TaxTMI 
TaxTMI 
2013 (8) TMI 472
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....he Managing Director and President respectively of the said company. Saurashtra Cement is engaged in the business of manufacturing cement and also produces "Clinker". Such product the company sells not only in the domestic market but also in the international market through exports. The Government of India with intent to boost the exports has been framing various incentive schemes. One of them was Duty Exemption Entitlement Certificate ('DEEC', for short). Under such scheme, an exporter could import certain inputs required for its export product without payment of duty on the condition that within the time specified, the importer shall discharge its export obligation. Such imports, of course, were permitted subject to conditions provided in the DEEC scheme. 2.2 With the intention of exporting "Clinker", Saurashtra Cement imported certain raw material namely, steam coal during the period between June, 1997 to November, 1997. Details of such imports and the duty foregone on such imports under the DEEC scheme are as under :- Licence No. & Date Port of Import Commo-dity Bill of Entry No. & Date Quantity (MTs) CIF Value (Rs.) Duty Foregone (Rs.) 1993/ ....
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....onnes export of Clinker under another licence, the company made no exports at all. Under the scheme, the company had imported the raw material without payment of duty. It was alleged that the company utilised such raw material for manufacture and sale of final product in the local market. 2.8 The show-cause notice referred to statements of the Directors and employees of the petitioner No. 1 company including the present petitioners No. 2 and 3 and called upon the petitioners to show cause why I. 44000 MT's of Steam Coal imported by M/s. SCL under Duty free advance Licences 20037 of dated 29-8-1997 and 19993, dated 3-6-1997 and valued at Rs. 6,67,55,251.00 should not be held liable for confiscation under Section 111(d) and Section 111(o) of the Customs Act, 1962 and since the goods have been cleared and not available for confiscation, why a fine in lieu of confiscation should not be imposed upon them. II. Custom duty amounting to Rs. 92,51,600.00 (Rupees Ninety two lakhs fifty one thousand six hundred only) under licences No. 20037, dated 29-8-1997 and 19993, dated 3-6-1997 along with the interest @ 24% p.a. should....
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....ter dated 11-11-1998 to the Deputy DGFT, Rajkot requesting that due to changed international conditions, the company be permitted to export cement instead of Clinker. The company had also written a letter to the licensing authority in February, 1999 and 4-6-1999 requesting for extension of six months for discharge of its export obligation. 2.10 In short, the defence of the petitioner No. 1 company was not on any factual dispute but on the ground that there was no mala fide on part of the company in not fulfilling the export obligation and that failure on part of the company to meet with such obligation was on account of reasons entirely beyond its control. In addition to above defence taken in the reply to the show-cause notice, the petitioner No. 1 company also pointed out that against the import of 20000 metric tonnes of steam coal under licence No. 19993, dated 3-6-1997 containing export obligation of 1,00,000 metric tonnes of Clinker, the company has already discharged its obligation to the tune of 71.35% in terms of quantity and 72.56% in terms of value. Any recovery of unpaid duty, therefore, must co-relate to the undischarged portion of the obligation and not for the enti....
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....nt of Rs. 70,00,000/- already paid as mentioned in SCN and there after by M/s. Saurashtra Cement Ltd. should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. (iii) I confirm the demand of Customs duty amounting to Rs. 1,31,74,972/- on M/s. GSCL under the provision to Section 28 of the Customs Act, 1962 and order to cover the same from them along with interest amount at the appropriate rate as per provision of Section 28AB of the Customs Act, 1962. The amount of Rs. 70,48,593/- already paid as mentioned in SCN and thereafter by M/s. Gujarat Sidhee Cement Ltd., should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. The Deputy Commissioner, Customs, Porbandar should verify the duty amount paid so far and payable and also calculate the interest amount thereon at the rate as prescribed by the Government. (iv) I also impose penalty under Section 112(a) read with 140 of the Customs Act, 1962 on the following persons : 1. Shri B.L. Kalwar, President Rs. 50,000/- ....
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....y amended its application before the Settlement Commission and admitted the duty liability of a total of Rs. 73,67,859/- (i.e. Rs. 66,64,222/- originally admitted + Rs. 7,03,637/- relatable to import of MR Bricks at Mumbai Port). 2.17 The Commission disposed of the applications of the petitioners by common order dated 24-5-2006. The Commission confirmed the customs duty demand of Rs. 73,67,859/- which was already previously paid. The Commission reduced the interest from 24% to 15% on account of retrospective amendment in law. With respect to penalty, the Commission imposed separate penalties of Rs. 7,00,000/- each on Saurashtra Cement as well as on its two Directors. The Commission granted immunity from prosecution to all the applicants under sub-Section (1) of Section 127H of the Customs Act, 1962. The Commission in its operative portion of the order stated as under : - Customs Duty : The Customs duty in this case is settled at Rs. 73,67,859/-. This amount stands paid. Interest : The Bench observes that consequently the rate of interest prescribed in Notification No. 30/97-Cus., dated 1-4-1997 was @ 24% which was modified and reduced to 15% with retrospective effect vi....
