TaxTMI 
TaxTMI 
2010 (2) TMI 6
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....fficers of the Customs Commissionerate, Mumbai in December, 1997, resulting in the recovery of incriminating documents. The investigations revealed that the appellant had clandestinely availed of benefit of import duty Exemption Notification No.211/83-Cus dated 23rd July, 1983, as amended, on the import of multiple consignments of engineering cargo as "Ship Spares". Based on the material collected in the course of investigations, two show cause notices dated 29th December, 1997 and 17th June, 1998, were issued to the appellant, demanding customs duty of Rs.3,12,030/- and Rs.65,66,076/- respectively (totalling Rs.68,78,106/-). Upon consideration of the reply furnished by the appellant, the Commissioner of Customs (Preventive), Mumbai by his order dated 26th February, 1999 confirmed the demand of customs duty of Rs.68,78,106/-, besides penalty and interest under Section 28AB of the Customs Act, 1962 (for short "the Act"). 3. Aggrieved, the appellant preferred an appeal to the erstwhile Customs, Excise and Gold (Control) Appellate Tribunal. However, the said appeal was withdrawn by the appellant on the ground that they proposed to prefer an application in terms of Section 127MA of ....
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....ted in Notification No.211/83 dated 23rd July, 1983 and that no spare parts, so imported, were sold by them to M/s Elektronik Lab. The stand of the appellant was that they had installed the imported equipment on the ocean going vessels with the assistance of M/s Elektronik Lab, who were the authorised agents of the foreign supplier, M/s Kelvin Hughes, in India from whom the appellant had imported the goods. It was argued that the said Notification did not prohibit an importer from taking assistance of a third party in the repair of the ships. It was reiterated that all the "ship spares" imported by the appellant were fitted in the ocean going vessels directly by them with the assistance of M/s Elektronik Lab and, therefore, all the conditions, stipulated in the Notification, were fulfilled. Apparently, the Settlement Commission was not convinced with the explanation offered by the appellant. On the contrary, the Settlement Commission felt that the appellant had ransferred/sold the imported goods to M/s Elektronik Lab; as pleaded by the Commissioner. Accordingly, vide order dated 24th September, 2001, the Settlement Commission directed the Commissioner to submit his final report alo....
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....s" by the appellant to M/s Elektronik Lab, who in turn sold the same items to ship owners, the appellant could not claim any benefit under exemption Notification No.211/83, the Settlement Commission sustained the demand of duty of Rs.47,79,320/- in respect of 8 consignments sold by the appellant to M/s Elektronik Lab. The Settlement Commission, thus, confirmed the additional customs duty of Rs.68,78,106/- demanded from the appellant under the order of adjudication by the Commissioner. Inter alia, observing that though the appellant had not made a full and true disclosure of their duty liability but had cooperated with the Settlement Commission, the Settlement Commission waived penalty in excess of Rs.18 lakhs and granted total immunity to the appellant from prosecution. The Settlement Commission also held that since the case of the appellant pertained to a period prior to April, 1995, when Section 28AB of the Act was inserted by the Finance Act, 1996, interest on delayed payment of duty could not be levied on the appellant. 9. Being dissatisfied with the order passed by the Settlement Commission, the appellant took the matter to the High Court by preferring the aforementioned wr....
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.... 127J of the Act did not bar the jurisdiction of the High Court under Article 226 of the Constitution to interfere with the order passed by the Settlement Commission when it was contrary to the provisions of the Act. It was urged that instead of outrightly declining to go into the merits of the additional ground raised, at best, the High Court could have given an opportunity to the Revenue to meet the stand of the appellant. It was also contended that the expression "clearance of the goods for home consumption" under Section 47 of the Act has a definite connotation and meaning under the Act and the imported goods can be cleared for home consumption only when a bill of entry for home consumption is filed; it is assessed; duties assessed are paid and an order is passed by the proper officer for clearance of the goods for home consumption, which is not the case here, as no bill of entry for home consumption was filed. Learned counsel was at pains to explain that the said consignments were correctly released for transhipment and re-export and the conditions as stipulated in Sections 54 and 69 of the Act having been complied with, no customs duty was leviable on the said 8 consignments.....
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....unsel relied on the decision of the Delhi High Court in Commissioner of C. Ex., Visakhapatnam Vs. True Woods Pvt. Ltd. 2006 (199) E.L.T. 388 (Delhi) Relying heavily on the decision of this Court in Union of India Vs. Anil Chanana 2008 (222) E.L.T. 481 (S.C.) and a decision of the Bombay High Court in C.I.T. Mumbai City XIV, Mumbai Vs. The Income Tax Settlement Commission, Mumbai & Ors. 2000 (246) ITR 63 (Bom), wherein while explaining the concept of compounding in terms of Rule 6 of the Customs (Compounding of Offences) Rules, 2005, which confers power on the compounding authority to grant immunity from prosecution to a person who has made full and true disclosure of facts relating to the case and has cooperated in the proceedings before him, it was held that applications for compounding ought to be disallowed if there are demonstrable contradictions or inconsistencies or incompleteness in the case of the applicant, learned counsel asserted that in the light of the facts found by the Settlement Commission and affirmed by the High Court, the appellant does not deserve any further relief. 12. Before adverting to the merits of the issues raised on behalf of the parties, it would be....
