Settlement Commission admits duty liability disclosure, directs Revenue to adjust via Bank Guarantee

The Settlement Commission admitted the application by M/s. Tyrolit Sak Limited, acknowledging the duty liability disclosure not previously revealed to the proper officer. It directed the Revenue to adjust the admitted additional duty liability from encashed amounts via the Bank Guarantee. The Commission maintained its exclusive jurisdiction under Section 127F of the Customs Act, emphasizing the necessity for reassessment before confirming the demand for differential duty, in line with the Supreme Court's precedent in Jacksons Thevara regarding non-compliance with post-importation conditions.

---

---

Issues Involved:
1. Non-fulfillment of export obligation under EPCG scheme.
2. Demand for differential duty and interest.
3. Jurisdiction of Settlement Commission to entertain the application.
4. Disclosure of duty liability not disclosed before the proper officer.
5. Reassessment of duty liability.

Detailed Analysis:

1. Non-fulfillment of export obligation under EPCG scheme:
The applicant, M/s. Tyrolit Sak Limited, obtained an EPCG licence for importing capital goods with the obligation to export cutting and grinding wheels worth US $19,68,036 within five years. They failed to meet this obligation, leading to a demand for differential duty of Rs. 48,59,967/- by the DC, Customs.

2. Demand for differential duty and interest:
The Customs Department issued a Show Cause Notice (SCN) demanding the differential duty along with interest at 24% per annum from the date of assessment, as per Customs Notification 28/97 and the EPCG Bond. The applicant admitted their failure to meet the export obligation and accepted the duty demand but sought relief from the interest and penalty.

3. Jurisdiction of Settlement Commission to entertain the application:
The applicant argued that the Settlement Commission has jurisdiction to entertain their application, citing precedents where similar cases were admitted and settled by the Commission. The Revenue opposed this, relying on a circular from the Ministry of Law which stated that such cases are outside the purview of Section 127B of the Customs Act.

4. Disclosure of duty liability not disclosed before the proper officer:
The applicant contended that the duty liability disclosed in the settlement application had not been previously disclosed to the proper officer (Assessing Officer) at the time of filing the Bill of Entry (B/E). The Settlement Commission agreed, noting that the disclosure of failure to meet post-importation conditions was made for the first time in the settlement application. The Commission referenced the case of Usha Martin Industries, where it was held that departmental circulars do not bind quasi-judicial bodies like the Settlement Commission.

5. Reassessment of duty liability:
The Commission examined whether reassessment of duty was necessary before confirming the demand for differential duty. It concluded that reassessment is required to quantify the duty liability accurately before recovery. The Commission cited the Supreme Court's ruling in Jacksons Thevara, which stated that reassessment is justified in cases of failure to comply with post-importation conditions.

Conclusion:
The Settlement Commission admitted the application, stating that the applicant had disclosed a duty liability not previously disclosed to the proper officer, and all conditions under Section 127B of the Customs Act were satisfied. The Commission directed the Revenue to adjust the admitted additional duty liability from the amounts already encashed by enforcing the Bank Guarantee. The Commission also asserted its exclusive jurisdiction to deal with the case as per Section 127F of the Customs Act.

---