Clarifying Customs Act: Section 127B Bar Applies Only When Section 123 Conditions Are Met; Independent Assessment Required.

The Special Bench concluded that the applicability of the bar under Section 127B(1) of the Customs Act hinges on the invocability of Section 123. Applications are not automatically barred for goods listed under Section 123(2) or seized on reasonable belief of smuggling unless the conditions for invoking Section 123 are satisfied. The Commission must independently assess whether these conditions are met, irrespective of the explicit mention of Section 123 in the Show Cause Notice. The Additional Bench, Mumbai, will resolve the applicant's case based on these determinations, emphasizing the interpretation of "apply" in Sections 123 and 127B.

---

---

Issues Involved:
1. Whether applications are barred in relation to goods listed or notified under sub-section (2) of Section 123 of the Customs Act.
2. Whether applications are barred when the goods are seized on reasonable belief that they are smuggled under sub-section (1) of Section 123.
3. Whether the bar applies to goods cleared under a Bill of Entry but subsequently seized.
4. Whether the bar applies only when Section 123 is invoked in the Show Cause Notice.

Detailed Analysis:

1. Bar on Applications for Listed or Notified Goods:
- The applications per se are not barred in relation to goods listed or notified under sub-section (2) of Section 123 of the Customs Act. The Special Bench concluded that the mere listing or notification of goods under Section 123(2) does not automatically bar applications for settlement. The invocability of Section 123 is a key determinant.

2. Bar on Applications for Goods Seized on Reasonable Belief of Smuggling:
- The applications may not get barred merely because the goods are seized on reasonable belief that they are smuggled goods under sub-section (1) of Section 123. The Commission can determine whether there was a justifiable ground for reasonable belief and whether the provisions of Section 123 are rightly invoked in the Show Cause Notice. This means that the Commission has the authority to independently assess the applicability of Section 123 based on the facts and circumstances of the case.

3. Bar on Applications for Goods Cleared Under a Bill of Entry but Subsequently Seized:
- The bar laid down in the third proviso to sub-section (1) of Section 127B of the Act could come into play for specified goods cleared under a Bill of Entry but subsequently seized under the Act on the reasonable belief that they are smuggled goods. This is applicable if the Revenue holds that the goods do not tally with the particulars contained in the Bill of Entry. Thus, even if goods are cleared through proper channels, subsequent seizure based on reasonable belief of smuggling can invoke the bar.

4. Bar on Applications When Section 123 is Invoked in the Show Cause Notice:
- Applications in respect of such goods will attract the bar regardless of whether or not Section 123 of the Act has been expressly invoked in the Show Cause Notice, as long as the ingredients required for the application of the said Section are present. The conditions necessary for the invocation of Section 123 are inherent in the Section itself, making its explicit mention in the Show Cause Notice irrelevant. This means that the applicability of Section 123 is based on the presence of its conditions rather than its explicit invocation in legal documents.

Conclusion:
The Special Bench determined that the invocability of Section 123 is essential to decide whether the bar under the third proviso to sub-section (1) of Section 127B applies. The Commission must assess whether the conditions for Section 123 are met, regardless of whether the goods are listed under Section 123(2) or whether Section 123 is mentioned in the Show Cause Notice. The Additional Bench, Mumbai, is to dispose of the case of the applicant in light of these decisions. The interpretation of the term "apply" in Section 123 and Section 127B was crucial, leading to the conclusion that the bar applies only if the conditions for invoking Section 123 are satisfied.

---