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.... of cement and clinker. It also exports its products in the international market. For export of clinker, the company imported coal and MR Bricks under different licences without payment of duty undertaking to export agreed quantity of clinker within 18 months of the import. Details of such imports are as under : - Licence No. & Date Port of Import Commo-dity Bill of Entry No. & Date Quantity (MTs) CIF Value (Rs.) Duty Foregone (Rs.) 20071 26-9-97 Veraval Coal F-05 2-1-98 6991 11414787.00 1731224.00 20108 16-10-97 Veraval Coal F-04 13-10-97 9804 14817529.00 2244856.00 20109 16-10-97 Veraval Coal F-04 13-10-97 9804 14817529.00 2244856.00 20110 16-10-97 Veraval Coal F-04 13-10-97 9804 14817529.00 2244856.00 20111 16-10-97 Veraval Coal F-04 13-10-97 7369 11137329.00 1687306.00 Veraval Coal F-05 2-1-98 2411 3936640.00 596361.00 20112 16-10-97 Veraval Coal F-05 2-1-98 9806 16011071.00 2425513.00 Total Duty Foregone 13174972.00 3.1 The details of export obligation in terms ....
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....icences valued at Rs. 8,69,52,414/- is confiscated under Section 111(d) and 111(o) of the Customs Act, 1962. Since the goods are not available for confiscation, I impose a penalty of Rs. 10,00,000/- (Rupees Ten Lakhs only) upon M/s. GSCL in lieu of confiscation of goods under Section 112 of the Customs Act, 1962. I confirm the demand of Customs duty amounting to Rs. 92,51,600/- on M/s. SCL under the provision to Section 28 of the Customs Act, 1962 and order to recover the same from them alongwith interest amount at the appropriate rate as per provisions of Section 28AB of the Customs Act, 1962. The amount of Rs. 70,00,000/- already paid as mentioned in SCN and there after by M/s. Saurashtra Cement Ltd. should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. (iii) I confirm the demand of Customs duty amounting to Rs. 1,31,74,972/- on M/s. GSCL under the provision to Section 28 of the Customs Act, 1962 and order to cover the same from them alongwith interest amount at the appropriate rate as per provision of Section 28AB of ....
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....noticed that M/s. Saurashtra Cement had filed another application which also related to illegal import of coal on 14-12-1998 involving a duty of Rs. 27,84,814/-. In the said case the Bench imposed a penalty of Rs. 3,00,000/- was imposed vide its Final Order No. 44/2002-Cus., dated 1-10-2002 (2003 (156) E.L.T. 307) (Sett.Comm.). Furthermore, M/s. Saurashtra Cement has filed another application on 26-04-2005 again involving illegal import of coal, in which additional duty admitted is Rs. 92,51,600/- and which is pending settlement. The co-applicants therein are also S/Shri B.L. Kalwar and M.S. Gilotra as in the present case. The present case of the applicant which is a sister concern of M/s. Saurashtra Cement Ltd. and the same co-applicants as in the other pending case is also relating to illegal imports of coal and the duty liability settled in this case is Rs. 1,24,15,822/-. It appears that the applicant and co-applicants are habitual offenders and importing the same goods adopting similar modus operandi to evade the payment of duty and in the light of the same, their conduct is not clean and needs to be taken cognizance of. Accordingly, the Bench imposes penalty of Rs. 12.50 la....
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....sioner, the Settlement Commission increased the total demand to Rs. 37,50,000/-. He submitted that such revision was wholly unjust. 4.1 The counsel submitted that the Commissioner committed a serious error in enhancing the penalties on the ground that there were series of defaults committed by the company and the Directors. He pointed out that against Saurashtra Cement, there was an isolated case of irregular imports for which a penalty of Rs. 3,00,000/- was imposed by the Settlement Commission vide order dated 1-10-2002. There was no other default by either Saurashtra Cement or its Directors. The present Directors were not proceeded against in the earlier default. He, therefore, submitted that the Settlement Commission committed an error in making substantial enhancement in the penalty against the petitioners. 4.2 With respect to Gujarat Sidhee Cement and its Directors, the counsel submitted that this was the first default on part of the company. There was no previous instance and the Commission committed a grave error in taking note of the earlier defaults of Saurashtra Cement and the present parallel proceedings in case of the other company to enhance the penalties. 4.3....
