TaxTMI 
TaxTMI 
2002 (7) TMI 268
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....how cause notice (SCN) dated 25-1-2002 issued by the Dy. Director, Directorate of Revenue Intelligence, Nepal Division, New Delhi (DRI). In this application the main applicant accepted an amount of Rs. 6,01,249/- as payable. The total amount of duty involved in the dispute is shown as Rs. 32,01,488/-. All the 17 containers containing the imported goods covered by the aforesaid 6 Bills of Entry were seized by the Customs Authorities during the period 7th August to 9th August, 2001. These applications have been registered in the Commission as SC (C) Nos. 205 to 213/2002, dated 14-2-2002. 2. The facts of the case in brief are that on information, the Jurisdictional Customs Authorities examined 17 containers covered by the 6 Bills of Entry in question. The Customs Authorities, on scrutiny of Import General Manifests (IGMs) filed at ICD, Tughlakabad, New Delhi found that 23 more containers had been imported in the name of the company. These containers were also examined. The examination conducted by the Customs Authorities revealed undeclared virgin metal and metal scrap besides declared quantities of aluminium scrap. The goods contained in the aforesaid containers were therefore ....
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....ed 6-5-2002 on behalf of each of the 9 applicants in respect of 8 Bills of Entry (including the 6 Bills of entry referred to in their earlier application and 2 Bills of Entry filed on 1-5-2002 in respect of 23 containers) and the SCN referred to above. In the amended application, the main applicant accepted an additional amount of duty payable as Rs. 1,76,01,382/-. It is stated in the application that the total amount of duty involve in respect of the 8 Bills of Entry is Rs. 2,15,95,729/- and as duty amounting to Rs. 39,94,347/- is already deposited by them, the balance amount of Rs. 1,76,01,382/- is accepted as payable. It is stated in the application that :- (i) In respect of goods covered by 4 Bills of Entry comprising of 9 containers, there is discrepancies in the weight of the goods declared and this discrepancy is due to supplier's mistake. The additional duty liability involved in respect of these goods is Rs. 6,01,421/- and this liability is accepted. (ii) In respect of goods covered by other 2 Bills of Entry comprising of 8 containers, there are discrepancies in the description of the goods as well as weight. It is st....
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.... sub-section (1) of Section 127C of the Act incorporating his comments on the amended application and objecting to the admission thereof. 8. The applications were heard for admission on 25th June, 2002. The learned Advocate appearing on behalf of the applicant submitted the brief facts of the case as mentioned in their application and stressed that there is no matter relating to levy, assessment and collection of Customs duty pending before any Court in this particular case and that the applicant No. 1 has accepted to pay the entire amount of duty even in respect of goods which do not belong to him since the supplier of these goods had wrongly despatched them and have agreed that the applicant No. 1 should pay the Customs duty, have the goods released from the Department and the necessary payment can be settled at a later stage. It is also submitted that they had paid the Customs duty for goods in 17 containers on the basis of their declaration and are now disclosing their additional liability as also the liability in respect of the goods in 23 other containers and that they accept the Panchnama value, rate of duty and the quantification done by the Customs Officers in respec....
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....tainers was master minded by an IPS Officer, Shri Harish Kumar. Summons and non-bailable warrant were issued to him and he was declared proclaimed absconder. His role in smuggling of precious metals as scrap is not limited to 40 containers but wilful mis-declaration and mis-classification in 1450 containers. He also referred a citation of a case of Commissioner of Income-tax v. Express Newspaper Limited [1994 (2) SCC 374]. It is also submitted that in the present case since the extension of time has been granted under proviso to sub-section (2) of Section 110 of the Act, the SCN has been disposed of and, therefore, the present case is distinguishable from the facts of the case of M/s. Chawla Enterprises relied upon by the applicant. 8.2 The Advocate further submitted that this application is not maintainable and the Commission has no jurisdiction to entertain this application. The Revenue submitted their objections towards entertainment of the application of applicant No. 5, Shri Harish Kumar. The Revenue further drew the attention of the Bench towards applicant No. 2 Shri Balwan Sharma who was merely a supervisor till September, 2001 but the moment these transactions were br....
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.... an application in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short-levy on account of misclassification or otherwise of goods, to the Settlement Commission to have the case settled and such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless - (a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of goods, (as the case may be, and in relation to such Bill of entry or shipping bill) a show cause notice has been issued to him by the proper officer; (Emphasis supplied) (b) the additional amount of duty accepted by the applicant in his application exceeds two lakh rupees : Provided further that no application shall be enter....
