TMI Blog2010 (2) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... e Exemption Notification No.211/83-CUS dated 23rd July, 1983 – Appellant is not entitled for exemption – order of settlement commission and high court maintained. – decided in favor of revenue. - 1435 OF 2003 - - - Dated:- 5-2-2010 - JUDGMENT D.K. JAIN, J.: 1. This appeal, by special leave, is directed against the final judgment and order dated 23rd April, 2002 rendered by the High Court of Judicature at Bombay in Writ Petition No.633 of 2002, whereby the High Court has dismissed the writ petition, affirming the decision of the Settlement Commission, Customs and Central Excise, Mumbai (hereinafter referred to as, "the Settlement Commission"). 2. The facts, giving rise to the present appeal, may be summarized thus: The appellant is an importer and ship repair unit registered with the Director General of Shipping, Government of India. On the basis of the intelligence gathered, premises of the appellant were searched by the officers 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.211/8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, had placed purchase orders on the appellant for import of spare parts to be fitted on ocean going vessels, as they were not registered with the Director General of Shipping as a ship repair unit and were not eligible for duty free imports under the aforementioned Notification. The appellant imported the spare parts and sold the same to M/s Elektronik Lab; in contravention of the exemption notification. 5. Taking into consideration the report of the Commissioner and the case records, the Settlement Commission, vide order dated 8th February, 2001, allowed the application of the appellant to be proceeded with under sub-Section (1) of Section 127C of the Act. The amount of additional duty determined to be payable under sub-Section (3) of said Section was duly paid by the appellant. 6. At the next hearing before the Settlement Commission, it was asserted on behalf of the appellant that they had fulfilled all the conditions as stipulated 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 assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Lab to the ship owners for the same items were higher than those charged by the appellant from them, which undisputedly showed the value addition. 8. Upon consideration of the information furnished by the Commissioner, particularly the fact that the appellant had given details of the "consignee" as the ship owners, without disclosing the sale of imported "spare parts" to M/s Elektronik Lab, the Settlement Commission was satisfied that there was suppression of facts on the part of the appellant so as to avail of the benefit of duty exemption fraudulently. According to the Settlement Commission, the sale of ship spares/navigational equipments by the appellant to M/s Elektronik Lab was an independent transaction, distinct from the subsequent sale by the latter to the ship owners, which was in the nature of home consumption. Finally, concluding that the Revenue had been able to produce documentary evidence showing sale of imported "spare parts" 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng applicability of Sections 54 and 69 of the Act in respect of 8 consignments in question, particularly when the point raised was a pure question of law going to the root of the matter and did not involve any investigation of facts. In support of the contention that a pure question of law can be raised for the first time even before this Court, reliance was placed on the decisions of this Court in Tarini Kamal Pandit Ors. Vs. Prafulla Kumar Chatterjee (Dead) by Legal Representatives(1979) 3 SCC 280, Ajaib Singh Vs. State of Punjab(2000) 4 SCC 510, Municipal Corporation of the City of Jabalpur Vs. State of Madhya Pradesh Anr. (1963) 2 SCR 135, Collector of Central Excise, Ahmedabad Vs. Pioma Industries and Imperial Soda Factory (1997) 10 SCC 400. Relying on Jyotendrasinhji Vs. S.I. Tripathi Ors. 1993 Supp (3) SCC 389 and Paul Industries (India) Vs. Union of India Ors. (2004) 13 SCC 340, it was contended that the finality clause contained in Section 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 ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been rejected by the Settlement Commission on this ground alone. Referring to the invoices raised by the appellant on M/s Elektronik Lab, learned counsel submitted that the documents on record clearly establish that the transactions between the appellant and M/s Elektronik Lab were purely trading transactions, which not only show the untruthfulness of the appellant's initial stance but also prove the violation of the order passed in favour of the appellant permitting re-export of the consignments in question. As regards the plea of the appellant that these consignments were not exigible to any duty in terms of Sections 54 and 69 of the Act, learned counsel submitted that apart from the fact that it involved determination of disputed questions of fact, an application under Section 127B of the Act for determination of question whether an item is dutiable or not, was not maintainable before the Settlement Commission. In support of the oposition, learned counsel 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 Chanan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st from a bare reading of the provision that in the application filed