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....nt Commission and also has made full and true disclosure of his duty liability. 7. Section 127J of the Act provides that order of Settlement Commission shall be conclusive. It reads as under : - "SECTION 127J. Order of settlement to be conclusive. - Every order of settlement passed under sub-section (7) of section 127C shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force." 8. From the above statutory provisions, it may be noticed that the Settlement Commission in addition to having wide powers for settlement of the duty demand on an application by any person subject of course to conditions laid down in Section 127D of the Act, also has special power of granting immunity from prosecution under the Customs Act, the Indian Penal Code or any other Central Act provided of course the Commission is satisfied that such person has co-operated with the proceedings and has also made full and true disclosure about his duty liability. Secondly, the provisions do not provide that the Settlement Commission w....
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....egard to the nature of the function performed by the Commission and keeping in view the principles of judicial review. May be, there is also some force in what Dr. Gauri Shankar says viz., that the order of the Commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not be permitted to accept what is favourable to him and reject what is not. According to learned counsel, the Commission is not even required or obligated to pass a reasoned order. Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz.....
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....es under the Act in proceedings relating to other assessment years." 11. In case of M/s. R.B. Shreeram Durga Prasad (supra), the Apex Court recognised the requirement of procedural fairness in the proceedings before the Settlement Commission. In the said case, since the order passed by the Settlement Commission suffered from breach of natural justice, the Apex Court held that the order was a nullity and remanded the proceedings to the Settlement Commission for fresh consideration. It was observed that the judicial review is concerned not with the decision but with the decision-making process. The Apex Court held and observed as under :- "7. We are definitely of the opinion that on the relevant date when the order was passed, that is to say, August 24, 1977 the order was a nullity because it was in violation of principles of natural justice. See in this connection, the principles enunciated by this Court in State of Orissa v. Dr (Miss) Binapani Dei as also the observations in Administrative Law by H.W.R. Wade, 5th edn., pages 310-311 that the act in violation of the principles of natural justice or a quasi-judicial act in violation of the principles of natural justice is void ....
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....etween 1977-78 and 1978-79 and 1979-80, when no such distinction was suggested even by the assessee; indeed such a distinction is contrary to the case put forward by the assessee in its application under Section 245-C. The Commission (the majority) also ignored the several statements, admissions and averments made by the assessee before the Commission while admitting the case relating to Assessment Years 1978-79 and 1979-80 for settlement." 13. The counsel had also relied on the decision in the case of Sanchit Bansal and Another (supra) in which in the context of admission and selection process of candidates by an educational institution, the Apex Court observed that the role of court in such cases would be very limited and interference would be permissible only when there is violation of any enactment or on the ground of mala fide or ulterior motive or where the procedure adopted is arbitrary and capricious. 14. We may also notice that in the case of Ajmera Housing Corporation and Another v. Commissioner of Income Tax reported in (2010) 8 SCC 739, the Apex Court confirmed the decision of the High Court setting aside the order passed by the Settlement Commission when it was f....
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....Settlement Commission, therefore, is necessarily very narrow. The Apex Court in the case of State of U.P. and Another v. Johri Mal reported in (2004) 4 SCC 714 observed that the scope and extent of power of judicial review of the High Court under Article 226 of the Constitution of India would vary from case to case, the nature of the order, the relevant statute as also other relevant factors including the nature of power exercised by the public authorities, namely, whether the power is statutory, quasi judicial or administrative. It was observed that the power of judicial review is not intended to assume a supervisory role. The power is not intended either to review governance under the rule of law nor for the courts to step into the areas exclusively reserved by the suprema lex to the other organs of the State. The court observed that the limited scope of judicial review is (i) Courts, while exercising the power of judicial review, do not sit in appeal over the decisions of administrative bodies; (ii) A petition for a judicial review would lie only on certain well-defined grounds. (iii) An order passed by an administrative a....
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....n the Commission's order in imposing such penalties on the company and the two Directors. As noted earlier, the provisions of Chapter XIVA nowhere provided that the Commission cannot increase the penalty from what was originally imposed when a party might file an application for settlement. Secondly, the Commission has a special power to waive prosecution under certain circumstances. In the present case, the Commission while exercising such powers, granted total immunity from prosecution to the company as well as to the two Directors. With the narrow scope of judicial review available in a writ petition, we do not find any reason to interfere. 19. The case of the other company namely Gujarat Sidhee Cement, however, would stand on a somewhat different footing. In case of this company, the Commissioner had originally imposed penalty of Rs. 10,00,000/- in lieu of confiscation of goods and had separately imposed penalty of Rs. 50,000/- each on the two Directors. Even this order was quashed by the Tribunal and the proceedings were remanded before the Commissioner. Ultimately, on an application filed by the company and its Directors, the Settlement Commission imposed penalty of Rs. 12....