2021 (12) TMI 919 - HC - Customs

Court dismisses Petition & Interim App, allows compounding of offences under Customs Act.

Mehta Infocomm, Akash Tori Infocom Service Pvt. Ltd., Rainbow Digitech Pvt. Ltd., Jignesh Mehta, Versus Additional Director General (Adjudication), Mumbai, Director General, Directorate of Revenue Intelligence, New Delhi, Commissioner of Customs, Nhava Sheva - V, Raigad, Principal Commissioner of Customs, Pr. Commissioner of Customs, Commissioner of Customs, The Union of India, Mumbai

Mehta Infocomm, Akash Tori Infocom Service Pvt. Ltd., Rainbow Digitech Pvt. Ltd., Jignesh Mehta, Versus Additional Director General (Adjudication), ... Issues Involved:1. Challenge to the Order-in-Original redetermining assessable value and levying differential duty and penalty.2. Alleged violation of principles of natural justice.3. Petitioners' intent to approach the Settlement Commission.4. Issuance of communication for compounding of offences.5. Request for stay on coercive action.Detailed Analysis:1. Challenge to the Order-in-Original:The Petitioners challenged the Order-in-Original No.129 SA(129) ADG (ADJ)/DRI, MUMBAI/2019-20 dated 24.03.2020, which redetermined the declared assessable value, levied differential duty, and imposed penalties. The order was passed by the Additional Director General (Adjudication), Directorate of Revenue Intelligence, Mumbai. The impugned order was a composite order addressing five entities, with separate reasons provided for each.2. Alleged Violation of Principles of Natural Justice:The Petitioners argued that the impugned order was passed in gross violation of the principles of natural justice. They contended that despite informing the adjudicating authority of their intent to approach the Settlement Commission, the order was passed without allowing them the opportunity to do so. The Petitioners claimed that the notices issued mentioned the option to settle the cases under Chapter XIVA of the Customs Act, 1962, which was not honored.3. Petitioners' Intent to Approach the Settlement Commission:The Petitioners repeatedly sought adjournments to approach the Settlement Commission, citing the need to file a consolidated application. Despite being granted several opportunities and adjournments, the Petitioners did not file the application with the Settlement Commission. The court observed that the Petitioners' intent appeared to be to frustrate the adjudication process and delay proceedings.4. Issuance of Communication for Compounding of Offences:The Dy. Commissioner of Customs issued a communication dated 29/10/2021, informing the Petitioners to apply for compounding of their offences under the Customs (Compounding of Offences) Rules 2005. This communication was challenged by the Petitioners, who sought protection from prosecution. The court noted that the Petitioners had the option to file an application for compounding of offences before the jurisdictional Chief Commissioner of Customs.5. Request for Stay on Coercive Action:The Petitioners requested the court to stay any coercive action against them, arguing that they were denied the opportunity to approach the Settlement Commission. The court found no merit in this request, noting that the Petitioners had been given ample time and opportunity to approach the Settlement Commission but failed to do so. The court observed that the Petitioners' conduct showed a lack of bona fides and intent to delay the adjudication process.Conclusion:The court dismissed the Petition and the Interim Application, finding no merit in the Petitioners' submissions. The court emphasized that the Petitioners could still file an application for compounding of offences under the relevant provisions of the Customs Act, 1962, and the Customs (Compounding of Offences) Rules, 2005. The court also noted that any amount voluntarily paid by the Petitioners during the investigation could be set off against their liabilities.