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.... to be proceeded with or reject the application : [Emphasis provided] Provided that an application shall not be rejected under this sub-section, unless an opportunity has been given to the applicant of being heard : Provided further that the Commissioner of Customs shall furnish such report within a period of one month of the receipt of the communication from the Settlement Commission, failing which it shall be presumed that the Commissioner of Customs has no objection to such application; but he may raise objections at the time of hearing fixed by the Settlement Commission for admission of the application and the date of such hearing shall be communicated by the Settlement Commission to the applicant and the Commissioner of Customs within a period not exceeding two months from the date of receipt of such applications, unless the presiding officer of the Bench extends the said period of two months, after recording the reasons in writing." 10. Revenue's main objections against the admission of these applications are two fold - (i) The present case is a case of non-declaration and concealment of non-declared goods under the cover of declared goo....
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.... agree that the present case is squarely covered by the judgment of the Hon'ble Madras High Court - 2002 (139) E.L.T. 512 (Mad.) - wherein Cellular Mobile Phones were imported in the guise of ACER CD ROM Drive and concealment was detected by authorities only through detailed examination. On noticing these facts, the Hon'ble Madras High Court came to the conclusion that, that was a case of gross mis-declaration and smuggling and did not relate to levy, assessment or collection of Customs duty and consequently the applications were held to be outside the purview of Settlement Commission under Sections 127B and 127C of the Act. We are given to understand that though the aforesaid judgment of the Madras High Court has been appealed against before a Division Bench of that High Court but there is no stay of the judgment. We, therefore, feel that the judicial discipline would require us to abide by the interpretation taken by the Hon'ble Madras High Court in the aforesaid judgment and accordingly the case covered by the present applications (which also involve finding of un-declared goods being imported in the cover and guise of declared goods) are outside the purview of Sections 127B and....
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.... Additional Sessions Judge rejected the anticipatory bail application filed by Shri Harish Kumar with severe stricture against him. In para 4 of the order of Court observed that :- "I have persued the documents placed before me by the investigating officer collected by him during investigation and I find that several fax messages showing payment to this company, have been addressed to Shri Harish Kumar giving his mobile telephone number. Mr. Harish Kumar himself has also been writing letters and fax message on behalf of M/s. Suren International Ltd., to the suppliers in Singapore and letters/message in his hand writing, has been placed on record. Mr. Harish Kumar has not only been thickly is involved in this business, but it seems that he has been taking care of this business of importing of so called scraps. He had been giving instructions and directions by putting his notes on correspondence of this company. He has been discussing the business with the parties. His hand written notes show that he has been negotiating the price and all terms and conditions when and where the things have to be done and the companies have been directly responding to him and not to his wife and fath....
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....ery large number of 1450 containers which are imported by the applicant and where the Customs have reasonable doubt regarding veracity of the declaration made at the time of clearance thereof. It is, therefore, reasonable that the Customs Authorities should be given full opportunity to investigate the case fully and establish the contraventions involved. The nature of investigation to be carried out in this case by the Customs Authorities is not only complex but wide spread as they may have to investigate with the suppliers of the goods, the shipping lines, the negotiating banks and the clearing agents besides the importer and his associates. We also find from submissions of Revenue that a large number of documents have been seized during the searches and these documents are being investigated upon. We are of the view that admission of the present applications for settlement would come in the way of legitimate investigation to be carried out by the Customs Authorities and since the time for the issue of the SCN has been extended by another 6 months; the authorities should have full opportunity to complete their investigation and issue the required SCN. Under sub-section (2) of Sect....
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....h Settlement of Cases, dissected and observed as follows :- "It is not inappropriate to state that the policy of the law as disclosed in Chapter XIXA is not to provide a rescue shelter for big tax-dodgers who indulge in criminal activities by approaching the Settlement Commission. The Settlement Commission will certainly take due note of the gravity of economic offences on the wealth of the nation which the Wanchoo Committee had emphasised and will exercise its power of immunisation against criminal prosecutions by using its power only sparingly and in deserving cases; otherwise such orders may become vulnerable if properly challenged." The Bombay High Court in the case of CIT v. Income-tax Settlement Commission - 2000 (246) ITR 63 Bom. while dealing with Sections 245C and 245H (corresponding to Sections 127B and 127H of the Customs Act) in Chapter XIXA of the Income-tax Act observed as under :- "No assessee is allowed to approach the Commission without disclosing full and true income and as such true, full and honest disclosure is a precondition for invoking the Commission's jurisdiction under Section 245C. An application to the Commission is not intended to enable the dishones....