TaxTMI 
TaxTMI 
2016 (9) TMI 880
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....hereas the other two Members rejected the Settlement Applications filed by the Petitioners and sent the matter back for adjudication (the majority view). Taking exception to the majority view, the present Writ Petition has been filed. 3. The brief facts giving rise to the present controversy are as follows:- (a) The Petitioners entered into a Memorandum of Agreement ("MOA") dated 8th November, 2006 with a party from Singapore for buying a Barge/Pontoon at an agreed price of US $ 1,300,000. The said price also included the cost of equipment such as crane, accommodation module, fenders etc and their fitments. Under the said MOA, various separate invoices were issued for sale of the said Barge / Pontoon, the said equipments and the fitment charges. Upon import of the said Barge / Pontoon, the Petitioners declared the same as a Barge for claiming benefit of duty exemption (effective rate of duty Nil) as per Item No.352 of the said Notification No.21/2002- Cus dated 1st March, 2002. The said Barge / Pontoon was later registered as USC-1 with the Indian Register of Shipping. As per the advice received by the 1st Petitioner, the said Barge / Pontoon was cleared by availing benefit of t....
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....e office of the 3rd Respondent issued a notice dated 29th October, 2013 under section 127C(1) of the Customs Act, 1962 inter alia directing the Petitioners to explain in writing as to why these Applications should be allowed to be proceeded with. By the said notice, an answer was also sought for in relation to the discrepancies mentioned in the said notice. (e) The Petitioners filed a detailed reply to this notice vide their Advocate's letter dated 7th November, 2013 and furnished all the details. A perusal of this letter indicates that all the discrepancies that were raised by the 3rd Respondent, were duly answered by the Petitioners. Thereafter, being satisfied with the explanations given by the Petitioners, the Settlement Commission, vide its order dated 12th November, 2013, allowed these Applications to be proceeded with and the same was duly informed to the Petitioners vide its letter dated 14th November, 2013 (page 146 of the paper book). (f) After the Settlement Applications were allowed to be proceeded with, the first hearing of these Applications took place on 26th March, 2014 when none appeared on behalf of the Revenue and neither any report was filed by the Reven....
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....eedings and non-payment of any admitted duty and interest as required under clause (c) to the 1st proviso to section 127B(1), and accordingly sent the matter back to the proper officer in terms of Section 127-I of the Customs Act, 1962 for disposal of the SCN as required under law. It is this majority view that has been impugned in this Writ Petition. 4. In this factual background, Mr. Kantawala, learned counsel appearing on behalf of the Petitioners, submitted that the findings of the Settlement Commission are wholly perverse. He submitted that the mandate of Section 127B inter alia clearly stipulates that no Settlement Application shall be entertained unless the Applicant has paid the additional amount of customs duty accepted by him along with interest [clause (c) to the 1st proviso to section 127B(1)]. He submitted that this was a condition precedent before the Applicant approached the 3rd Respondent for settlement of its case. If this condition precedent was not satisfied, the Settlement Application was liable to be rejected at the initial stage itself for non-fulfillment of this mandatory requirement. 5. In the facts of the present case, Mr. Kantawala submitted that as mand....
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....ere recorded that they were not disputing the change in classification proposed by Revenue in the SCN and that they have now accepted the classification of the whole Barge with the fittings under heading 8905 which attracts duty of 5%. Mr. Kantawala submitted that even in the Settlement Applications filed before the Settlement Commission, it was categorically stated as under:- "The Applicant submits that the Application filed by it fulfills all the conditions for allowing the same to be proceeded with: a. It has filed Bill of Entry in respect of import of the said goods and in relation to the same a Show Cause Notice has been issued by the proper officer b. The additional amount of duty accepted by the applicant in its application exceeds three lakhs rupees c. It is submitted that the interest is not applicable on the duty, however agrees to pay any such interest if determined by the Settlement Commission. d. It is submitted that no appeal or any matter in respect of the matters covered by the present application is pending in the Appellate Tribunal or any court e. The said goods are not covered by the Notification issued under section 123 of the Customs Act, 1962 ....