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....tlement Commission shall call for a report from the Commissioner of Customs having jurisdiction and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may allow the application to be proceeded with or reject the application. 15. Section 127E empowers the Settlement Commission to reopen the completed proceedings in appropriate cases, while Section 127F confers all the powers upon the Settlement Commission, which are vested in an officer of the Customs under the Act. Section 127H empowers the Settlement Commission to grant immunity from penalty and prosecution, with or without conditions, in cases where it is satisfied that the assessee has made a full and true disclosure of his duty liability. Under Section 127-I, the Settlement Commission can send back the matter to the proper officer where it finds that the applicant is not cooperating with it. Section 127J declares that 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 sha....
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....d purpose within the said period, allow....................................................................................................." 17. It is clear from the language of the Notification that in order to avail of the benefit of exemption from whole of the duty of customs leviable under the Customs Tariff Act, 1975, twin conditions, viz., (1) capital goods, components, etc. are required for repairs of ocean going vessels, and (2) the ship repair unit should be registered with the Director General of Shipping, Government of India, are to be fulfilled. Both the conditions are cumulative and admit of no exception. Being the foundation for availing the benefits under the notification, both the conditions have to be strictly complied with. Besides, under the Notification, an importer is also required to maintain a proper account of import, use and consumption of the capital goods, components, etc. imported for the aforesaid purpose in a prescribed form and failure to satisfy the Collector about their installation or consumption for the said purpose makes the importer liable to pay an amount equal to the duty payable on such goods. It is a settled position in law that Exemptio....
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....ronik Lab which showed that the goods were cleared from Customs and delivered to M/s Elektronik Lab. If it is so, it appears that the applicant has transferred/sold the goods to M/s Elektronik Lab. To this query of the Commission, the applicant submitted that it is only a language mistake and all the bills do not show this and these invoices are issued only for collecting the money." 20. It is evident from the afore-extracted paragraph that the unequivocal stand of the appellant was that the material imported by them was installed/used for repairs of ocean going vessels directly by them with the assistance of M/s Elektronik Lab, an authorised agent in India of the foreign supplier from whom the appellant had imported the goods. It was pleaded that the Exemption Notification did not bar the importer getting assistance from a third party for installation of the equipment on the vessels. The appellant stood its ground even when they were confronted by the Settlement Commission with some invoices, showing that the goods imported were got cleared from Customs and delivered to M/s Elektronik Lab. When the Settlement Commission asked the Revenue to submit further report to establish th....
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....ey had accepted and paid the customs duty. We feel that when according to the appellant, no customs duty was payable in respect of the 8 consignments, then on the plain language of Section 127B of the Act, appellant's application before the Settlement Commission was not maintainable. In our view, an application under Section 127B of the Act would be maintainable only if it discloses duty liability, which had not been disclosed to the proper officer. Obviously, a disclosure contemplated by the said Section is in the nature of voluntary disclosure of the concealed additional customs duty. Secondly, indubitably, such a plea was neither raised before the adjudicating authority in response to the show cause notices issued to the appellant nor before the Tribunal as also before the Settlement Commission. Even before the High Court, in the original writ petition, such a plea was not raised and it was only by way of an amendment application, that an additional ground was sought to be raised. Though it is true that there is no bar in the High court and for that matter this Court entertaining an additional ground, involving a pure question of law, but on facts at hand, in the light of th....
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....at order dated 8th February, 2001 passed by the Settlement Commission allowing the application of the appellant to be proceeded was not challenged by the Commissioner nor such a plea was urged by the Revenue before the High Court or in their reply to the present appeal, we find it difficult to reject the application at this stage, though, having perused some of the documents available on record, we are convinced that the appellant had not made a full and true disclosure of its affairs before the Settlement Commission. Be that as it may, we are of the opinion that having opted to get their customs duty liability settled by the Settlement Commission, under Chapter XIVA of the Act, the appellant cannot be permitted to dissect the Settlement Commission's order with a view to accept what is favourable to them and reject what is not. As observed by Krishna Iyer, J. in CIT Vs. B.N. Bhattacharjee (1979) 4 SCC 121, the recommendation of Wanchoo Committee was a compromise measure of a statutory settlement machinery, where a big evader could make a disclosure, disgorge what the Commission fixes and thus buy quittance for himself and accelerate recovery of taxes in arrears by the State, al....