Customs settlement immunity cannot bar FERA prosecution when the Commission acts beyond its statutory authority.

A settlement authority under the Customs Act, 1962 can grant immunity only within that statute's limits. Here, the settlement proceedings were confined to customs duty, interest and related reliefs arising from DEEC, DEPB and drawback matters, so they did not amount to adjudication or settlement of prosecution under the Foreign Exchange Regulation Act, 1973. The Commission also had no competence to confer immunity for FERA offences, because Chapter XIV-A of the Customs Act extends only to customs matters and FERA provides its own immunity mechanism. Accordingly, any purported immunity from FERA prosecution was legal effect, and the rejection of the discharge application was upheld.

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Issues: (i) Whether the Settlement Commission granted immunity to the petitioner from prosecution under the Foreign Exchange Regulation Act, 1973 for alleged non-realisation of export proceeds; (ii) Whether the Settlement Commission under the Customs Act, 1962 had competence to grant immunity from prosecution for offences under the Foreign Exchange Regulation Act, 1973.

Issue (i): Whether the Settlement Commission granted immunity to the petitioner from prosecution under the Foreign Exchange Regulation Act, 1973 for alleged non-realisation of export proceeds?

Analysis: The settlement proceedings were confined to liabilities arising under the Customs Act, 1962, particularly the duty exposure linked to DEEC, DEPB and drawback-related matters. The order of settlement dealt with customs duty, interest and related reliefs, and the reference to foreign exchange allegations did not convert the proceeding into one concerning prosecution under the Foreign Exchange Regulation Act, 1973. The subject matter of the complaint under Section 56 of the Foreign Exchange Regulation Act, 1973 was not adjudicated or settled on merits by the Settlement Commission.

Conclusion: No substantive immunity under the Foreign Exchange Regulation Act, 1973 was granted to the petitioner.

Issue (ii): Whether the Settlement Commission under the Customs Act, 1962 had competence to grant immunity from prosecution for offences under the Foreign Exchange Regulation Act, 1973?

Analysis: The statutory scheme of Chapter XIV-A of the Customs Act, 1962 confines the Settlement Commission to cases relating to levy, assessment and collection of customs duty. Its power to grant immunity under Section 127H is limited to offences under the Customs Act, 1962 and cannot be extended to a separate special enactment such as the Foreign Exchange Regulation Act, 1973. The Foreign Exchange Regulation Act, 1973 is a self-contained code and contains its own mechanism for immunity under Section 60. Any immunity purportedly granted by the Settlement Commission for FERA offences was therefore beyond jurisdiction and without legal effect.

Conclusion: The Settlement Commission lacked competence to grant immunity for the FERA offences.

Final Conclusion: The revision failed because the discharge application was rightly rejected, as the customs settlement order did not bar prosecution for the alleged foreign exchange violations.

Ratio Decidendi: A settlement authority constituted under the Customs Act can grant immunity only within the statutory limits of that Act and cannot confer immunity from prosecution for offences under an independent special statute unless that statute itself so permits.

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