TMI Blog2011 (3) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, this court finds that the Settlement Commission has grossly mislead by itself by failing to consider the investigation report which it had called for and thereby fell into error by accepting the untenable plea of the Revenue that there are inconsistencies in the disclosures. Such finding is based on no evidence and contrary to the records. Merely because there is a huge difference in duty between the show cause notice and the admitted amount, the case of the petitioner cannot be thrown out. As the first respondent failed to consider the vital and relevant documents viz., the investigation report which had been called for by the Settlement Commission before deciding the issue finally. The non-application of the mind of the first respondent on this vital relevant document clearly goes to the root of the matter. The order impugned suffers from error apparent on the face of the records - matter remitted back to the first respondent for reconsideration. - W.P. No. 5916 of 2008 - - - Dated:- 21-3-2011 - R. Sudhakar, J. Shri S. Murugappan, Counsel, for the Petitioner. Shri T.R. Senthil Kumar, Sr. Standing Counsel, for the Respondent. [Order]. The above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of an application under Section 127B and the relevant portions which would be useful for the disposal of the writ petition are as follows : 127C. Procedure on receipt of application under Section 127B. - (1) 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 complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application : Provided that an application shall not be rejected under this sub-section unless an opportunity has been given to the applicant of being heard : Provided further that the Commissioner of Customs shall furnish such report within a period of one month of the receipt of the communication from the Settlement Commission, failing which it shall be presumed that the Commissioner of Customs has no objection to such application; but he may raise objections at the time of hearing fixed by the Settlement Commission for admission of the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the records and the report of the Commissioner of Customs received under sub-section (1) and the report, if any of the Commissioner (Investigation) of the Settlement Commissioner under sub-section (6) and after giving an opportunity to applicant and to the Commissioner of Customs having jurisdiction to be heard either in person or through a representative duly authorised in this behalf and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner of Customs or the Commissioner (Investigation) under sub-section (1) or sub-section (6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Every order passed under sub-section (7) shall provide for the terms of settlement including any demand by way of duty, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proportionate duty demand and duty accepted after joint sitting Proportionate duty demand Duty accepted after scrutiny of Bond Register Total Duty demanded in SCN Total Duty Accepted No Signature of crew member 102.00 42,80,113.52 10,16,323.04 25,70,027.00 25,70,027.00 20,13,102.00 20,13,102.00 No such crew member 54.00 12,05,987.90 12,05,987.90 6,04,451.90 6,04,451.90 4,73,467.00 4,73,467.00 Purchase denied by Master 52.00 19,25,870.66 14,76,814.00 11,94,895.18 7,83,278.16 9,36,010.00 6,13,590.00 No such Vessel 21.00 5,63,607.49 nil 2,36,737.22 nil 1,85,435.00 nil Sales made to Coastal Vessels 58.00 25,05,588.49 .00 12,20,357.23 4,25,959.64 9,55,906.00 3,33,654.00 Signature not tallying 324.00 64,40,930.75 30,06,228.46 32,34,341.34 nil 25,33,571.00 nil 611.00 1,69,22,098.80 67,05,353.63 90,61,809.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosure of facts relating to the case have not been made by the petitioner and accordingly remitted the case to the jurisdictional Customs Officer under Section 127-I of the Customs Act. Challenging the same the present writ petition has been filed. 9. Primarily Mr. S. Murugappan, the learned counsel appearing for the petitioner contended as follows :- (i) The admitted fact is that the show cause notice has been issued for a higher sum of Rs. 1,69,22,099. After the joint sitting held between the department and the petitioner, as per order of the Settlement Commission to the Commissioner (Investigation), the department conceded that the proportionate duty demand should be Rs. 90,61,809 against which the petitioner accepted a liability of Rs. 43,83,717.17. Thereafter, on the basis of the investigation report and the earlier orders of the Settlement Commission the Department conceded that the show cause notice demand should be Rs. 70,97,432.42. The petitioner however, accepted for Rs. 34,33,814.25. The basis for computation of these figures was based not merely on the plea taken by the petitioner but also on the basis of the investigation and analysis of the documents by the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been adopting various basis for making varying disclosures from time to time. In view of the above, the Bench feels that the disclosure of limited liability by making shifting exclusions made by the applicants cannot be considered full and true, especially in this case which is fraught with gross fraudulent and illegal practices by the applicant over a long period of time and where there are demonstrable contradictions, inconsistencies and incompleteness in the disclosures made one after another by the applicant. When the department itself accepts difference in calculation of duty liability, the