2005 (2) TMI 588 - Commission - Customs

Customs Act Settlement: Rs. 1.48M Duty Liability Settled with Immunities

The Settlement Commission allowed the main applicant and co-applicants to settle duty liability amounting to Rs. 1,48,74,192/- under Section 127C(1) of ... Settlement of case - Demand, penalty and prosecution for illegal import Issues:1. Duty liability arising from diversion of duty-free goods for sale in the local market.2. Settlement application filed by the main applicant and co-applicants.3. Immunities sought from fine, penalty, interest, and prosecution under the Customs Act.4. Conditions for settlement under Section 127C(7) of the Customs Act, 1962.Detailed Analysis:1. The case involved the diversion of duty-free goods meant for export in violation of customs regulations. The main applicant and co-applicants were involved in importing HDPE/LDPE granules under Advance Licences but instead sold them locally. The duty liability amounted to Rs. 1,48,74,192/-, leading to a Show Cause Notice demanding payment. The main applicant admitted the diversion and made initial deposits towards the duty liability, with subsequent encashment of a Bank Guarantee by the Revenue.2. The main applicant and co-applicants filed settlement applications, admitting the duty liability. The Settlement Commission allowed the applications to proceed under Section 127C(1) of the Customs Act, 1962. An interim order adjusted the deposited amount against the demand, leaving a balance duty liability of Rs. 2,61,941/-, which was deposited and confirmed by the Revenue.3. During the final hearing, the applicants sought immunities from fine, penalty, interest, and prosecution under the Customs Act. The applicants argued that full duty liability had been discharged, and cooperation was extended throughout the proceedings. In contrast, the Revenue opposed granting immunities, citing past penalties imposed on the individuals involved.4. The Settlement Commission analyzed the case records and submissions from both parties. It found that the duty admitted equaled the demand in the Show Cause Notice. Accordingly, specific conditions were laid down for settlement under Section 127C(7) of the Customs Act, 1962. The settlement included the amount of Customs duty settled at Rs. 1,48,74,192/-, granting immunity from fine, penalty, and prosecution due to full disclosure and cooperation. However, full immunity from interest was not granted, with a 10% per annum rate imposed on the interest amount. The order specified a timeline for calculating and paying the interest liability. Immunities were granted under Section 127H of the Customs Act, 1962, with a caveat that the order would be void if obtained through fraud or misrepresentation of facts.