2019 (11) TMI 454 - HC - Customs

Court grants writ petition, sets aside rejection of settlement application under Customs Act. Interpretation of proviso clarified.

The Court allowed the writ petition, setting aside the impugned order that rejected the application for settlement under Section 127B of the Customs Act, ... Application for settlement - Section 127B of the Customs Act, 1962 - SCN was issued on 07.02.2013 prior to listing of the application in terms of Section 127C(1) of the Act for admission/hearing thereof, raising various queries for response by the petitioner - whether there was any case pending in the Appellate Tribunal or Court which would act as a bar to maintainability of the application in terms of the second proviso to Section 127B? HELD THAT:- The Bench in a similar issue IN RE: SHRI AGARWAL TRADING COMPANY [2001 (2) TMI 481 - SETTLEMENT COMMISSION, MUMBAI] has proceeded to entertain the application based on the interpretation that the word 'case' utilised in the proviso should assume the same meaning as the definition of the word under the Customs Act 1962 which means 'any proceeding under this act or any other act for the levy, assessment and collection of customs duty' as contra distinguished from proceedings for prosecution. Further, the provisions of Section 127H of the Act empower the Commission to grant immunity to prosecution under either the Customs Act, the IPC or any other Central Act, in such cases where prosecution has not been instituted before the date of receipt of the Application for settlement by the Commission. Had the commission issued notice to the petitioner prior to hearing the matter, it would perhaps have been persuaded to adopt a reasoning similar to that of the Coordinate Bench - However this has not been done. Petition allowed. Issues:Application for settlement under Section 127B of the Customs Act, 1962 - Maintainability of the application based on the pendency of cases before the Appellate Tribunal or Court.Analysis:Issue 1: Application for SettlementThe petitioner filed an application for settlement under Section 127B of the Customs Act, 1962. The application was received by the Settlement Commission and a notice was issued prior to listing the application for admission/hearing. One of the queries raised in the notice related to the pendency of any case in the Appellate Tribunal or Court, which could affect the maintainability of the application as per the second proviso to Section 127B.Issue 2: Maintainability based on Pendency of CasesThe impugned order rejected the application as non-maintainable, citing the second proviso to Section 127B, without hearing the petitioner. The petitioner contended that the proviso should only apply to cases related to duty assessment pending before the Appellate Tribunal or Court, not to cases of prosecution. The respondent argued for a literal reading of the proviso, covering both assessment and prosecution cases.Issue 3: Disclosure of Prosecution ProceedingsThe respondent claimed non-disclosure of prosecution proceedings before the Special CBI Court, but the petitioner had explicitly mentioned the prosecution in the settlement application. The argument of inadequate disclosure was dismissed, as the petitioner had provided detailed information about the prosecution launched by the Central Bureau of Investigation.Issue 4: Legal Interpretation and PrecedentThe petitioner relied on a decision by a Co-ordinate Bench of the Settlement Commission, Bombay, which interpreted the term 'case' in Section 127B and emphasized that the proviso should not bar applications based on pending prosecution proceedings. The Bench considered the definition of 'case' under the Customs Act and the powers of the Settlement Commission to grant immunity from prosecution.Issue 5: Judicial RationaleThe Court agreed with the interpretation that 'case' should be understood in the context of duty assessment proceedings, not prosecution, based on the Customs Act's definition. The Commission's power to grant immunity from prosecution before the date of application receipt was highlighted. The Court set aside the impugned order and directed the petitioner to appear before the Commission for further proceedings on the question of maintainability.In conclusion, the Court allowed the writ petition, setting aside the impugned order, and instructed the Settlement Commission to decide on the application's maintainability independently and in accordance with the law.