TaxTMI 
TaxTMI 
TaxTMI 
2011 (3) TMI 1310
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....h are necessary for the disposal of the present writ petition are as follows :- The petitioner is operating a duty free shop in Chennai Port and based on the investigation done a show cause notice in No. OS-16/2006-DIU, dated 1-3-2007 demanding customs duties and imposing penalties on the company and the officers of the company was issued. The petitioner filed a case before the first respondent for settlement of the case by admitting a total liability of Rs. 67,05,357/-. The case was admitted by the first respondent by its order No. 14/2007-Cus., dated 4-6-2007. Even before the admission of the case, at the time of investigation the petitioner paid Rs. 25 lakhs towards duty involved on 30-8-2006 and Rs. 10 lakhs on 8-9-2006 and further sum of Rs. 10 lakhs on 20-9-2006. The petitioner also furnished bank guarantee and based on a joint discussion with the respondent department, the petitioner gave a letter dated 2-7-2007 asking the department to encash the bank guarantee for Rs. 42,55,000. This was followed by a reminder dated 26-7-2007. It however, appears that the department informed the Settlement Commission that it has not encashed the bank guarantee by letter dated 31-7-2007. I....
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.... Settlement Commission. (4) If the Settlement Commission is satisfied, on an application made under sub-section (1) that the applicant is unable for good and sufficient reasons to pay the amount referred to in sub-section (3) within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments, if the applicant furnishes adequate security for the payment thereof. (5) Where the additional amount of customs duty referred to in sub-section (3) is not paid by the applicant within the time specified or extended period, as the case may be, the Settlement Commission may direct that the amount which remains unpaid, together with simple interest at the rate of eighteen per cent per annum or at the rate notified by the Board from time to time on the amount remaining unpaid, be recovered as the sum due to the Central Government by the proper officer having jurisdiction over the applicant in accordance with the provision of Section 142. (6) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commis....
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....s that were considered for determining the duty liability for the purpose of Settlement Commission to come to a conclusion as to how the issue should be resolved. Paragraph 9 of the report clearly states the nature of the order passed by the first respondent which runs as follows :- "9. In view of the irreconcilable positions taken by the rival parties, Addl. Bench hereby directs Commissioner (Investigation) attached to this Bench to conduct investigation on rival claims and file a factual report to the Bench. Any other matter not referred to above but relevant to the facts in issue may also be investigated and reported." It is, therefore, clear that the Commission took a conscious decision to order investigation by the Commissioner. 5. On the basis of the order of the first respondent, the investigation was thoroughly done and a detailed report was filed. The report proceeds to give a detailed working sheet showing as to how the calculations as regards the quantum of duty demanded in the show cause notice and the quantum of duty admitted by the petitioner should be considered. In paragraph 2.4 the various heads like duty demanded and admitted in application, duty dema....
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....he Settlement Commission directing the Revenue to encash the bank guarantee given by them to realise the amount and also to pay the balance amount of admitted duty. The Commissioner (Investigation) has also stated that the petitioner has paid Rs. 25 lakhs towards duty and the bank guarantees were encashed by the Department during January 2008 insofar as the admitted duty of Rs. 67,05,347. After receipt of the report, the Settlement Commission, heard the parties on 20-2-2008. The petitioner made their written submissions and they also relied upon the earlier decision of the Settlement Commission in the case of M/s. Flemingo (DFS) Pvt. Ltd. 8. The first respondent Bench however, on considering the entire arguments made on either side and after narrating the various events that had happened suddenly took a view that in respect of the duty demand there is a huge gap of Rs. 1.07 crore i.e more than three times of the admitted amount. The Bench was of the view that the disclosure made by the petitioner cannot be considered as a full and true disclosure as there were demonstrable contradictions, inconsistencies and incompleteness in the disclosures made one after another by the peti....
