TaxTMI 
TaxTMI 
2003 (1) TMI 652
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.... dated 8-12-95 which permitted import of the goods as per the list attached thereto. The applicant was under obligation to export 'Embroidery in the piece, in the strips or in Motifs' worth US$ 38,41,927. The licence has been issued for the licence period AM-96 and export obligation was to be completed in 5 years' time. The applicant had imported machinery and cleared them under Bill of Entry No. 618 dated 26-4-96 after discharging duty in terms of Customs Notification 110/95 dated 5-6-95. As per the EPCG scheme in question, the applicant was to undertake the exports in a phased manner whereby 10%, 20%, 30%, 40% was to be achieved in the block years II, III, IV & V respectively. However, as the applicant had not fulfilled the export obligation as required, the customs duty as per the normal rate but for the exemption under Notification 110/95 dated 5-6-95 became payable, in addition to other actions consequent on the failure by the applicant. 2. The DC of Customs, ICD, Bangalore in his letter C. No. EPCG/47/96-ICD dated 11-7-2002 addressed to the Sr. Manager, State Bank of Mysore, IFB, Bangalore has informed that the applicant had not fulfilled the export obligation for the....
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....between "Notice" and "Show Cause Notice" and to clarify the distinction between "Obligation" and "Liability". He has accordingly complied with the directions of the Bench. 4. The twin issues which merit deep considerations are (i) whether the two letters-one dated 11-7-2002 and another one dated 10-8-2002, referred to in para (1) supra, could be considered to be "Show Cause Notice", contemplated under clause (a) under the first proviso to sub-section (1) of Sec. 127B of the Act and (ii) whether there is no fresh disclosure of duty liability in the settlement application, as contended by the Revenue. 5. With reference to the first issue, the ld. Advocate has relied on the orders passed by the Principal Bench and Addl. Bench, Mumbai of the Settlement Commission in Re : Chawla Enterprises - 2002 (139) E.L.T. 464 (Sett. Comm.) and in Re : Sai Impex - 2002 (139) E.L.T. 450 respectively. He further pointed out that the words, 'Show Cause Notice' used in the body of the law must be taken to be a notice through or by or under which, the citizen is put on notice as required under the maxim "Audi Alteram Partem". He added that there is no prescribed format for issue of ....
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....case" under clause (b) of Sec. 127A of the Act, cases involving only confiscation and personal penalty do not fall within the purview of settlement, thus defeating the purpose of the whole scheme itself. Obviously, this is not what is contemplated. The purpose of a notice or a SCN is only to satisfy the requirement of the Audi Alteram Partem Principle. Further, the Apex Court have held in British Airways PLC v. UOI, 2002 (139) E.L.T. 6 (S.C.) that "The well-known Principle of harmonious construction is that effect shall be given to all the provisions and for that any provision of the statute should be construed with reference to the other provisions so as to make it workable". 8. Going by the meaning given to "Notice" in Law Lexicon, extracted above, the notice must be precise and unambiguous and should appraise the party determinatively the case he has to meet. It has to be seen whether the two letters namely, the one dated 11-7-2002 and another one dated 10-8-2002 of the DC, ICD, Bangalore and AO, ICD, Bangalore respectively pass the muster of a notice or SCN as per the Law Lexicon. The first letter dated 11-7-2002 mentions the EPCG licence No. points out that the applica....
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....1) E.L.T. 598 (S.C.) that Sec. 28 only provides for procedural aspect of recovery of duty and hence, any irregularity committed by a proper officer in following the procedure laid down therein will not denude the officer of his jurisdiction. The same judgment have also ruled that "even though a provision of law is mandatory in its operation if such provision is one which deals with the individual rights of a person concerned and is for his benefit, the said person can always waive such a right". Accordingly, the two letters will have to be taken as meeting the requirements of a SCN referred to under clause (a) under the first proviso to sub-section (1) of Sec. 127B of the Act. 10. On the second issue, the Revenue's contention is that the applicant was fully aware of the duty liability even while clearing the imported goods and hence there is no fresh disclosure of the duty liability in the settlement application. The Revenue has referred to the opinion of the Department of Legal Affairs circulated in the circular No. 53 issued from F. No. 607/16/2001 - DBK dated 20-8-2002 of the M/o Finance, Department of Revenue, New Delhi. 11. At the outset, it has to be poi....
