Petition Dismissed: Settlement Commission's 10% Interest on Customs Duty Upheld; Customs Circular No. 53/2000 Not Applicable.

The court dismissed the petition, affirming the Settlement Commission's order for payment of 10% p.a. interest on customs duty. It held that the Commission had jurisdiction to levy interest due to the petitioners' breach of the exemption notification and bond terms. The Customs Circular No. 53/2000 was deemed inapplicable.

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Issues Involved:
1. Jurisdiction and power of the Settlement Commission to levy interest.
2. Validity of the Settlement Commission's order directing payment of interest.
3. Applicability of Customs Circular No. 53/2000.

Summary:

Jurisdiction and Power of the Settlement Commission to Levy Interest:
The petitioners challenged the Settlement Commission's order directing payment of interest at 10% p.a. on customs duty, arguing that neither Notification No. 204/92 nor the Customs Act provided for such interest. The court held that the Settlement Commission had jurisdiction to direct payment of interest as the petitioners had committed a breach of the exemption notification and the terms of the bond executed by them. The court emphasized that the terms and conditions of the bond, which included an obligation to pay interest in case of breach, became part of the exemption notification issued u/s 25 of the Customs Act.

Validity of the Settlement Commission's Order Directing Payment of Interest:
The court found no merit in the petitioners' contention that the Settlement Commission's order was without jurisdiction. The court noted that the petitioners had admitted their duty liability and had approached the Settlement Commission voluntarily. The court held that once the petitioners committed a breach of the exemption notification, the customs authorities were entitled to recover duty with interest. Consequently, the Settlement Commission's order directing payment of interest was valid and within its jurisdiction.

Applicability of Customs Circular No. 53/2000:
The petitioners relied on Customs Circular No. 53/2000, which stated that the Settlement Commission had no jurisdiction to entertain applications involving default in export obligations under Advance Licence/EPCG Schemes. The court held that the circular was not applicable to the present case as the petitioners had committed a breach of both the terms of the licence and the exemption notification. The court further noted that the circular could not override the law laid down by the Supreme Court, which empowered customs authorities to investigate breaches of exemption notifications.

Conclusion:
The court dismissed the petition, upholding the Settlement Commission's order directing payment of interest at 10% p.a. on the customs duty. The court found that the Settlement Commission had jurisdiction to levy interest and that the circular relied upon by the petitioners was not applicable to the facts of the case. The petitioners were held bound by the terms of the bond executed by them, which included an obligation to pay interest in case of breach.

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