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2019 (3) TMI 311 - DELHI HIGH COURTAdjudication of show cause notice while the settlement application was pending - it was alleged that petitioner had inflated the value of readymade garments being exported in order to claim inflated amounts by way of drawback - Section 127B of the Customs Act, 1962 - Held that:- Section 127C(1) provides for two distinct steps to be taken by the Commission when an application under Section 127B is made to it. First, the Commission must issue a notice within 7 days requiring the applicant to explain in writing as to why the application be allowed to be proceeded with. Second, after the explanation is provided by the applicant, and within 14 days from the date of the initial notice, the Commission is required to pass an order either allowing the application to be proceeded with or rejecting it - The proviso to the said sub-section provides for the consequences of a failure on the part of the Commission to complete either of these steps within the time permitted. In either case, the application is deemed to have been allowed to be proceeded with - In either case, the application is deemed to have been allowed to be proceeded with. In the present case, it is clear that the petitioner's application had been acknowledged by the communication of the Settlement Commission dated 29.08.2018. Although the said communication contemplated an admission hearing on a date to be notified, no such hearing took place. In such circumstances, the proviso to Section 127C (1) would apply and the petitioner's application must be deemed to have been allowed to be proceeded with. By virtue of Section 127F (2) of the Act, during the pendency of the application, the adjudication of the Show Cause Notice by the customs authorities was clearly premature. The said provision denudes the customs authorities of their powers in relation to a matter pending before the Settlement Commission, and vests jurisdiction in respect of those matters in the Commission itself. The adjudication of Show Cause Notice in respect of which a settlement application has been made (and allowed to be proceeded with) is not just contrary to the statutory scheme, but also defeats the very purpose of the settlement provisions. The impugned order dated 27.09.2018 passed by the Additional Commissioner of Customs (ICD), Export, Tughlakabad, New Delhi is hereby quashed. It is open to the parties to proceed with the petitioner's pending application before the Settlement Commission in accordance with law - petition allowed.
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