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Issues: (i) Whether the Settlement Commission's finding that the appellant was not entitled to exemption under Notification No.211/83-Cus because the imported goods were sold to a third party (M/s Elektronik Lab) before use was legally sustainable; (ii) Whether the High Court erred in refusing to entertain, at the writ stage, an additional ground that eight consignments were exempt from duty under Sections 54 and 69 of the Customs Act, 1962.
Issue (i): Whether the appellant could claim exemption under Notification No.211/83-Cus despite documentary evidence showing sale/diversion of imported ship spares to a third party prior to installation.
Analysis: Notification No.211/83 requires (a) that goods be imported for repairs of ocean-going vessels and (b) that the importer be a ship repair unit registered with the Director General of Shipping; both conditions are cumulative and strictly construed. Section 127B mandates full and true disclosure in settlement applications. Documentary records (invoices, delivery challans, pattern of sales) established transfer/sale of the imported goods to a third party not registered under the Notification, which prevented the importer from maintaining required accounts and from proving installation/use. The Settlement Commission examined the Commissioners reports and records and concluded there was suppression and diversion; the High Court affirmed that conclusion on the available material.
Conclusion: The conclusion is against the appellant. The Settlement Commissions finding that exemption under Notification No.211/83-Cus was not available is sustained.
Issue (ii): Whether the High Court should have permitted the appellant to raise, by amendment at the writ stage, a new plea that eight consignments were non-dutiable under Sections 54 and 69 (transhipment/warehousing) despite earlier pleadings and conduct before adjudicating authorities and the Settlement Commission.
Analysis: Section 127B permits settlement only where an applicant makes a disclosure of duty liability not previously made; claiming no duty at all is inconsistent with invoking the settlement scheme. The additional ground was not raised before the adjudicating authority, the Tribunal or the Settlement Commission and was sought belatedly by amendment. The new plea involved document-based questions (bills of transhipment/export, who had property in goods when papers were filed) and thus required factual investigation. Given the documentary findings of sale/diversion and the appellants earlier stance, the High Court was justified in refusing to permit the belated ground without treating it as a pure question of law fit for first-time consideration.
Conclusion: The conclusion is against the appellant. The High Court did not err in refusing to entertain the additional ground under Sections 54 and 69.
Final Conclusion: On the issues decided, the Settlement Commissions order denying exemption and confirming the duty demand was upheld and the High Court rightly dismissed the writ petition; the appeal is without merit and dismissed.
Ratio Decidendi: Where an exemption notification imposes cumulative eligibility conditions and settlement under Section 127B requires full and true disclosure, documentary evidence of sale/diversion of imported goods to an ineligible third party before use disentitles the importer to the exemption and bars belated invocation of alternate reliefs that would contradict earlier disclosures.
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