department is not justified in blaming the petitioner of varying disclosure which plea is also denied. (iv) The petitioner at the time of admission of the application has clearly admitted a liability of Rs. 67,05,357 as against Rs. 1,69,22,099 and the case was admitted vide admission order dated 4-6-2007. Thereafter, the investigation was ordered. The question of calculation arose only because of the direction issued by the Settlement Commission for an investigation report in terms of Section 127C(6). Once the investigation was going on the petitioner was allowed to participate and po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disclosures has no basis and it is based on misconception of the provision of law. 10. The learned counsel appearing for the petitioner also distinguished the case relied upon by the first respondent in Union of India v. Anila Chanana And Another (2008 IND LAW SC 112 = 2008 (222) E.L.T. 481 (S.C.) stating that the facts are not similar to the facts of the present case as the said decision of the Apex Court relied on by the first respondent relates to a case of compounding of an offence in terms of Section 137(3) of the Act. In that case the Apex Court has accepted the contention of the Union of India that at time of disclosures there should not be any inconsistencies or incompleteness and the person who made the disclosure in the application for compounding the offence did not make true and proper disclosures whereas in the present case, the learned counsel stated that the admitted liability was Rs. 67,05,357/- whereas even as per the calculations made in the investigation report the errors were pointed out only to show that the demand made in the show cause notice is without proper basis. There is no subsequent disclosure by the petitioner except pointing out the infirmity i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by reminder dated 26-7-2007. It is the department which refused to encash the bank guarantee for one reason or other. However, thereafter it comes to light that the department had encashed the bank guarantee and the delay if at all could be attributed to the Revenue and not to the petitioner. The fact that the admitted liability has been discharged by the petitioner is admitted in the investigation report in paragraph 4.4 which has been already extracted above. 4.4 Regarding Bank Guarantee :- The SCN demanded Rs. 1,69,22,099/- as customs duty evaded. Initially the applicants admitted an amount of Rs. 67,05,347/-. They had already paid Rs. 25 lakhs towards duty. The Bench directed vide Admission order dated 4-6-2007 as follows : The Revenue may encash bank guarantee given by them to realise the amount... The applicants are directed to pay the balance amount of admitted duty within thirty days from the date of receipt of this order. The same were encashed by the department during Jan. 2008. Therefore, the plea of non-compliance of the direction of the Settlement Commission for payment of the admitted duty does not stand to reasons. 14. Insofar as the first contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosures one after another is a fallacy. There was only one application for settlement under Section 127C and thereafter an enquiry was conducted by the Commissioner (Investigation) based on the order passed by the Settlement Commission in terms of 127C(6). At the time of enquiry the petitioner has pointed out his version of the case and that has been accepted and a report has been filed. Therefore, there is no multiple disclosures as stated by the Settlement Commission. This finding of the first respondent is totally erroneous. In the application the admitted duty liability is given and it has been paid. This establishes petitioner s co-operation in the settlement case. 16. In para 24 of the order, the first respondent has observed that the Revenue has conceded that there were errors in the calculation and the demand made in the show cause notice should be scaled down. This is evident from the investigation report. The various methods of calculation clearly reveal that the original demand as per the show cause notice has to be suitably modified or reduced for the purpose of settlement of the case. It is for the Settlement Commission to accept the report or reject the report and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to consider the investigation report which it had called for and thereby fell into error by accepting the untenable plea of the Revenue that there are inconsistencies in the disclosures. Such finding is based on no evidence and contrary to the records. Merely because there is a huge difference in duty between the show cause notice and the admitted amount, the case of the petitioner cannot be thrown out. 19. It will be pertinent to point out that in the earlier case relied upon by the Settlement Commission in M/s. Flemingo (DFS) Pvt. Ltd. the duty demanded was Rs. 3,87,63,211 approximately and the amount admitted by the respondents therein was Rs. 82,25,502 which was paid and settled. It has to be pointed out that nowhere in the provisions of Chapter XIVA the quantum demanded in the show cause notice and the amount to be settled is to be considered as an issue. It is for the Settlement Commission to decide as to what will be the duty liability to be settled and consequent penalty and interest to be levied. 20. Mr. T.R. Senthil Kumar, the learned counsel appearing for the respondents submitted that aggrieved by the order of the Settlement Commission in the case of M/s. Fleming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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