TaxTMI 
TaxTMI 
2022 (3) TMI 204
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....d finally. 2. By this petition filed under Article 226 of the Constitution of India, the petitioner seeks a writ of certiorari for quashing and setting aside the impugned notices dated 2nd February 2022 and 10th February 2022 issued by the respondent no.4 and the order dated 16th February 2022 issued by the respondent no.3. The petitioner also seeks a writ of mandamus to direct the Additional Bench, Settlement Commission, Mumbai to call for a report along with the relevant records from the respondent no.2-Commissioner of Customs in terms of Section 127C(3) and to consider and deal with the said application for interim settlement and to pass an appropriate order after complying with the principles of natural justice and the provisions of the Customs Act, 1962. Some of the relevant facts for the purpose of deciding this petition are as under :- 3. On or about 6th January 2022, the petitioner filed Bills of Entry Nos.6414624 and 6414261, both dated 26th November 2021 with the respondents. On 27th November 2021, the respondents issued Seizure Memorandum. The petitioners filed a writ petition bearing No.8751 of 2021 in this Court for various reliefs including for quashing and sett....
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....ional release of the seized goods pending final adjudication. The petitioners annexed copies of TR6 Challans dated 28th January 2022 in respect of the payment of Rs. 12,07,804/- and Rs. 10,91,827/- deposited by the petitioners. The petitioners also produced TR6 Challan showing the payment of Rs. 1100/- towards fees for filing an application for settlement under Section 127B of the Customs Act, 1962. On 31st January 2022, the petitioners forwarded a copy of the order passed by this Court dated 28th January 2022 in Writ Petition No.8751 of 2021 allowing the petitioners to withdraw the said writ petition with liberty to avail all the remedies available in law. 7. On 2nd February 2022, the Superintendent, Additional Bench, Settlement Commission informed the petitioners that on scrutiny of the purported application, it was found that the said application had two defects such as :- (a) No Show Cause Notice had been issued in the instant case which was a statutory requirement for filing an application before the Custom and Central Excise Settlement Commission as envisaged under proviso (a) to clause (1) of Section 127B of the Customs Act, 1962 and; (b) No separate app....
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....ntained in the application. It was further mentioned that the said communication was issued with the approval of the Commissioner, Customs & Central Excise and Service Tax Settlement Commission, Additional Bench, Mumbai. 11. On 14th February 2022, the petitioners through their advocate's letter to the Chairman/Vice-Chairman and other Members of Settlement Commission requested the Settlement Commission to allow the said application to be proceeded with and call for a report with relevant records from the respondent Commissioner as provided under Section 127C(3) and to pass appropriate orders under Section 127C(4) to the learned Commissioner (Investigation) or may proceed for passing orders under Section 127C(5) in accordance with law. 12. The Commissioner by communication dated 16th February 2022, once again referred to the previous correspondence exchanged between the parties, informed that in view of defects/deficiencies, it could not be treated as an application under Section 127B(1) of the Customs Act, 1962 and is accordingly returned in original as the same did not meet the eligibility criteria as prescribed therein and hence was not maintainable. The petitioners were inf....
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....ons and case laws relied upon by the petitioners in the impugned communication. 17. Learned senior counsel for the petitioners placed reliance on the order dated 27th November 2009 passed by the Settlement Commission in case of M/s. Venture Impex and would submit that the said order would apply to the facts of this case. Though in that matter, there was no show cause notice issued by the respondents, the Settlement Commission entertained the application filed under Section 127B of the Customs Act, 1962. He placed reliance on the order dated 31st March 2006 passed by Division bench of this Court in Writ Petition No.1243 of 2006 in case of Omega Intl. Vs. Union of India & Anr. and would submit that this Court, in the said judgment, had directed that the affidavit of Assistant Commissioner of Customs (P) be treated as show cause notice under Section 124 of the Customs Act, 1962. He submits that the said order applies to the facts of this case. 18. Learned senior counsel also placed reliance on the order dated 26th July 2011 passed by the Settlement Commission in case of M/s. AVI Trexim Pvt. Ltd. & Ors. under Section 127B of the Customs Act, 1962 before the Settlement Commission ....
