Court quashes Settlement Commission order, reinstates Applications for fair hearing, allows interest. Compliance required.

The Court quashed the Settlement Commission's order, restoring the Settlement Applications for reconsideration. The Commission was directed to provide a fair hearing, allowing the imposition of interest payment as a condition. Failure to comply would result in the revival of the original order. Each party was responsible for their costs.

---

---

Issues Involved:
1. Validity and legality of the Settlement Commission's order dated 27th March 2015.
2. Admissibility of the Settlement Applications under Section 127B of the Customs Act, 1962.
3. Compliance with procedural requirements under Section 127C of the Customs Act, 1962.
4. Payment of interest as a condition for the Settlement Applications.

Detailed Analysis:

1. Validity and Legality of the Settlement Commission's Order:
The Petitioners challenged the final order dated 27th March 2015 passed by the Settlement Commission, which rejected their Settlement Applications as inadmissible. The primary argument was that the Settlement Commission erred in law by dismissing the applications without proper consideration of the procedural requirements and the merits of the case.

2. Admissibility of the Settlement Applications under Section 127B:
The Petitioners contended that their applications complied with Section 127B of the Customs Act, 1962, which allows importers/exporters to approach the Settlement Commission before adjudication of the show-cause notice. They argued that their applications should be deemed admissible as they met the conditions stipulated under Section 127B, including the acceptance of additional duty liability and payment of the same.

3. Compliance with Procedural Requirements under Section 127C:
The Petitioners emphasized that Section 127C(1) mandates the Settlement Commission to issue a notice within seven days of receiving an application and to decide on its admissibility within 14 days. They argued that since no such order was passed within the stipulated time, their applications should be deemed to have been allowed to proceed. The Settlement Commission's failure to follow this procedure was a significant point of contention.

The Court noted that the Settlement Commission had indeed issued a notice on 10th June 2014 but did not pass any order on the admissibility of the applications until the final order on 27th March 2015. This delay violated the statutory provisions of Section 127C(1), leading to the conclusion that the applications were deemed to have been allowed to proceed.

4. Payment of Interest as a Condition:
The Petitioners argued that the Settlement Commission misdirected itself by holding the applications inadmissible due to non-payment of interest. They contended that they had agreed to pay the interest within 30 days of the Settlement Commission's order, as recorded during the hearing on 4th March 2015. The Court acknowledged that the Settlement Commission could impose a condition for the payment of interest under Section 28AA of the Act before considering the applications de novo.

Conclusion:
The Court quashed and set aside the impugned order dated 27th March 2015, restoring the Settlement Applications to the file of the Settlement Commission for a de novo consideration. The Settlement Commission was directed to give a reasonable opportunity of hearing to all concerned, including the Petitioners. The Court clarified that the Settlement Commission could impose a condition for the payment of interest, which the Petitioners must comply with before their applications are reconsidered. If the Petitioners fail to pay the interest as determined, the impugned order would stand revived, and the applications would be rejected. The parties were directed to bear their own costs.

---