TaxTMI 
TaxTMI 
2025 (7) TMI 286
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.... Act 1973 and Subsection 3 and 4 of Section 49 of the Foreign Exchange Management Act 1973 was filed against the Petitioner, for alleged violation of Section 18(2) and Section 18(3) of FERA 1973, before the court of Ld. ACMM by the Respondent, on behalf of the Complainant/Enforcement Directorate, in his official capacity and in view of the authorisation issued vide Central Govt. Order No.17/93 (F. No. 1/2/93) AD-IC dated 24.09.1993, in exercise of powers conferred upon under Section 61(2)(ii)(b) of FERA 1973. 3. It was submitted that Canara Bank, Connaught Circus, New Delhi vide its Letter dated 02.09.1999, informed the Delhi Zonal Office of the Enforcement that there were Overdue Export Bills Pending Realisation in the account of M/s Beeta Exports, West Karol Bagh, New Delhi, of the equivalent value of Rs.84.46 Crores involving 119 GRs. 4. Subsequently, information was received from the Bankers of M/s Beeta Exports, in response to the enquiries made under Section 33(2) of the FERA 1973, that Delhi Zonal Office of the Directorate of Revenue Intelligence, New Delhi (for short 'DRI') was also making investigations against M/s Beeta Exports, for Evasion of Customs through fraudu....
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....ibs could not be made from India. Consequently, because of the non-performance of the Agreement on their part, the buyers aboard did not make payments of export bills and wanted him to meet them personally to sort out the dispute for any payments to be made. The re-import of goods was not possible as the buyer had taken delivery of the goods and as per the telephonic discussions with the buyer, he was confident that the matter would be sorted out. 9. No steps were taken to realise the proceeds from buyers in UAE as his case was on a weaker wicket due to non-performance, as per the contract. Further, all the avenues of pursuing the matter were closed. Furthermore, it was not possible to furnish the copy of the Supplier Agreement between M/s Seven Star General Trading Company of UAE because the records were with the DRI. 10. Enquiries were made from the bankers of M/s Beeta Exports, RBI and DRI and records of the Income-Tax Department were also gone through, but the Agreement for supply of specified quantity of Gold Nibs for a specific period, was not found in the records of any of the aforesaid Departments. Mr. Anil Kapoor was also unable to furnish any such document during th....
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.... the adjudication by the Settlement Commission pertained to this aspect. Instead, it dealt with the DEEC, DEPB and the Drawback Scheme. It was noted that when the export proceeds have not been realised as per the law, Duty Drawback cannot be claimed against it, thereby implying that there was no effective adjudication/settlement on the aspect of non-realisation of sale proceeds, before the Settlement Commission. It was, therefore, concluded that the subject matter of the Complaint i.e. non-realisation of export proceeds, was beyond the scope of Settlement Commission and the immunity granted by the Settlement Commission, was void ab initio and the Application of discharge of the Petitioner, was dismissed. 16. Aggrieved, the present Revision Petition has been filed. 17. The Petitioner has submitted that he had filed an Application bearing No. 1/99 dated 05.11.1999, before the Settlement Commission, a body constituted by the Ministry of Finance under Section 127 of the Customs Act, 1962, for grant of immunity from the prosecution under the Customs Act and other Central Acts. The Application was admitted by the Settlement Commission on 23.12.1999. An amended Application was also ....
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....hips and the reported non-realisation of the sale proceeds on account of some export made by the Petitioner, which were duly disclosed before the Settlement Commission, to be in the sum of Rs.40.06 Crores. This amount on account of exports regarding 134GRs, could not be realised due to the crash in the international market. 23. It was asserted by the Petitioner that the provisions of Section 127-H of the Customs Act are similar to the provisions of Section 245-H Income Tax Act, 1961 whereby powers are conferred on the Settlement Commission, to grant immunity from prosecution and penalties for any offences under the Customs Act, 1962, IPC or any other Central Act and such Order of the Settlement Commission is conclusive. 24. It is submitted that once the matter stands settled by the Order of the Settlement Commission which has become conclusive, it cannot be re-opened in any proceedings under the Customs Act or under any other Law for the time being in force. No proceedings under FERA can be initiated regarding the same subject matter. 25. Reliance has been placed on M/s Nirmal & Navin (P) Ltd. & Ors. vs. D. Ravindran, Crl. Appeal No. 439-440/2002, arising out of SLP (Crl.)....
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....18(2) and 18(3) of FERA 1973, for which investigation and penal action was initiated by the ED in accordance with Section 56 of FERA, was never agitated before the Settlement Commission. Mere mentioning of facts regarding non-realisation of Export proceeds, did not make it subject matter before the Settlement Commission. It was also not the plea of the accused that non realisation of the sale proceeds was due to availing Custom Duty benefits as per the DEEC/DEPB /Drawback scheme. 30. The Respondent has further submitted that though the Settlement Commission had granted immunity from Prosecution for any offence under Customs Act, IPC or other Central Acts, the same was with respect of 'Case' defined under Section 127A(b) of the Customs Act. As per the definition of 'Case', it relates to the cases for levy/assessment/collection of Customs Duty which means this definition does not include the "case" with regard to non-realisation of Export proceeds which is the subject matter of the present Complaint. 31. It was therefore contended that the Settlement Commission had kept itself away from passing any Order in respect of the violation of FERA, 1973 and collection of Duties. Theref....
