TMI Blog2002 (6) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... ., dated 1-3-96, 11/97-Cus., dated 1-3-97, 23/98-Cus., dated 1-3-98 and 20/99-Cus., dated 28-2-99. The main applicant also executed necessary end-use bonds as required under these Customs notifications undertaking to utilize the goods in the manner specified in these notifications and also produce proof, (i.e.,) a certificate from the Assistant Commissioner of Central Excise in whose jurisdiction, the factory manufacturing the medical equipments is situated, certifying that the said parts have been used in the manufacture of the said goods within three months or such extended period as the Asstt. Commissioner of Customs may allow. In case of failure, the importer has to pay, on demand, an amount equal to the difference between the duty leviable on such quantity of the said such parts but for the exemption and that already paid at the time of importation. Similarly, the above said notifications also provided for concessional rate of duty to the spares required for the maintenance of the specified medical equipments on execution of a bond by the importer undertaking to comply with the following conditions namely, (i) the spare parts will be used for the maintenance purposes on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to sub-section (1) of Section 28 of the Customs Act, 1962 and interest under Section 28AB ibid. There is also a proposal to confiscate the seized goods u/s 111(o) of the Customs Act, 1962. The co-applicants have also been asked to show cause as to why penalty should not be imposed on each of them under Section 112(a) of the Customs Act, 1962. 4. In the settlement application, the main applicant has accepted the duty demanded in the SCN and has explained that the imported parts could not be used on account of their obsolescence caused by change in technology. As a result, these goods have to be scrapped and in fact, these were still available when the officers of DRI, Bangalore visited the main applicant s premises. Such scrapped materials have also been seized. Insofar as the spares are concerned, similarly, the main applicant has explained that those spares were distributed to their branches so that they could be supplied from the nearby branches whenever there was demand from the buyers of these medical equipments. Since there was not much of a demand for spares and because of lack of communication, these were returned unutilized, but inadvertently taken as used. 5. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, the observations in Para 15 (Page 10) of the admission order would stand modified. There is therefore no dispute with regard to the applicant s liability to pay the duty involved. Similarly, in view of the admitted stand, namely that the goods which are allowed clearance extending the benefit of exemption have not fulfilled the conditions subject to which the exemption was granted and that the non-observance of the condition has not been sanctioned by the proper officer, such goods are liable for confiscation u/s 111(o) of the Customs Act, 1962. The officers of DRI have seized the imported goods lying unutilized, though as obsolete materials, and also the spares and they are thus liable for confiscation under Section 111(o) of the Customs Act, 1962. Having thus concluded about the duty liability and the liability to confiscation, what is left to be decided is on the prayers seeking grant of immunities. 8. The Bench first takes up the issue relating to liability to payment of interest. In Col. 11 of the settlement application, the main applicant has shown Rs. 93,37,976.13 as interest involved in the dispute. In Col. 12 thereof, the applicant had admitted the duty and interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th in Para 6 (Page 6) of the admission order by the majority members. A copy of the admission order was already supplied to the Revenue. 9. The DRI has objected to grant of immunity from penalty as according to them, the duty evasion was a calculated ploy and in support thereof, they have drawn attention to the following documents : (i) e-mail dated 17-6-2000 from Shri Sreedhar, among others to S/Shri D.A. Prasanna and Nandakumar; (ii) the letter dated 28-10-2000 from Shri Sreedhar, in response to letter dated 14-7-2000 from the Assistant Commissioner of Customs, Air Cargo Complex, confirming that all the exempted materials have been fully consumed including those covered by end-use bonds closed on 3-6-2000 and 8-6-2000; (iii) the statement dated 22-12-2000 of Shri P. Krishanamoorthy, MD of the CHA firm referring to the discussions during which he appears to have cautioned the importer not to be complacent even though the customs would have close certain end-use bonds without usage of material, as required in the notification. (iv) The statement dated 18-12-2000 of Shri V. Somasekhar stating inter alia that he removed 15-20 end-use files unauthorisedly from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ria with corresponding customs provisions and the rationale behind setting up the Settlement Commission. 11. The C CESC has been set up on the lines of Income Tax Settlement Commission which itself owed its birth to the recommendations of the Wanchoo Committee, Para 2.32 of the recommendations is extracted below : This, however, does not mean that the door for compromise with an errant tax payer should for ever, remain closed. In the administration of fiscal laws whose primary objective is to raise revenue, there has to be room for compromise and settlement. A rigid attitude would not only inhibit a one-time tax-evader, or an unintending defaulter from making clean breast of his affairs, but would also unnecessarily strain the investigational resources of the Department in cases of doubtful benefit to revenue, while needlessly proliferating litigation and holding up collections. We would, therefore, suggest that there should be a provision in the law for settlement with the taxpayer at any stage of the proceedings. In the United Kingdom, the confession method has been in vogue since 1923. In the U.S. law also, there is a provision for compromise with the tax payer as to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y against prosecution or imposition of penalty. Similarly, in Sheikh Mohd. Rawoothar v. Settlement Commission - (1999) 236 ITR 581, the Madras High Court have held that - the machinery of the Settlement Commission is available to the assessee who, after exhibiting his dis-honest conduct by filing a return in which true income has not been disclosed, has availed of the chance to correct himself by making true and full disclosure before the Commission . The Bombay High Court have also held in Rasik Ramji Kamani v. Tripathi S.K. - (1993) 203 ITR 840 that - ........... it is not the policy of the law or the direction of legislation to lean in favour of a social criminal, particularly white collar brand. This not withstanding, the scheme of Settlement Commission escaped judicial frowns for a major reason : speedier culmination of a tax dispute may, in a sense, serve the cause of a nation needing huge resources for its vast welfare schemes . It is also further said in the same judgment that for an effective and meaningful settlement, candid cooperation and frankness from the tax payer, albeit a sinner in the past is essential. 13. It is, therefore, clear from a reading of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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