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....graphs of the report. The major duty component falls under category 6 which is based on the earlier orders of the Settlement Commission in the case of M/s. Flemingo (DFS), dated 4-6-2007. (iii) On the basis of this report, the Settlement Commission should have decided the issue and computed the duty liability for settlement of the case. Without doing so, the first respondent has thrown the entire blame on the petitioner as if the petitioner has been making different disclosures each time one at variance with the other. This fact is not correct as admittedly in paragraph 24 of the order it has been recorded that the Revenue has conceded that there were errors in the calculation and the demand in the show cause notice should be brought down from Rs. 1,69,22,099 to Rs. 1,41,60,362. It will be necessary to extract paragraph 24 of the order which is as follows :- 24. The Bench considered carefully the S.C.N., the submissions and the rival claims of the applicant and the Revenue. The applicant has made disclosures many a time, each one at variance with the other. The Revenue has conceded that there were some errors in the calculation and brought down the demand from Rs. 1,69,....
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....r and distinct dispute with regard to the duty demanded. In both cases the Revenue has admitted that there is an error in calculation in respect of the amount demanded as per the show cause notice. Such being the case, the first respondent cannot throw the blame on the petitioner and state that there is variance in the disclosures made by the petitioner. According to the petitioner there is only one disclosure at the time of application to an admitted duty liability of Rs. 67,05,357/-. The various calculations that are found in the investigation report are based on the documents analysed by the investigating authority. It is on the basis of the direction issued by the first respondent Settlement Commission. The petitioner cannot be found fault for these variations. It is for the Settlement Commission to arrive at a proper conclusion particularly in view of the earlier order passed in the case of M/s. Flemingo DFS where it is to be noted that duty demand on each head varies. Without going into merits, the Settlement Commission came to an erroneous conclusion that there are more than one disclosures made by the petitioner. It is pleaded that what is contained in the investigation rep....
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....that the petitioner has not co-operated with the Settlement Commission by paying the admitted duty, this court is not able to accept the same for the simple reason that part duty was paid even before the issuance of show cause notice, at the investigation stage, and the balance amount was directed to be realised by way of encashing the bank guarantee by the Settlement Commission in its admission order dated 4-6-2007. Paragraph 16 of the said order is usefully extracted hereunder :- 16. In view of the representation from the advocate for the applicants, we grant them 15 days time to sit with the Revenue and verify the documents together and arrive at a consensus if possible. Revenue should ensure that all the relevant documents are made available to the applicants so that further disputes are avoided. This exercise should be done within 15 days and report compliance. The Revenue may encash the Bank Guarantee given by them to realise the amount. In the meantime, the applicants have fulfilled all the conditions for admission. Accordingly, the Bench is of the view that the application merits admission. The application is, therefore, admitted and allowed to be proceeded with under....
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....orders on the matters covered by the application. Clause (7) of Section 127C also provides that the Settlement Commission may pass appropriate orders on any other matter relating to the case not covered by the application as well, which clearly reveals that the Settlement Commission has wide powers to pass appropriate orders once an application is admitted. 15. In this case, the Commissioner (Investigation ) has given a detailed report running to 17 pages and has considered six categories of the claim in the show cause notice. He has also given a working sheet on the basis of which the show cause notice has to be reconsidered. It is an admitted fact that the original demand has been scaled down by the Investigating Commissioner based on the verification of the records. The Commissioner (Investigation) also relied on the earlier order passed by the Settlement Commission to determine the duty liability and as to the manner in which the case should be resolved. At no point of time, the Commissioner (Investigation) has stated that the petitioner has not co-operated with the Settlement Commission nor are there material to substantiate the reasons given by the Settlement Commission....
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....been stated that the evidence furnished by the department is based on the official records and the bills issued by the applicant and as such the demand of the department is prima facie corroborated. This finding of the first respondent is contrary to the findings in the earlier order in the same paragraph that the Revenue has conceded that there were some errors in the calculation and the demand made in the show cause notice should be scaled down drastically. This is evident from paragraph 24 of the investigation report, which has already been extracted. 18. It therefore, follows that the first respondent has failed to consider the report of the Commissioner (Investigation) and pass appropriate orders and simply shirked its duty by throwing the blame on the petitioner as if the petitioner had been making disclosures many a time each at variance with the other. As pointed out earlier there has been only one disclosure at the time of admission. The clarifications given by the petitioner is only at the time of investigation by the Commissioner (Investigation) who was duly authorised by the first respondent in terms of Section 127C(6). Such clarification or statement cannot be eq....