TMI Blog2011 (2) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... re this court on 23.12.2008, this court directed the matters to be listed on 09.01.2009 with a direction to the Registry to give notice to the parties as one of the matter was transferred from the High Court of Kerala on orders of the Supreme Court. Bur for unexplained reasons, the Registry did not circulate the papers. Ultimately, they were listed on 24.3.2010. After hearing arguments, orders were reserved on 7.4.2010. But due to intervening summer vacation and also due to posting at Madurai for three months, orders could not be pronounced. For getting certain clarifications, the matters were again posted before this court on 22.2.2011. After getting those clarifications, the matters were reserved for judgment. 3.The writ petitioner in W.P.No.7931 of 2006 M/s.Asianet Satellite Communications Limited (for short ASCL) originally filed O.P.No.27493 of 2002 before the High Court of Kerala at Ernakulam, seeking for a prayer to set aside the order, dated 13.8.2002 passed by the Customs and Central Excise Settlement Commission at Chennai insofar as it had directed the petitioner ASCL to remit a sum of Rs.1,94,00,860/- as differential duty in the course of fulfillment of export obligati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I-A of the Export Import Policy (for short EXIM), 1992-1997. The EPCG licence issued by the Director General of Foreign Trade (DGFT) permitted the import of cable TV equipments valued at Rs.9,79,51,255/- at concessional rate of duty. The export obligation was fixed at US dollars 124,18,543 within a period of five years from the date of issuance of licence. The ASCL had imported capital goods valued at 19,47,373 US Dollars. Therefore, the DGFT had reduced the export obligation from the original 1,24,18,543 US Dollars to 77,89,491 US Dollars to be achieved within a period of five years from the date of issuance of the licence. The Bank guarantee for a sum of Rs.3,90,55,765.83 was executed by the ASCL on the basis of the original value of licence taking consideration which remained unabated. They also executed a legal undertaking as per condition No.5 of the licence for the discharge of duty liability in the event of failure in fulfilling the export obligation. 7.It is the case of the ASCL that despite their best efforts in realising the foreign exchange through the service of cable TN network to the residents of Kerala, they had to face a number of legal disputes from the small tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by DRI. The High of Court of Kerala by its order, dated 29.5.2000 had directed the DGFT to dispose of their representation. It was observed that seizure of goods will continue and final order can be passed by the department only after DGFT passes an order on the representation. The DGFT had rejected the petitioner's request. Thereafter, the ASCL contended that they have realized the foreign exchange to the tune of Rs.12,36,46,725/- for the establishment of network for supply of Satellite TV services in Kerala through their various schemes during the period upto 26.4.2000. 10.A statement dated 26.4.2000 was submitted to the DRI enclosing the certificate received from various banks detailing the quantum of revenue earned by them upto 26.4.2000. A show cause notice was issued on 30.6.2000 by the DRI, Calicut in respect of imports made through Chennai Sea Port. Two other show cause notices were also issued for clearing goods from the other ports such as Thoothukudi and Thiruvanandapuram. The show cause notices contained the details regarding the Bill of Entry. CIF value duty foregone amount, interest. But, however the show cause notice dated 30.6.2000 issued by the DRI, Calicut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Customs Act, 1962. There is, therefore, no question of grant of immunity from payment of interest. (iv)Immunity is granted from penalty and prosecution for offences under the Customs Act 1962 in terms of Sec.127H of the Customs Act, 1962, in respect of the case covered by the applications and the show cause notices in question." The Commission had found that no interest was chargeable under the Customs Act, 1962 at the relevant time. It felt no need to grant any immunity from the payment of interest. Both parties were aggrieved by the order of the Settlement Commission. 13.While attacking the order, it was the stand of ASCL that the Commission's direction to pay the amount of Rs.1,94,00,860/-, the differential customs duty relatable to unfulfilled portion of export obligation was illegal. The Commission having clothe with extensive power under Chapter XIV-A of the Customs Act and under Section 127B, it enables an application to be made by making full and true disclosure of duty liability to have the case settled. Under Section 127F, the Settlement Commission shall also have power vested in an officer of the Customs under the Customs Act. In terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in the EXIM policy. The actual percentage of export obligation fulfilled corresponds to nearly 50.31%. Therefore, the Commission's direction to pay differential customs duty of Rs.1,94,00,860/- was illegal. 