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.....f. 01-08-1998 by section 102 of Finance (No.2) Act, 1998 (21 of 1998). The object for inserting this Chapter was that the door to settlement with an errant and defaulting tax-payer was kept open, keeping in mind the primary objective to raise revenue. The Legislature was of the view that a rigid attitude would inhibit a one-time tax evader or an un-intending defaulter from making a clean breast of his affairs and unnecessarily strain the investigation resources of the Government. The settlement machinery was thus meant for providing a chance to a tax-evader who wants to turn over a new leaf as recommended by the Direct Taxes Inquiry Committee (popularly known as the 'Wanchoo Committee'). Keeping the aforesaid objective in mind, this Chapter viz. Chapter XIV-A, was inserted in the Customs Act, 1962 under which the Settlement Commission (3rd Respondent) is constituted. 10. Having set out in brief the objects for which Chapter XIV-A was inserted in the Customs Act, 1962, we shall now turn our attention to some of the statutory provisions of the said Act. On the date when the Settlement Applications arising out of the common SCN dated 9th February, 2012 were filed by the Petitioners ....
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....e said date, the applicant shall within a period of thirty days from the 1st day of June, 2007 pay the accepted duty liability failing which his application shall be liable to be rejected. (2) Where any dutiable goods, books of account, other documents or any sale proceeds of the goods have been seized under section 110, the applicant shall not be entitled to make an application under sub-section (1) before the expiry of one hundred and eighty days from the date of the seizure. (3) Every application made under sub-section (1) shall be accompanied by such fees as may be specified by rules. (4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant." (emphasis supplied) 11. There have been certain amendments to this section in 2014 and 2015 which are not really germane to decide the controversy before us. Be that as it may, as can be seen from the above reproduction, section 127B(1) gives an opportunity to a person to approach the Settlement Commission to settle a case relating to him before the same is adjudicated, and have the same settled. For this purpose, the said person has to make an Application before the Settlement Commi....
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....ed to be proceeded with under sub-section (1), the Settlement Commission shall, within seven days from the date of order under sub-section (1), call for a report along with the relevant records from the Commissioner of Customs having jurisdiction and the Commissioner shall furnish the report within a period of thirty days of the receipt of communication from the Settlement Commission : Provided that where the Commissioner does not furnish the report within the aforesaid period of thirty days, the Settlement Commission shall proceed further in the matter without the report of the Commissioner. (4) ............. (5) ............. (6) ............. (7) ............. (8) ............. (9) ............. (10) ..........." (emphasis supplied) 13. Section 127C inter alia stipulates that on receipt of an Application under section 127B, the Settlement Commission shall, within seven days from the date of receipt of the Application, issue notice to the Applicant to explain in writing as to why the Application made by him should be allowed to be proceeded with. After taking into consideration the explanation provided by the Applicant, the Settlement Commission shall....
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....of the Petitioners. 15. Considering these facts, we are clearly of the view that the majority view of the Settlement Commission was in grave error in coming to the conclusion that the Settlement Applications filed by the Petitioners were liable for rejection on the ground of non co-operation in the proceedings and non payment of any admitted duty and interest as required under Section 127B. As stated earlier, the Petitioners had explained that they had not made any additional payment of duty because in the past they had deposited the amount of duty which was far in excess of what was demanded in the SCN. This explanation was accepted by the Settlement Commission, and it was only thereafter that the case was allowed to be proceeded with. We, therefore, think that it was not correct on the part of the of the Settlement Commission (the majority view) to reject the Settlement Applications of the Petitioners on the ground of non payment of any admitted duty and interest as required under Section 127B. 16. As far as the findings of the majority view that the dispute in the present case related to classification, we equally find this finding to be incorrect. Firstly, under Section 127B,....