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....n either can be rejected or admitted. Under Section 127F, the Settlement Commission has all the powers which are vested in an officer of the Customs under the said Act or Rules made thereunder in addition to the powers conferred under the said Chapter V of Central Excise Act, 1944. He submits that once the application for settlement is admitted or deemed to have been admitted, all powers are vested in the Settlement Commission and not in the Superintendent or Commissioner. 23. Learned senior counsel strongly placed reliance on Section 127H and would submit that the Settlement Commission has power to grant immunity from prosecution and penalty. The respondents cannot deprive the petitioners from immunity from prosecution and penalty by returning the application filed for Settlement. He submits that under Section 127I, the Settlement Commission also has power to send a case back to the proper officer who shall thereupon dispose of the case in accordance with the provisions of the said Act as if no application under Section 127B had been made. He submits that the provisions relating to ouster of jurisdiction has to be construed strictly. 24. Learned senior counsel for the petiti....
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....application for settlement. He submits that under Section 127B (1) proviso (a), issuance of show cause notice was mandatory for filing an application under the said provision which condition is not complied with by the petitioners. In absence of any such show cause notice, the petitioners at the first instance could not have filed any such application under Section 127B(1) of the Customs Act, 1962. 27. It is submitted that if the respondents issue any show cause notice in future, the petitioners can always file an application for settlement under the said provision subject to compliance of other conditions mentioned therein. Investigation against the petitioners are incomplete. The respondents had only placed in the affidavit-in-reply in the earlier petition what came to light during the course of investigation against the petitioners while opposing the relief sought in the said writ petition. 28. It is submitted that as on today, neither any amount of duty nor any penalty or interest is crystallized. He submits that if any show cause notice cum notice of demand is issued by the respondents against the petitioners, the respondents would not be allowed to travel beyond the sai....
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....s many Vice-Chairmen and other Members as the Central Government thinks fit and shall function within the Department of the Central Government dealing with Customs and Central Excise matters. (3) The Chairman, Vice-Chairman and other Members of the Settlement Commission shall be appointed by the Central Government from amongst persons of integrity and outstanding ability, having special knowledge of, and experience in, administration of customs and central excise laws : SECTION 32A. Jurisdiction and powers of Settlement Commission- (1) Subject to the other provisions of this Chapter, the jurisdiction, powers and authority of the Settlement Commission may be exercised by Benches thereof. (2) Subject to the other provisions of this section, a Bench shall be presided over by the Chairman or a Vice-Chairman and shall consist of two other Members. (3) The Bench for which the Chairman is the presiding officer shall be the principal Bench and other Benches shall be known as additional Benches. (4) Notwithstanding anything contained in sub-section (1) and subsection (2), the Chairman may authorise the Vice-Chairman or other Member appoi....
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....otified vide Notification No. 1/2007/SC(PB) dated 31.05.2007 (as amended). "RULE 2. Definitions. - Unless the context otherwise requires; (d) "Commission" means the Customs and Central Excise Settlement Commissioner instituted under Section 32 of the Central Excise Act, and include any Bench exercising or discharging the powers or functions of the Commissioner;" CUSTOMS ACT, 1962 - Section 127A. Definitions - In this Chapter, unless the context otherwise requires, - (a) "Bench" means a Bench of the Settlement Commission; (b) "case" means any proceeding under this Act or any other Act for the levy, assessment and collection of customs duty, pending before an adjudicating authority on the date on which an application under subsection (1) of section 127B is made: Provided that when any proceeding is referred back by any Court, Appellate Tribunal or any other authority, to the adjudicating authority for a fresh adjudication or decision, as the case may be, then such proceeding shall not be deemed to be a proceeding pending within the meaning of this clause; (c) "Chairman" means the Chairman of the Settlement Commis....
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....ent Commission shall proceed further in the matter without the report of the Principal Commissioner or Commissioner of Customs. (4) Where a report of the Commissioner called for under sub-section(3) has been furnished within the period specified in that sub-section, the Settlement Commission may, after examination of such report, if it is of the opinion that any further enquiry or investigation in the matter is necessary, direct, for reasons to be recorded in writing, the Commissioner (Investigation) within fifteen days of the receipt of the report, to make or cause to be made such further enquiry or investigation and furnish a report within a period of ninety days of the receipt of the communication from the Settlement Commission, on the matters covered by the application and any other matter relating to the case : Provided that where the Commissioner (Investigation) does not furnish the report within the aforesaid period, the Settlement Commission shall proceed to pass an order under sub-section (5) without such report. (5) After examination of the records and the report of the Principal Commissioner of Customs or Commissioner of Customs received under ....
