2018 (9) TMI 675 - HC - Customs

Rejection of Settlement Application - illicit diversion of duty free foreign liquor meant for consumption of diplomats, etc. to third persons - seizure of imported foreign liquor - settlement application rejected on the ground that the petitioner had not deposited the entire additional amount of Customs duty along with interest as he had failed to deposit the interest element of ₹ 18,635/-. Held that - The petitioner had deposited admitted duty liability of ₹ 3,24,233/-. Failure to deposit interest of ₹ 18,635/-, it is apparent, was based upon legal advice and understanding of the experts consulted by the petitioner - The High Court while issuing notice on the writ petition vide order dated 13th November, 2007 had directed the petitioner to deposit ₹ 19,000/- with the Registrar General of this Court. The said deposit was made on 20th November, 2007. The writ petition has remained pending since then and was admitted to hearing vide order dated 4th August, 2009. Time limitation - Held that - The impugned rejection order has adversely commented upon the lack of instructions and failure of Mr. Murari Kumar, Advocate, to furnish authorization for appearance before the Settlement Commission. Apparently, the petitioner was not properly guided on the strict time lines prescribed. Applications before the Settlement Commission have to be taken up for hearing in a time-bound manner. As per Section 127C, the Settlement Commission, on receipt of application under Section 127B has to issue notice to the applicant within seven days and pass an order within fourteen days from the date of notice. Rs. 19,000/- deposited by the petitioner in this Court along with interest accrued would be paid to the Customs Department and treated as payment towards and on account of the settlement application. The petitioner would be also liable to pay difference in the interest accrued on ₹ 19,000/- and interest payable on ₹ 18,635/- in terms of the Customs Act - petition allowed.

Summary

Issues:
Challenge to rejection order by Settlement Commission on non-compliance with deposit conditions under Customs Act, plea regarding interest payment, lack of instructions for appearance before Settlement Commission, pending adjudication proceedings, and proposed settlement terms.

Analysis:
The petitioner challenged the rejection order by the Settlement Commission due to non-compliance with deposit conditions under the Customs Act. The rejection was based on the failure to pay the entire interest due on the accepted Customs duty liability. The Settlement Commission observed that the petitioner had not deposited the full interest amount, leading to the rejection of the settlement application under the relevant provisions of the Act.

The rejection order highlighted that the petitioner admitted a duty liability of a specific amount in relation to the seizure of imported foreign liquor. The show cause notice issued to the company and directors involved significant duty demands, confiscation of goods, and allegations of illicit diversion of duty-free liquor. The petitioner had made a partial payment towards the duty liability but failed to deposit the complete interest amount as required by law.

The High Court acknowledged the petitioner's failure to pay the full interest amount but noted that it was based on legal advice and consultations with experts. The Court also mentioned the pending writ petition and subsequent deposit made as directed by the Court. The Court emphasized the importance of timely actions and proper guidance in matters before the Settlement Commission, highlighting the need for adherence to prescribed timelines.

During the hearing, the respondent's counsel admitted the prolonged pendency of adjudication proceedings, indicating a lack of progress in the case. The Court considered the petitioner's offer to make a payment to the Prime Minister's Relief Fund and directed the payment of accrued interest to the Customs Department. The Court allowed the writ petition subject to the specified conditions, emphasizing that the Settlement Commission would evaluate all aspects, including disclosure requirements, without making any comments on the merits of the case.

In conclusion, the Court directed the petitioner to appear before the Settlement Commission for further proceedings, setting a specific date for the hearing to expedite the process. The judgment outlined the payment terms, consequences of non-compliance, and the Settlement Commission's authority to review the case comprehensively.