liquidation of the balance dues. On the material before it, the Commission concluded that the applicants were neither presently in a position to cooperate by paying the admitted liability nor likely to acquire such capacity in future.

Conclusion: The cases were liable to be returned to the proper officer for disposal in accordance with the Customs Act as if no application under Section 127B had been made, under Section 127-I.

Ratio Decidendi: Where an applicant before the Settlement Commission is unable to discharge the admitted liability and thereby fails to cooperate in the proceedings, the Commission may return the matter to the proper officer under Section 127-I of the Customs Act, 1962.

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