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....ngs before Settlement Commission to be judicial proceedings - Any proceedings under this Chapter before the Settlement Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196, of the Indian Penal Code (45 of 1860). Section 127N. Applications of certain provisions of Central Excise Act- The provisions of Chapter V of the Central Excise Act, 1944 (1 of 1944) in so far as it is not inconsistent with the provisions of this Chapter shall apply in relation to proceedings before the Settlement Commission under this Chapter. The Customs & Central Excise Settlement Commission Procedure, 2007- RULE 4. Signing of notices, etc. - (i) any requisition, direction, letter, authorization, order or written notice to be issued by the Commission shall be signed by the Chairman or a Vice-Chairman or any other Member of the Commission or by the Secretary; (ii) nothing in sub-rule (1) shall apply to any requisition or direction which the Commission may, in the course of the hearing, issue to an applicant or a Commissioner or an authorized representative personally. ....
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....o affidavit-in-reply-cum-notice from the respondent Commissioner which refers to investigations and seizure by DRI and their submissions placed on record and informing the case of alleged mis-declaration of material particulars intended for clearing mis-declared goods for home consumption in contravention of Rule 11 of Foreign Trade (Regulation) Rules, 1993, Section 46 of the Customs Act, 1962. 35. In paragraph 6 (c) of the said Form, the petitioners were required to disclose the duty demanded in the show cause notice. The petitioners stated that it was not quantified. In paragraph 10 of the said Form, the petitioners on their own mentioned the amount of duty which is payable according to the petitioners, without there being any quantification by the respondents. In paragraph 17 of the Annexure-A, the petitioners alleged that they have placed on record the deemed written show cause notice and also the remand application filed by DRI seeking remand of co-accused before the Esplanade Court. The petitioners also placed on record the writ petition and the application therein preferred by them and two affidavits filed by DRI. 36. Under Section 28 of the Custom Act, the proper offi....
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....us no proceedings for levy, assessment and collection of customs duty is pending before an adjudicating authority on the date when the petitioners applied for settlement under Section 127B of the Customs Act. In our view, such application for settlement of cases under Section 127B could be filed only in respect of the "case" within the meaning of Section 127A(b) i.e. in pending proceedings before an adjudicating authority for levy, assessment and collection of customs duty on which the said application under Section 127B(1) was made by the petitioners. The said application filed by the petitioners under Section 127B was thus not maintainable at that stage on this ground also. 39. Proviso (a) to Section 127B(1) of the Customs Act clearly provides that no application under Section 127B(1) shall be made unless show cause notice has been issued to him by the proper officer. Rule 3 of the Customs (Settlement of Cases) Rules, 2007 clearly provides for the manner of filing an application. It is provided that the application under sub-section (1) of Section 127B of the said Act shall be made in Form No.SC(C)-1. 40. A conjoint reading of Section 127B(1) read with proviso and Rule 3 of....
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....issued to him by the proper officer". These conditions have to be cumulatively fulfilled and are mandatory. If an application has to be filed to the Settlement Commission, there is no question of the applicant waiving the notice to show cause. Accepting such a contention would defeat the Parliamentary intent. The issuance of a notice to show cause is an important stage and when it is made a jurisdictional requirement - in the absence of which even an application cannot be made - an applicant cannot set up a waiver of such a condition. Parliament has legislated by requiring that no application under Section 127B(1) can be made unless a notice to show cause has been issued. 44. It is held that in the absence of a notice to show cause a mandatory jurisdictional requirement is not fulfilled. In absence of a notice to show cause, the Settlement Commission cannot assume jurisdiction. An assessee cannot by his own act of waiving the issuance of a notice to show cause confer jurisdiction upon the Settlement Commission. Admittedly in this case, no show cause notice has been issued by the respondents under any of the provisions of the Customs Act, 1962 for adjudication. There is no provis....