15.The Settlement Commission need not have accepted the cut off date prescribed by the department and it should not have gone by the certification given by the DGFT. There was certification available by bankers in respect of foreign exchange earnings made by it corresponding to the service rendered by the petitioner which need not be doubted. The money outflow in favour of the petitioner in various NRE accounts are accompanied by a corresponding diminution on account of the concerned in the different banks, authorised dealers in foreign exchange. Therefore, the nexus between the EPCG licence and earning in the foreign exchange has been clearly established. Hence the Settlement Commission should have accepted the stand of the ASCL that they had fulfilled 50% of the duty obligation. When the ASCL gave an undertaking to discharge the export obligation by furnishing the bank guarantee, it was originally fixed at Rs.3,90,55,765.83 on the basis of the original export obligation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt obligation, they will have to pay duty on demand. The undertaking to fulfill the export obligation equivalent to four times of CIF value of the capital goods within a period of five years and obtaining of discharge certificate from the licensing authority, i.e., Assistant Collector of Customs within the stipulated time is mandatory. Any amount becoming due under the bond is recoverable in terms of Section 142(1) of the Customs Act without prejudice to any other mode of recovery. The Settlement Commission had failed to note that as per paragraph 102 of Handbook of procedures for the period from May, 1992 to March, 1997, there is provision to demand interest at the rate of 24%. unless interest was also paid along with the export obligation, no discharge certificate need be issued by the DGFT. 18.It was further submitted that the Commissioner had merely relied upon the DGFT's letter, dated 5.10.2000 for holding that the ASCL had achieved 14% of the export obligation. Therefore, computing liability to Rs.4,63,46,499/- and that interest was not chargeable under the Customs Act was erroneous. This had brought substantial revenue loss to the Government. Instead of settling the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are rendered in India or abroad. In their application dated 11.11.93 to DGFT, the applicant had given the details of the scheme and plans for earning foreign exchange. They have very specifically mentioned the export services proposed to be rendered in India and have referred to erstwhile paras 46 B-11/46 E of the EXIM Policy. The Bench observed that though the license in question was issued under para 38 of the Policy; an amendment has been made on the body of the license changing it to para 46-A. In view of this amendment, the provisions of para 46-E of the Policy become relevant." 21.In respect of issue No.2, in paragraph 10.2.4, the Commission had answered as follows: "10.2.4.The applicant has stated that the DGFT was still considering their request. However, the matter cannot be kept pending for an unduly long time defeating the very objective of the Settlement mechanism. While the applicant has not submitted any such certificate, DGFT in their letter 20/316/94/EPCG111/1246, dt.5.10.2000 to DC, Tuticorin has stated that the applicant has achieved 14% (approximately) of the export. This has been reiterated in their letter no.20/316/94/EPCG111/565, dt.15.6.2001 to a specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, not sustainable." 23.In respect of issue No.4, the Commission in paragraph 11 had answered as follows: "11.The Bench observes in this context that irrespective of whether the Policy/Hand Book provides for levy of interest, neither the notification under which the impugned goods have been assessed nor the Customs Act based on which the said exemption notification was issued contained, during the material period, any authority to levy interest on the duty due consequent to failure to fulfill export obligation. The stand taken by the Commissioner of Customs and Central Excise, Cochin is correct in that the provisions to charge interest for delayed payment of duty came to be incorporated in the Customs Act in September, 1996, whereas, the impugned imports took place much prior to that. During the period when the applicant imported the capital goods i.e., July 94 to Dec. 95, there was no provision in the Customs Act to levy interest for delayed payment of duty nor under Notification No.160/92-Cus. under which the import in question was assessed. In fact, citing the judgements of the Hon'ble High Courts at Madras and Andhra Pradesh, this Bench has taken a similar view on an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the notification No.160/92 cannot be relied upon. 29.The learned Senior counsel also placed reliance upon a judgment of the Supreme Court in Jyotendrasinhji Vs. S.I. Tripathi and others reported in 1993 Supp (3) SCC 389 for contending that the power of this court under Article 226 to go behind the order of Settlement Commission is very limited. Reliance was placed upon the following passage found in paragraph 16 of the said judgment which reads as follows: "16.It is true that the finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this Court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this Court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this Court under Article 136. A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order . The learned Judge added judicial review is concerned not with the decision but with the decision-making process . Reliance was placed upon the decision of the House of Lords in Chief Constable of the N.W. Police v. Evans2. Thus, the appellate power under Article 136 was equated to power of judicial review, where the appeal is directed against the orders of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that the order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant. The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised. The Commission has interpreted the trust deeds in a particular manner. Even if the interpretation placed by the Commission on the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be a violation of the provisions of the Income Tax Act. It is equally clear that the interpretation placed upon the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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