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SK. COLOMBOWALA Versus COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI

2007 (7) TMI 514 - CESTAT, MUMBAI

Settlement of case and Kar Vivadh Samadhan (KVS) Scheme - Distinction between - Penalty - Difference of Opinion - Whether the provisions relating to Settlement of cases under the Customs Act can be considered to be identical to Kar Vivadh Samadhan Scheme justifying invocation of case laws under the Kar Vivadh Samadhan Scheme? - majority order. - C/988, 987, 991, 990, 992 & 989/2004 - A/402-407/2007-WZB/C-I/(C.S.T.B.) - Dated:- 19-7-2007 - Ms. Archana Wadhwa, Shri M. Veeraiyan, Ms. Jyoti Balasund .....

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1962. The said penalties stand imposed upon the appellants on the allegations and findings that they aided and abetted one M/s. Amrit Laxmi Machine Works, Bombay in duty free imports against duplicate advance licences. 2. After hearing both the sides, we find that proceedings were also initiated against M/s. Amrit Laxmi Machine Works. However, the said noticee settled the dispute in Settlement Commission who vide its Order No. 38/2002 dated 5-9-2002 settled the case on terms that an amount .....

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that co-accused cannot be vested with any higher penal consequences than main accused. By referring to various, Ld. Advocate has argued that main accused stand absolved of penal consequences, no question of imposition of penalty on the co-accused can arise. 2. After hearing the Ld. DR, we find that the Hon ble Supreme Court in the UOI of India v. Onkar S. Kanwar [2002 (145) E.L.T. 266 (S.C.)], held that settlement of dispute by main declarant under Kar Vivad Samadha Scheme to operate as ful .....

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Kar Vivad Samadhan Scheme and issue finally settled in favour of him, as a consequence, penalty imposed on co-noticee does not survive. 3.  Ld. DR has submitted that all the above decisions are in respect of settlement under Kar Vivad Samadhan Scheme, whereas in the present case the dispute has been settled by the main noticee in Settlement Commission. However, we find that this difference would not effect the ratio of law declared by the above decision. The principal which weighed with the .....

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co-accused was set aside on the ground that where the Settlement Commissioner has granted immunity to the main accuse from levy of penalty, co-accused cannot be vested with any higher penal consequences than the main accused. In view of the above, we set aside, the impugned order of imposition of penalties upon the appellants and allow all the appeals with; consequential relief to them. (pronounced in court on.........................) Sd/- (Archana Wadhwa) Member (Judicial) dated 12-12-2006 4. .....

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bearings valued at Rs. 9,22,110/- within the overall value of Rs. 50,05,468/- allowed for duty free import and they were required to export goods valued at Rs. 3,52,96,940/-. (b) There were certain amendments to the licence and M/s. Amrit Laxmi Machine Works imported two consignments in January, 1997 and August, 1998. Licencee discharged export obligation by February, 1997. Still there was balance value on the licence for Rs. 27 lakhs and the licence was not being utilized after August, 1998 by .....

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alue of Rs. 1,91,33,433/- which included 4248 bearings as against 248 pieces originally allowed; arranging financial transactions between Nippon Bearings Pvt. Ltd., and M/s. Amrit Laxmi Machine Works, and M/s. Shalin Bearings Corporation and M/s. Amrit Laxmi Machine Works; arranging imports from Dubai from the relative of Shri Manharlal H Vora and showing high-sea-sales to M/s. Amrit Laxmi Machine Works; transferring the goods cleared in the name of M/s. Amrit Laxmi Machine Works to Delhi.. (d) .....

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ari approached the Settlement Commission and paid the duty of Rs. 15,94,565/- along with 10% interest as ordered by the Hon ble Settlement Commission. The Settlement Commission gave immunity in matters relating to penalty and prosecution to these noticees on the ground that the applicants have cooperated with the Settlement Commission in the proceedings before it and has made a full true disclosure. (g) In respect of other noticees which include the present appellants adjudication proceedings we .....

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pon Bearing Pvt. Ltd. 1,00,000/- 6. Shalin Bearings Corporation 1,00,000/- . No. Name of the appellant Amounts (Rs.) 1. Shri Manharlal H. Vora 1,00,000/- 2. Mr. Ashwin Shantilal Mehta 1,00,000/- 3. Nippon Bearing Pvt. Ltd. 50,000/- 4. Shalin Bearings Corporation 50,000/- 6. The proposed order of Ld. Member (Judicial) allows appeals of these persons on the ground that M/s. Amrit Laxmi Machine Works and its Director were granted immunity from penalties by the order of the Settlement Commissio .....

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Settlement Commission. 8. Further M/s. Amrit Laxmi Machine Works and its Director approached the Settlement Commission and cooperated with the Settlement Commission and received immunity as provided under the Act. The present appellants have not chosen to go to the Settlement Commission. 9. The proposal to set aside the penalties on these appellants on the ground that M/s. Amrit Laxmi Machine Works and its Director have been granted immunity by the Settlement Commission based on case .....

