TaxTMI 
TaxTMI 
2025 (1) TMI 962
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....us dated 01.04.2015 (hereafter the Notification) as being discriminatory and arbitrary. The petitioners claim that the said notification is beyond the statutory mandate of the Act read with the Customs Tariff Act, 1975 (hereafter the CT Act). 3. Additionally, the petitioners impugn the recovery proceedings initiated by the respondents for recovery of dues as determined. 4. Petitioner no.1 is a company named M/s. KBS Industries Limited (hereafter KBS) and petitioner no. 2 is a director of KBS. The petitioners filed an application under Section 154 of the Act seeking rectification of the impugned order to the extent that it imposed the interest of Rs. 1,15,13,067/- (Rupees One Crore Fifteen Lacs Thirteen Thousand and Sixty-Seven only), which was rejected. The Settlement Commission held that the rectification of errors under Section 154 of the Act is confined to arithmetical or clerical errors and the petitioners' application was beyond the scope of the Section 154 of the Act. The Settlement Commission found that there was no clerical or arithmetical error which would warrant any rectification of the impugned order. The same was communicated to the petitioners by a letter dated ....
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....ccordingly, search operations were carried out at the premises of KBS (Plot No.418, HSIIDC Phase-1, Barhi Industrial Area, Sonepat, Haryana-131001 and Plot No. F-1730, DSIIDC, Narela Industrial Area, Delhi - 110040) on 08.06.2017. It is stated that during the course of search, 1500 Kgs of copper scrap was found at Sonipat premises, however, no stocks of goods imported were found. The search was also conducted at the office premises of KBS. 13. Thereafter, the summons was issued to petitioner no. 2 and his premise (House No. 24/70, West Punjabi Bagh, New Delhi) was also searched on 15.06.2017. During the search, statement of petitioner no. 2 was recorded under Section 108 of the Act. He acknowledged that the goods imported under the Advance Licenses were sold in the local market. 14. The impugned order records that on enquiries, petitioner no. 2 claimed that the goods were sold in the local market due to financial crisis and he was ready to pay the custom duty alongwith interest and penalty. After making necessary enquiries, the custom officials ascertained the custom duty involved in respect of the goods imported under the Advance Licenses at Dadri Port and Patli Port was Rs.....
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....eby called upon to show cause to the Principal Commissioner of Customs (Preventive), New Custom House, Near IGI Airport, New Delhi within 30 days of the receipt of this notice, as to why penalty should not he imposed on him under Section 112 and/or114A and 114AA of the Customs Act, 1962, for the acts of omission." 16. In the aforesaid context, the petitioner company filed an application under Section 127B of the Act before the Settlement Commission for settlement of the disputes arising in connection with the show cause notice dated 16.07.2021. KBS was the main applicant and petitioner no. 2 was a co-applicant. 17. It is material to note that the petitioners accepted their liability to pay an amount equal to the duty leviable along with the interest at the rate of 15% per annum from the date of clearance of the said materials in terms of the notification dated 01.04.2015. However, the petitioners disputed that the said goods imported were liable for confiscation. The Settlement Commission disposed of the petitioners' application in terms of the impugned order. 18. The impugned order notes that certain discrepancies were noticed in the application filed by the petitioner in....
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.... payable Interest paid by Applicant Balance amount of Interest payable 1 0510399488/17.08.2016 67,27,232.57 0.00 67,27,232.57 2 0510395142/31.07.2015 47,85,834.29 20,00,000 27,85,834.29 Total 1,15,13,066.86 20,00,000 95,13,066.86 9.3 The applicant vide his letter dated 01.01.2024 submitted a duly certified calculation sheet by a chartered accountant and claimed that the total duty saved/foregone against Advance Authorization No. 0510395142 was Rs. 96,24,379/ only and that only balance amount of duty of Rs. 1,69,009/- and interest of Rs. 81,819/- is payable by them. In the calculation sheet in respect of Advance Authorization no 0510395142 dated 31.07.20215 the applicant accepted interest liability of Rs 46,39,280.07 and claimed to have paid Rs.44,70,270.88 of its interest liability. As regards to Advance Authorization no 0510399488 dated 17.08.2016, though no such calculation sheet was provided but the applicant accepted interest liability of Rs. 29,87,477 68/-. 9.4 The Commissioner (Inv.) carefully examined the reports submitted by both sides and submitted as under: (i) That against Advance Author....
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....Rs. 96,24,379/-only in respect of Authorization License No. 0510395142 dated 31.07.2015. (vii) As per record, there is delay in payment of duty. It is an established fact that duty and interest go together. In the instant case, the applicant has accepted the duty liability and the records show that there was delay in payment of the same therefore the applicant cannot escape from payment of interest thereon. (viii) In the instant case, the applicant, M/s KBS Industries Ltd. has failed to discharge export obligation and the department has provided date wise details of the interest payable from such relevant date as prescribed under the said Notification. Therefore, the total interest payable by the applicant is Rs. 1,15,13,066.86/ (Rs.67,27,232.57 for Advance Authorization No.0510399488 + Rs.47,85,834.25/- for Advance Authorization No.0510395142) Out of which, the applicant has already paid Rs 20,00,000/- and balance amount of interest Rs.95,13,067/- is yet to be paid by the applicant. The details have been verified as per provisions of the Customs Act, 1962 and found in order." 23. The petitioners were once again given an opportunity to be heard in the context o....
