2017 (2) TMI 838 - HC - Central Excise

Court quashes customs duty order, stresses legal adherence for fair decisions.

The court set aside the order of the Customs and Central Excise Settlement Commission and remitted the matter for fresh consideration due to the incorrect ... Levy of Countervailing Duty (CVD) vis-a -vis excise liability - Order of Settlement Commission contrary to statutory provisions - Scope of judicial interference with Settlement Commission orders - Effect of counsel's confession/consent recorded before adjudicatory forum - Remand for fresh consideration where law was unsettled at time of original orderLevy of Countervailing Duty (CVD) vis-a -vis excise liability - Order of Settlement Commission contrary to statutory provisions - Levy of CVD on the imported goods was not leviable and the Commission's levy of CVD was contrary to the provisions of law. - HELD THAT: - The Court accepted the legal proposition, as clarified by the Supreme Court in SRF Ltd., that CVD was not leviable on the goods in question because they were not liable to excise duty. An order of the Settlement Commission upholding levy of CVD on such goods is therefore contrary to the Act and susceptible to judicial interference under the principle that courts may set aside Commission orders which are contrary to statutory provisions. The Court relied on settled authorities, including Ind-Swift Laboratories Ltd., to affirm that a Commission's error in law on admitted facts warrants such interference. [Paras 8, 9]Levy of CVD upheld by the Commission is unsustainable as being contrary to the Act and cannot be legally sustained.Effect of counsel's confession/consent recorded before adjudicatory forum - Remand for fresh consideration where law was unsettled at time of original order - Scope of judicial interference with Settlement Commission orders - Whether the Commission's order should be partially set aside on the CVD point or wholly set aside and remitted for fresh consideration; the Court ordered total setting aside and remand. - HELD THAT: - Although the levy of CVD was found to be contrary to law, the Court noted that at the time the Commission passed its order the legal position was fluid and the petitioner's counsel had apparently conceded the levy before the Commission. Given the unsettled state of law when the Settlement Commission decided the matter and the totality of concessions and concessions-based concessions that influenced the Commission's exercise of discretion (including reductions in redemption fine and penalty), the Court deemed it appropriate not to sever only the CVD portion but to set aside the Commission's order in its entirety and remit the matter to the Commission for fresh consideration. The Court relied upon the principle affirmed in Asahi India Safety Glass Ltd. and Ind-Swift that a High Court can apply the correct principle of law to remit matters for reconsideration where the Commission's order is legally erroneous. [Paras 10, 11]The Commission's order is set aside in totality and the matter is remitted to the Commission for fresh consideration; parties directed to appear before the Commission on the date fixed by this Court.Final Conclusion: The Customs and Central Excise Settlement Commission's order upholding CVD is legally unsustainable; the High Court set aside the entire Commission order and remitted the matter for fresh consideration, directing the parties to appear before the Commission on the appointed date and disposing of the petition accordingly. Issues:Challenge to order of Customs and Central Excise Settlement Commission regarding assessment of customs duty, redemption fine, and personal penalty. Dispute over the levy of Additional Customs Duty/Countervailing Duty (CVD) on imported goods. Confession of counsel for the petitioner regarding payment of CVD. Scope of interference by the court in orders passed by the Commission.Analysis:The petitioner challenged an order passed by the Customs and Central Excise Settlement Commission regarding the assessment of customs duty, redemption fine, and personal penalty. The petitioner imported goods, declaring a lower value, but the department assessed a higher value leading to a show cause notice. The Commission assessed customs duty and levied a redemption fine and personal penalty. The petitioner contended that CVD was not leviable on the imported goods, citing relevant judgments. The confession of the petitioner's counsel regarding CVD payment was disputed, and an application for modification was filed but not decided.The court noted that the facts of the case were undisputed, focusing on the import of goods and the dispute over CVD levy. The court discussed the scope of interference in Commission orders, citing relevant Supreme Court judgments. The court found that if CVD was not leviable on the imported goods, the Commission's decision to levy it would be contrary to the law. Despite the petitioner's counsel's confession, the court decided to set aside the entire order and remit the matter back for fresh consideration due to the evolving legal position at the time of the Commission's decision.The court emphasized that even though the counsel may have conceded to CVD levy based on the prevailing legal uncertainty, the order must align with the law. Therefore, the court directed the parties to appear before the Commission for a fresh consideration, disposing of the petition accordingly. The judgment highlighted the importance of legal correctness in Commission orders and the need for alignment with prevailing legal principles, ultimately ensuring fair and lawful decisions in customs and excise matters.