Court revokes immunity on interest liability as Settlement Commission lacked power post amendment

The Court set aside the immunity granted to Respondent No.1 towards interest liability, quashing the Settlement Commission's order in that regard. The Court found that the Settlement Commission lacked the power to grant immunity towards interest post the relevant amendment to the Customs Act, 1962. As Respondent No.1 did not contest this argument, the immunity was revoked.

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Issues: Challenge to Settlement Commission's order granting immunity towards interest liability.

In this case, the Union of India through Commissioner of Customs challenged the Settlement Commission's order granting immunity to Respondent No.1 towards interest liability. Respondent No.1, a private limited company engaged in civil engineering works, imported an Electronic Control Speco Asphalt Hot Mixing Plant claiming exemption under a notification. The Customs Department alleged evasion of customs duty and diversion of duty exemption benefits. Respondent No.1 applied for settlement, admitting duty liability and paying a part of the amount towards interest liability. The Settlement Commission, referring to a previous decision, granted complete immunity to Respondent No.1 from interest liability. The Petitioner contended that the Settlement Commission lacked jurisdiction to grant such immunity post an amendment to section 127H(1) of the Customs Act, 1962. The original provision allowed immunity from penalty, fine, and interest, but the amended provision deleted the reference to interest. The Court noted that Respondent No.1 did not contest the Petitioner's argument regarding the amendment's impact on the Settlement Commission's power. Consequently, the Court set aside the immunity granted to Respondent No.1 towards interest liability, quashing the Settlement Commission's order in that regard.

In summary, the key issue in this legal judgment was the challenge to the Settlement Commission's order granting immunity towards interest liability to Respondent No.1. The Court analyzed the relevant provisions of the Customs Act, 1962, before and after an amendment that removed the reference to interest from the section allowing immunity. The Court found that the Settlement Commission lacked the power to grant immunity towards interest post the amendment. As Respondent No.1 did not contest this argument, the Court set aside the immunity granted and quashed the Settlement Commission's order in that respect.

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