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....Russia, USA, Middle East and other countries and was having a turnover for last two years of about 65 Crores per annum. He had obtained 60 duty free advance licenses under DEEC Scheme from DGFT against which he was entitled to import various duty-free items such as acrylic fibre, raw wool, wool tops, mohair etc. so that these items could be used in manufacturing process. Out of these 60 duty free advance licenses, the export allegations against 45 licenses have been fulfilled and nothing is pending. 38. The Petitioner came under a financial strain when it became impossible and infeasible for him to continue to export his goods to Russian buyers any further as substantial amount of outstanding exports proceeds were yet to be realised from different Russian buyers. A substantial amount of more than 20 crores was held up on account of non-realisation of export proceeds. 39. The Petitioner thus, filed an Application was under Section 127B Customs Act before the Settlement Commissioner due to his inability to pay the substantial Custom duty amounting to Rs. 6,99,32,447/- due to losses incurred by him on account of non-realisation of export proceeds from export of wool to Russia be....
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....provide for repayment of Customs and Excise duty paid by the Assessee. The refund is of the average amount of duty paid on materials of any particular class or description of goods used in the manufacture of export goods of specified class. The Petitioner had produced the Shipping Bills and also the Export Realisation Certificate from the Bank, in relation to all except 19 shipping bills. In relation to these 19 bills, the Applicant in his Letter dated 06.02.2002 had given a calculation and his willingness to an amount of Rs. 8,05,122. 44. The third segment was DEPB (Duty Exemption Remission Scheme) which was essentially an Export incentive, the object of which was to neutralise the incidents of Customs Duty payment on the import content of export products. This neutralization is provided for by credit to customs duty against export products. Under DEPB, exporters may apply for credit as a percentage of FOB value of exports made in freely convertible currency. Credit is available only against the export product and at rates specified by DGFT for import of raw materials, components etc., DEPB credit under the Scheme has to be calculated by taking into account the deemed import co....
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....t was also directed to pay an interest of 10% of the DEEC amount of Rs. 8,63,25,976 under the Customs Act, from the date of clearance to the date of final payment. It was noted that the Petitioner had already paid Rs. 6.30 crore and a balance of Rs. 2,41,31,098/- remained which was directed to be paid in instalments. 49. The Settlement Order dated 06.03.2002, as detailed above, clearly shows that it pertains only to the liability under the Customs Act. A perusal of the Settlement Commission Order shows that neither the violations under the FERA/FEMA were a subject matter nor were they adjudicated by the Settlement Commission. Notice was given to the Directorate of Enforcement by the Settlement Commission only because certain Orders on the Applications filed by the Petitioner were required to be complied by the Directorate. It is also evident that the amounts which were the subject matter of FEMA, were only referred to take a lenient view in permitting the Petitioner to deposit the outstanding amount under the Customs Act by way of instalment. 50. The present Complaint under S.56 FERA is based on the allegations that the Petitioner had failed to take any steps to realise the E....
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....fide buyer who misclassified the goods for the purpose of payment of customs duty to settle the issue. 56. The Object of the Settlement Commission was discussed by the Apex Court in the case of Alpesh Navinchandra Shah v. State of Maharashtra (2007) 2 SCC 777 wherein it was stated that its objective is to settle tax evasion issues. By virtue of disclosure by a tax offender, they gain immunity from fine/penalty which is otherwise mandatory under the provisions of tax laws. 57. Similarly, in the case of Commr. Of Cus. (Air), Chennai vs Cus. & C. Ex. Settlement Commission 2003 (85) ECC 215 it was observed that the object of Settlement Commission is to create a machinery to ensure effective and quick disposal of important cases involving far reaching financial and revenue implications particularly where complicated issues are involved and the evaders of duty may be intending evaders and should have a chance to come clean from their mess and the department should not waste its energy and manpower in protracted investigation, adjudication and prosecution. 58. With these objects in mind only, the Settlement Commission has been established to enable a bona fide importer who mis-cl....
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....sure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, under-valuation or inapplicability of exemption notification 6 [or otherwise] and such application shall be disposed of in the manner hereinafter provided: ......Provided that no such application shall be made unless, - (a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of such goods, as the case may be, and in relation to such bill of entry or shipping bill, a show cause notice has been issued to him by the proper officer; (b) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; and (c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28-AB: Provided further that no application shall be entertained by t....
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....t to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act 1 [and also either wholly or in part from the imposition of any penalty and fine] under this Act, with respect to the case covered by the settlement: Provided that no such immunity shall be granted by the Settlement Commission in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application under section 127B." 61. The entire scheme under Chapter XIV-A as enumerated hereinabove, clearly indicates that the Settlement Commission has been given widest discretionary powers to protect the interests of the Revenue and even with regard to the grant of immunity from prosecution and penalty settle the matter. It also has the power to declare the Settlement to be void and to direct denovo adjudication. 62. The jurisdiction of the Settlement Commissioner is related to "case" which is defined under S.127A(b) to mean 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 ap....