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....proper officer for assessment of the goods. Based on the declarations made in the prescribed format of the B/E, the AO completes the assessment as per Sec. 17 of the Act. The assessment thus made in the B/E by the AO, the proper officer, is by itself an order, as held by CEGAT in Midland Plastics Ltd. v. Commissioner of Customs, New Delhi, 2002 (141) E.L.T. 235 (Tribunal). In this case, the applicant has declared in the B/E that he was claiming the benefit of Customs Notification 110/95 and assessment has been made accordingly. The undertaking given in the bond/bank guarantee is only to safeguard duty in the event of a failure in complying with the conditions of the notification. The failure in compliance with the conditions of the Notification is an event subsequent to the clearance of the goods. At the time of declarations in the B/E while seeking clearance of the goods, the importer does not anticipate any failure in fulfilment of the conditions, nor the extent of failure. The failure could be 100% or less. Even in this case, the failure in fulfilling the export obligation as per the letter dated 10-8-2002 of the AO, ICD, Bangalore is only to the extent of 35.90% of the ex....
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....fferent than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place." 13. Reverting to the specifics of this case, in B/E 618 dated 26-4-96, the applicant has declared the description of the imported goods, their value, and other details and has predominantly declared that the clearance of the goods was being sought under "EPCG Scheme, Notification No. 110/95". As per the Notification, concessional assessment was made charging 15% of Basic Customs Duty only as against merit rate. A total duty of Rs. 53,14,824/- has been collected. The perusal of the B/E also contains a mention of the duty on merit rate as Rs. 1,31,88,585/-. As against the above, even the Revenue has demanded only the duty proportionate to the unfulfilled portion of the export obligation. Even though the total duty foregone as ....
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....24-8-2002, Rs. 4,18,737/- is to be adjusted towards the duty liability. Thus, the total amount already realised is Rs. 46,63,737/-, out of the admitted duty liability of Rs. 66,24,751/- leaving a balance of Rs. 19,61,014/-. 15. As the proceedings are pending and since the conditions under Section 127B(1) of the Act are satisfied, the application is allowed to be proceeded with in terms of sub-section (1) of Sec. 127C of the Act. The applicant shall pay the balance amount referred to above within 30 days on receipt of this order and submit proof thereof. With the admission of this application, this Bench acquires the exclusive jurisdiction to perform the functions of any officer of Customs under the Customs Act, 1962 in respect of this case, vide sub-section (2) of Sec. 127F of the said Act. Sd/- (N. Rajagopalan) Vice-Chairman 16. At the outset, on the question whether the two letters of revenue addressed to the Bank to honour the guarantee and credit to Govt. the guarantee amount to the extent of duty due, with copies to the applicant, is a Show Cause Notice, with respect, I do not share the perception of the above order. 17. First referring to the ....
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....507 (S.C.)] both in respect of Section 11A of Central Excise Act which corresponds to Sec. 28 of Customs Act, CC, Calcutta v. Tin Plate Co. of India, [1996 (87) E.L.T. 589] and CC, Mumbai v. Virgo Steels, [2002 (141) E.L.T. 598], referred to below in this order itself. 19. Therefore, the requirement of a SCN in terms of clause (a) of the first proviso to sub-section (1) of Section 127B read with definition of 'case' in relation to which an application can be made under Section 127B, is a SCN issued in terms of Section 28 of CA, though may be read with provisions of section 124 ibid. Any notice for short levy is most likely to contain with proposal to confiscate the goods in respect of which further duty has become due and to impose penalty on the person responsible for the same. Therefore, a harmonious reading of Section 127B, 28 & 124 of CA is possible by insisting on a SCN for short levy, non-levy, etc. 20. Be that as it may, issue more relevant begging for an answer is whether the letters in question in CN-EPCG/47/96 UCD/4622 dt. 11-7-2002 of Dy. Commr. of Customs & C.No. EPCG/47/96 ICD/5398 dt. 10-8-2002 of the Appraising Officer, both addressed to the Senior Ma....