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....ustoms Act, being an exception to the normal procedure contemplated under the Act and occurring in a fiscal statute, has to be necessarily construed strictly. The scope of the proceedings cannot be unduly enlarged. It is held that allowing of settlement applications means there may not be any penal proceedings and confiscation. In such circumstances, when the applicant seeks to avail benefit of settlement, the provisions of Section 127A and 127B are to be strictly construed. In our view, since the petitioners had not complied with the mandatory requirement, the application for settlement under Section 127B of the Customs Act filed prior to issuance of show cause notice by the respondents, the said application filed by the petitioners was not an application which could be adjudicated upon by the Settlement Commission under Section 127B of the Customs Act, 1962. 48. In our view, the said application filed by the petitioners without complying with the mandatory requirements under Section 127B(1) read with Rules being a defective application, was not maintainable at that stage and was premature. The Settlement Commission thus even otherwise could not have entertained such applicatio....
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.... it did not satisfy the condition for an application under section 127B(1) of the Customs Act, 1962. The respondents had made it clear that that if there was no written reply received within five days from the date of the said letter, the Commission was at liberty to decide the matter on the basis of the material contained in the application. It was further made clear that the said letter was issued with the approval of the Commissioner, Customs & Central Excise and Service Tax Settlement Commission, Additional Bench, Mumbai. 52. The petitioners however did not cure the said defects as pointed out by the respondents again in the said letter dated 10th February 2022 but raised similar issues which were raised earlier in respond to the communication dated 2nd February 2022 vide their advocate's letter dated 14th February 2022. In these circumstances, the Settlement Commission issued a letter/order dated 6th February 2022 signed by the Commissioner and after referring the earlier correspondence exchanged between the parties informed the petitioners that application filed by the petitioners for settlement was defective or premature as no show cause notice was issued in the instant c....
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....th February 2022. The Chairman, after perusing the reply had ordered on file on 15th February 2022 as "Application be returned pointing out the defects made out above." The application was accordingly returned vide letter dated 16th February 2022. The petitioners did not file any rejoinder controverting these averments made in the affidavit-in-reply nor even bothered to ask for time for filing the affidavit-in-rejoinder. In our view, there is thus no substance in the submission made by Mr.Nankani, learned senior counsel for the petitioners that the application for settlement was not returned by the Settlement Commission but was returned by Superintendent. 57. A perusal of the record clearly indicates that the petitioners themselves have raised various contentions before the Settlement Commission and not before the Superintendent. All such correspondence produced were before the Chairman, Customs & Central Excise Settlement Commission and upon his order, recorded on file various orders which were communicated to the petitioners. Those orders cannot be construed as if the orders passed by the Superintendent and not by the Settlement Commission. 58. In so far as the judgment in ....
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....r settlement without ensuring that a proper written show cause notice had been issued after due completion of investigation. 61. After recording these observations in paragraph 10 of the said order, the Settlement Commission categorically took an assurance from the learned advocate for the applicant that they are also willing for final settlement of case after the department would complete the investigation and would finalise the quantification of differential duty involved in mis-declaration/undervaluation and further that the applicant shall abide by the outcome of investigation by Revenue and would pay any additional amount of duty if so demanded. In view of the said assurance, the Settlement Commission considered it appropriate to admit the application and keep further proceedings for final disposal of the settlement application in abeyance till Revenue would complete the investigation for issuance of a proper show cause notice. In our view, the said order passed by the Settlement Commission would not assist the case of the petitioners but would assist the case of the respondents. 62. In so far as the order dated 26th July 2011 passed by the Settlement Commission in case ....
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....not maintainable at the threshold. In any event, in view of those letters addressed calling upon the petitioners to cure the said defects in the application for settlement which were admittedly not cured by the petitioners, there was substantial compliance of Clause 2 of the said Standing Order dated 7th March 2001. 65. In so far as reliance placed on Section 17 of the Customs Act by the learned senior counsel for the petitioners in support of his submission that the petitioners in this case had already self-assessed the duty leviable on such goods and had paid the duties accordingly is concerned, in our view, reliance placed on Section 17 of the Customs Act, 1962 is totally misplaced. For the purpose of attracting the provisions of Section 127B for filing an application for settlement of cases, there has to be an application in respect of the case where show cause notice had been issued to the applicant by the Proper Officer. In our view, till show cause notice is issued to the applicant by the Proper Officer, the petitioners cannot assess the duty or penalty or any other levy on its own by invoking the provision of Section 17 for the purpose of filing application under Section....