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....s-representation of facts." REASONS AND CONCLUSION 25. As noted at the outset, the petitioners' principal challenge to the impugned order is founded on the premise that no interest payable on CVD levied under Section 3 of the CT Act or on SAD levied under Section 3A of the CT Act. It is contended that since there is no statutory provision for payment of interest on the said duties, interest as imposed by the impugned order - which is stated to include interest on the said duties - is erroneous and contrary to law. It is submitted that although an order passed under Section 127C (5) of the Act cannot be challenged on merits, the same is untenable if it is not in accordance with the provisions of the Act. 26. The learned counsel for the petitioners rested her submissions on the decision of the Bombay High Court in Mahindra & Mahindra Ltd. vs. Union of India 2022 SCC OnLine Bom 3155. She also pointed out that the Special Leave Petition (SLP) preferred by the Revenue against the said decision [SLP(C) Diary No. 18824/2023] was dismissed as the Supreme Court had found no merit in the said petition. [Union of India and Others v. Mahindra & Mahindra Ltd. 2023 SCC OnLine SC 1435]. ....
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....uired to pass "such order as it thinks fit on matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Principal Commissioner of Customs or Commissioner of Customs and Commissioner (Investigation) under Sub-section (3) or Sub-section 4" of Section 127C of the Act. 32. Section 127J of the Act expressly provides that an order of settlement shall be conclusive as to the matters stated therein. Section 127C of the Act and Section 127J of the Act are set out below for ready reference: 127C. Procedure on receipt of an application under Section 127B.-(1) On receipt of an application under section 127B, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the application made by him should be allowed to be proceeded with and after taking into consideration the explanation provided by the applicant, the Settlement Commission, shall, within a period of fourteen days from the date of the notice, by an order, allow the application to be proceeded with or reject the application, as the case....
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....on (4), and after giving an opportunity to the applicant and to the Principal Commissioner of Customs or Commissioner of Customs having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Principal Commissioner of Customs or Commissioner of Customs and Commissioner (Investigation) under sub-section (3) or sub-section (4). (5A) The Settlement Commission may, at any time within three months from the date of passing of the order under sub- section (5), amend such order to rectify any error apparent on the face of record, either suo motu or when such error is brought to its notice by the jurisdictional Principal Commissioner of Customs or Commissioner of Customs or the applicant: Provided that no amendment which has the effect of enhancing the liability of the applicant sh....
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.... 127J. Order of settlement to be conclusive.-Every order of settlement passed under sub-section (5) 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. 33. It is clear from the Scheme of Chapter XIV-A of the Act that the provisions contained therein are for settlement of cases and not for adjudication of disputes. In the circumstances, it is not open for an applicant to dissect the order passed by the Settlement Commission or to seek merit review of the such an order. Since the nature of the order passed under Section 127C of the Act is that of a settlement of a case, the applicant is required to accept the same in its entirety. 34. Sub-section (8) of Section 127C of the Act also expressly provides that an order passed under Sub-section (5) of Section 127C of the Act shall provide for terms of settlement including payment by way of duty, penalty or interest and the manner in which the sums shall be paid. 35. In the present case, the impugned order expressly provides ....
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....ote that Sub-section (5) of Section 127C of the Act expressly provides that the Settlement Commission would make an order as contemplated therein "in accordance with the provisions of the Act". Therefore, it is not permissible that the Settlement Commission make an order contrary to the provisions of the Act. 39. In Mahindra & Mahindra Ltd. v. Union of India, the Bombay High Court, after examining the order passed by the Settlement Commission in that case, concluded that it was contrary to law inasmuch as it had directed payment of interest in respect of countervailing duty and special additional duty levied under Sections 3 and 3A of the CT Act. The court found that there was no statutory provision enabling levying of interest on such duties and therefore the same was impermissible. However, it is necessary to note that the case settled by the order of the Settlement Commission in that case pertained to four show cause notices alleging that the petitioner had not declared the entire amount payable in connection with the goods imported, which amounted to misdeclaration with an intent to avoid payment of custom duty. In the given facts, the court found that no interest was payabl....
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....rted materials in respect of which the conditions specified in this notification are not complied with, together with interest at the rate of fifteen per cent per annum from the date of clearance of the said materials;" 41. As is apparent from the above, the exemption notification was issued by the Central Government in exercise of powers under Section 25(1) of the Act. The said Section is set out below: "25. Power to grant exemption from duty.-(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon." 42. Section 25(1) of the Act expressly empowers the Central Government to impose such conditions as may be specified in the notification, for exempting goods of any specified description from the whole or any part of duty of customs leviable thereon. In the present case, admittedly, KBS had imported goods for the purpose of export without ....