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....d directions. 23. In this context, it is seen that relying on the decision of Apex Court in the case of CC, Mumbai v Virgo Steels, [(2002 (141) E.L.T. 598 (S.C.)] it is observed in the above order that Section 28 provides only for procedural aspect of recovery of duty and hence any irregularity committed by a proper officer in following the procedure laid down therein will not denude the officer of his jurisdiction and, therefore, the two letters have to be taken as meeting the requirements of a SCN. However, it must be highlighted that the Apex Court has specifically observed in the same judgment that ".... We are of the opinion that the law laid down by this court in Tin Plate Co's case (supra) is that issuance of a notice under Section 28 is a mandatory requirement of that Section, with which we are in agreement." The earlier case of CC, Calcutta v. Tin Plate Co. of India, [1996 (87) E.L.T. 589] with which the Apex Court now agreed, had laid down that issuance of a notice under Section 28 is a condition precedent for demanding duty. In the said case of Tin Plate Co. also, Hon'ble Supreme Court found that notices of demand had been issued stating "Please refer to th....
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..... show cause why he should not pay the amount specified in the notice'. But, the instant letters of Revenue to the Bank with copies to applicant are not letters to person chargeable with duty. In any case, they do not communicate such rights of the party, but merely inform the Bank of the money due from the applicant with copy to the applicant ostensibly, for information. 26. It may not also be out of context in this regard to recall the decision of Apex Court in the case of UOI and Others v. Madhumilan Syntex Pvt. Ltd., [1988 (35) E.L.T. 349 (S.C.)]. In the said case before Hon'ble Supreme Court, a classification list had been approved, based on which excisable goods were being cleared. Samples were also drawn and sent to Chemical Examiner. Thereafter, "Without giving any Show Cause Notice or affording any opportunity to the petitioners to be heard, on 7th February, 1984, the Superintendent of Central Excise issued a notice of demand..... on the footing that there was short payment of duty." While disposing of the case, the Hon'ble Supreme Court had observed that "We are of the view .... Section 11A of the Central Excise Act clearly provides that prior show cause notice mu....
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....iving raise to a proceeding to be settled. Hence, these letters cannot be considered to be SCNs. 29. Accordingly, as no SCN is shown to have been issued and hence there is no proceeding relating to levy, assessment and collection pending before a proper officer to come within the definition of 'case', the benchmark for filing application in terms of clause (a) of first proviso to Section 127B(1) is not satisfied and the application does not merit admission. Sd/- (K.P. Sridhara Raman) Member 30. I have gone through the orders of the learned Vice-Chairman and learned Member. 31. The short point in question is whether the letters of the Revenue C.No. EPCG/47/96-ICD dated 11-7-2002 and 10-8-2002 can be considered to be show cause notices (SCN) for the purpose of admitting the application of the Applicant by the Commission. The learned Member is of the view that the above letters do not constitute SCNs and hence the application does not merit admission in terms of clause (a) to proviso to Section 127B(1) of the Act. According to him, these letters are simple and straight forward directions to Bank to honour commitments undertaken by way of guarantee, con....
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.... (139) E.L.T. 464 (Sett. Comm.) :- "Without prejudice to the aforementioned, it is submitted that the necessity to issue a show cause notice is merely to comply with the principles of natural justice. In so far as the applicant is concerned there is no need to comply with the principles of natural justice inasmuch as he voluntarily makes an application and invokes the jurisdiction of the Hon'ble Commission and makes a full and true disclosure. On the other hand, so far as the respondent is concerned the principles of natural justice are complied with in the provisions of Section 127C(1), which relates to the procedures on receipt of application under Section 127B of the Act. This Section provides for the Commissioner of Customs having jurisdiction to submit a report to the Commission. In this report the Commissioner could detail all the allegations and disclose the materials in his possession. Further the Commissioner would have an opportunity to make submissions orally before the Commission. Therefore, principles of natural justice are complied with and there is no need for the formality of issue of a show cause notice. In the facts and circumstances, it is submitted that fo....