under Section 127B, an applicant is required to make a full and true disclosure of his duty liability, which he had failed to disclose before the proper officer. He is also required to exhaustively explain to the Settlement Commission the manner in which such liability has been incurred; the additional amount of customs duty accepted to be payable by him as also the price of such dutiable goods in respect of which he admits short levy on account of misclassification or otherwise of goods. In other words, the applicant is supposed to make a clean breast of his affairs in regard to short levy or non payment of customs duty admitted to be payable by him. 14. Section 127C of the Act prescribes the procedure to be followed by the Settlement Commission on receipt of an application under Section 127B of the Act. The section mandates that on receipt of an application under Section 127B, the Settlement 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 compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iodically to the Collector of Customs in such form and in such manner as may be specified by the said Collector; (2) the importer, by the execution of a bond in such form and for such sum as may be specified by the Collector of Customs, binds himself to pay on demand an amount equal to the duty leviable:- (a) on goods which are capital goods, as are not proved to the satisfaction of the Collector of Customs to have been installed or otherwise used for the aforesaid purpose: (b) on goods which are components, raw material and consumables, as are not proved to the satisfaction of the Collector of Customs to have been used or consumed for the aforesaid purpose; within a period of three months from the date of importation thereof or within such extended period as the Collector of Customs, on being satisfied that there is sufficient cause for not installing, using or consuming them, as the case may be, for the aforesaid purpose within the said period, allow....................................................................................................." 17. It is clear from the language of the Notification that in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el with the assistance of M/s Elektronik Lab. M/s Elektronik Lab is the authorised agent in India of the foreign supplier M/s Kelvin Hughes from whom the applicant imported the goods. He argued that the Notification does not say that the imported cannot get the assistance from a third party. The Commission asked him about his argument on the statement of Shri K.D. Motta, Manager of M/s Sanghvi Reconditioners that the signature of representatives of M/s Shipping Corpn. of India were forged by him. The applicant submitted that he is admitting it and he is guilty of that. The Commission further asked him on not admitting the duty of Rs.47,79,320/-. The applicant submitted that the ship spares were imported and fitted in the ocean going vessels directly by him with the assistance of M/s Elektronik Lab. and, therefore, he fulfilled the conditions of Notification No.211/83. The Commission drew his attention to some of the invoices issued by M/s Sanghvi Reconditioners to M/s Elektronik 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... components by them to a third party stood proved on the basis of overwhelming documentary evidence on record, disentitling them to the benefit of the exemption notification. In the final analysis, the High court came to the conclusion, and in our opinion correctly, that in the light of the material available on record, the order of the Settlement Commission did not suffer from any error warranting its interference. 21.In so far as the second issue with regard to the applicability of Sections 54 and 69 of the Act is concerned, in our view, it was too late in the day for the appellant to raise such a plea. In the first instance, if the appellant felt that these 8 consignments were intended for transhipment and were cleared from the warehouse for exportation and, therefore, no import duty was payable, there was no occasion for them to withdraw their appeal before the Tribunal and prefer an application before the Settlement Commission, more so when in respect of the remaining consignment, they 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the event of failure to render the account for such consumption, the importer was liable to pay the customs duty as may be demanded by the Commissioner of Customs. However, once the imported goods were sold to a third party, the appellant was incapacitated from maintaining and rendering the account to the Commissioner in terms of the notification. All these factors go to show that the additional ground sought to be raised before the High Court was not only an after thought, adjudication thereon did involve investigation into facts and, therefore, the decision of the High court in not entertaining the additional ground did not suffer from any infirmity. 22. We also find substance in the contention of learned counsel for the Revenue that having observed that the appellant had not made a full and true disclosure, their application should have been rejected by the Settlement Commission on that count itself and no relief should have been granted to the appellant. However, in view of the fact that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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