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s much as M/s. Amrit Laxmi Machine Works cannot be considered as the main accused. 11. The leniency shown to M/s. Amrit Laxmi Machine Works and its Director are in the mature of leniency shown by the criminal courts to approvers. In this case the major activities leading to the fraud have been undertaken by the following persons. (i) Ashwin Mehta of M/s. Nippon Bearings Pvt. Ltd., (ii) Manharlal H. Vora of M/s. Shalin Bearing Corporation. Therefore, the penalties imposed on them and their f .....

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is no evidence of the knowledge and involvement in the fraudulent acquiring of the duplicate licence or use of the same to evade customs duty. It is held by the Commissioner that Colombowala could have easily sensed the fraudulent intention behind the deeds of Shri Vora and Shri Mehta and should have cautioned them of the consequences and should have informed the department if the caution was not adhered by them. Such a finding only shows that at the most there was negligence on the part of CHA .....

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i Manharlal H. Vora, Mr. Ashwin Shantilal Mehta, Nippon Bearing Pvt. Ltd., Shalin Bearings Corporation are the main persons in the crime? 15. Whether treating the appellants as mere co-noticees waiver of penalty should be granted on the ground that M/s. Amrit Laxmi Machine Works and its Director have obtained immunity from penalty by the order of the Settlement Commission. 16. Whether order proposed by ld. Member (Judicial) or Member (Technical) should be endorsed? Sd/- (Archana Wadhwa .....

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ity together with interest, and granted immunity, fine, penalty and prosecution. 18. The order passed by the ld. Member (Technical holds that the judgment of the Apex Court in the case of Onkar S. Kanwar is not applicable in the context of settlement mechanism as the said judgment relates a case under Kar Vivad Samadhan Scheme 1998, which scheme proceeds on a different footing, and further holds that the appellants herein had not chosen to approach the Settlement Commission and hence cannot .....

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in the nature of leniency shown by a criminal court to an approver. 19. The provisions governing settlement of case are to be found in Chapter XIVA of the Customs Act, 1962 consisting of Section 127A to 127N. Section 127B reads as under :- Section 127B. Application for settlement of cases. - (1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, at any stage of a case relating to him make an application in such form and in such manner .....

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to have the case settled and such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless - (a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of goods, [as the case may be, and in relation to such Bill of entry or shipping bill] a show cause notice has been issued to him by the proper officer; (b) the additional amount of duty accepted by the applicant in his application exceeds tw .....

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ded that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause. It is thus clear that the settlement mechanism provides for a settlement of case. Section 127C deals with power and procedure of Settlement Commission and provides in sub-sec .....

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er sub-section (7) of section 127C shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. (emphasis supplied) 22. From the above it can be concluded that- (a) it is only a person who is chargeable to duty who is entitled to make an application to the Settlement Commission for settlement of his case pending .....

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herein and no matter covered by such order shall be re-opened in any proceedings under the Customs Act. (d) Once an application filed for settlement of case has been entertained by the Settlement Commission, it is only the Settlement Commission which will have exclusive jurisdiction over that case to the exclusion of any other officer of customs who had jurisdiction over such case prior to the application having been made, as per Sec. 127J. (e) Settlement provisions do not refer to any .....

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d the case by determining the amount of duty payable and granted immunity to the importer and its director both from confiscation of goods as well as penal action. There is no finding in the said order of the Settlement Commission as to the liability of the imported goods to confiscation under Sec. 11. The director of the imported company was also accorded immunity as he had filed a separate application for grant of immunity in his capacity as a co-noticee. The appellants herein did not file any .....

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a situation where a case is settled partly for some applicants and remains pending for others. Reading of the provision relating to settlement makes it clear that only an importer (specified category of person) can file an application for settlement of a case and that once such a case is admitted and settled, the entire case gets settled. (emphasis supplied). The provisions in Section 127J relating to conclusiveness of matters stated in the settlement order and bar against re-opening of any mat .....

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isdiction qua other co-noticees, for the reason that such an interpretation would be against the plain language of Sec. 127F. Further, in the present case, the charge against the co-noticees who are the appellants herein is the applicability of provisions of Sec. 112 of the Customs Act against them, which Section can be invoked if the goods imported would become liable to confiscation under Sec. 111. The show cause notice issued to the importer invoking the provisions of Sec. 111 qua the goods i .....

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including those of co-noticees, settlement mechanism provides for settlement of the entire case as a whole, the fact that only the person liable to pay duty can make an application for settlement does not mean that the case in so far as the remaining co-noticees can continue even after a final order of settlement has been passed in relation to the case. 25. In view of the above, I do not intend to go into the correctness or otherwise of the finding of the ld. Member (T) that the major role .....

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