Co-noticee penalty does not survive after Settlement Commission settles the common customs dispute involving the same show cause notice.

A common customs show cause notice concerning alleged undervaluation and mis-declaration was finally settled by the Settlement Commission in respect of the other co-noticees. In that setting, the appellant, proceeded against only as a co-noticee under Section 114AA of the Customs Act, 1962, could not be left exposed to a separate surviving penalty on the same notice. The settled position in the common proceedings meant the co-noticee liability did not survive independently once the underlying dispute had been finally resolved. The penalty was therefore held unsustainable, and the impugned order was set aside with consequential relief.

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Issues: Whether penalty imposed on a co-noticee survives where the common show cause notice has already been settled by the Settlement Commission in respect of the other co-noticees.

Analysis: The dispute arose from a common show cause notice concerning alleged undervaluation and mis-declaration in import of a car. Two co-noticees had approached the Settlement Commission and the dispute stood finally settled. The appellant was proceeded against only as a co-noticee in the same notice and was penalised under Section 114AA of the Customs Act, 1962. In these circumstances, the settled position applied to the common proceedings and the co-noticee could not be subjected to a separate surviving penalty once the underlying dispute had been finally settled.

Conclusion: The penalty against the appellant could not survive. The appeal was allowed and the impugned order was set aside, with consequential benefit in accordance with law.

Ratio Decidendi: Where a common customs dispute is finally settled by the Settlement Commission in respect of the co-noticees, the co-noticee proceedings based on the same notice do not survive independently for penalty.

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