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of <h1>Court quashes Customs order during Settlement Commission application, upholding exclusive jurisdiction.</h1> The court quashed the order issued by the Additional Commissioner of Customs during the pendency of the application before the Settlement Commission. It ... Adjudication of show cause notice while the settlement application was pending - it was alleged that petitioner had inflated the value of readymade garments being exported in order to claim inflated amounts by way of drawback - Section 127B of the Customs Act, 1962 - Held that:- Section 127C(1) provides for two distinct steps to be taken by the Commission when an application under Section 127B is made to it. First, the Commission must issue a notice within 7 days requiring the applicant to explain in writing as to why the application be allowed to be proceeded with. Second, after the explanation is provided by the applicant, and within 14 days from the date of the initial notice, the Commission is required to pass an order either allowing the application to be proceeded with or rejecting it - The proviso to the said sub-section provides for the consequences of a failure on the part of the Commission to complete either of these steps within the time permitted. In either case, the application is deemed to have been allowed to be proceeded with - In either case, the application is deemed to have been allowed to be proceeded with. In the present case, it is clear that the petitioner's application had been acknowledged by the communication of the Settlement Commission dated 29.08.2018. Although the said communication contemplated an admission hearing on a date to be notified, no such hearing took place. In such circumstances, the proviso to Section 127C (1) would apply and the petitioner's application must be deemed to have been allowed to be proceeded with. By virtue of Section 127F (2) of the Act, during the pendency of the application, the adjudication of the Show Cause Notice by the customs authorities was clearly premature. The said provision denudes the customs authorities of their powers in relation to a matter pending before the Settlement Commission, and vests jurisdiction in respect of those matters in the Commission itself. The adjudication of Show Cause Notice in respect of which a settlement application has been made (and allowed to be proceeded with) is not just contrary to the statutory scheme, but also defeats the very purpose of the settlement provisions. The impugned order dated 27.09.2018 passed by the Additional Commissioner of Customs (ICD), Export, Tughlakabad, New Delhi is hereby quashed. It is open to the parties to proceed with the petitioner's pending application before the Settlement Commission in accordance with law - petition allowed. Issues:1. Challenge to an order passed by the Additional Commissioner of Customs during the pendency of the application before the Settlement Commission.2. Violation of statutory provisions regarding settlement of cases under the Customs Act, 1962.3. Exclusive jurisdiction of the Settlement Commission over customs authorities during the pendency of settlement applications.4. Impact of Section 127F(2) on the powers of customs authorities.5. Consideration of natural justice in the adjudication process.Analysis:Issue 1: The petitioner challenged an order issued by the Additional Commissioner of Customs during the pendency of their application before the Settlement Commission. The petitioner contended that the order should be set aside due to its issuance during the ongoing settlement process.Issue 2: The judgment highlighted the statutory provisions governing the settlement of cases under the Customs Act, 1962. Section 127C outlines the procedure for the Settlement Commission upon receiving an application under Section 127B, emphasizing the need for timely actions by the Commission.Issue 3: The court emphasized the exclusive jurisdiction of the Settlement Commission over customs authorities during the pendency of settlement applications. Section 127F(1) and (2) of the Act clearly state that the Commission has the authority to exercise the powers and functions of customs officers in such cases.Issue 4: The impact of Section 127F(2) on the powers of customs authorities was discussed, highlighting that the adjudication of a Show Cause Notice during the pendency of a settlement application is premature and against the statutory scheme.Issue 5: The judgment briefly addressed the petitioner's complaint regarding natural justice, specifically the lack of information about proposed personal hearing dates. However, this issue was not extensively discussed due to the decision on the primary ground raised by the petitioner.In conclusion, the court quashed the impugned order passed by the Additional Commissioner of Customs and allowed the parties to proceed with the pending application before the Settlement Commission. The judgment reiterated the importance of adhering to statutory provisions and granting exclusive jurisdiction to the Settlement Commission during settlement proceedings.
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