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TMI Blog2013 (8) TMI 472X X X X Extracts X X X X X X X X Extracts X X X X ..... ely of the said company. Saurashtra Cement is engaged in the business of manufacturing cement and also produces "Clinker". Such product the company sells not only in the domestic market but also in the international market through exports. The Government of India with intent to boost the exports has been framing various incentive schemes. One of them was Duty Exemption Entitlement Certificate ('DEEC', for short). Under such scheme, an exporter could import certain inputs required for its export product without payment of duty on the condition that within the time specified, the importer shall discharge its export obligation. Such imports, of course, were permitted subject to conditions provided in the DEEC scheme. 2.2 With the intention of exporting "Clinker", Saurashtra Cement imported certain raw material namely, steam coal during the period between June, 1997 to November, 1997. Details of such imports and the duty foregone on such imports under the DEEC scheme are as under :- Licence No. & Date Port of Import Commo-dity Bill of Entry No. & Date Quantity (MTs) CIF Value (Rs.) Duty Foregone (Rs.) 1993/ 3-6-97 Porbandar Steam Coal F-14/ 11-6-97 20000 29628040 362 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material for manufacture and sale of final product in the local market. 2.8 The show-cause notice referred to statements of the Directors and employees of the petitioner No. 1 company including the present petitioners No. 2 and 3 and called upon the petitioners to show cause why I. 44000 MT's of Steam Coal imported by M/s. SCL under Duty free advance Licences 20037 of dated 29-8-1997 and 19993, dated 3-6-1997 and valued at Rs. 6,67,55,251.00 should not be held liable for confiscation under Section 111(d) and Section 111(o) of the Customs Act, 1962 and since the goods have been cleared and not available for confiscation, why a fine in lieu of confiscation should not be imposed upon them. II. Custom duty amounting to Rs. 92,51,600.00 (Rupees Ninety two lakhs fifty one thousand six hundred only) under licences No. 20037, dated 29-8-1997 and 19993, dated 3-6-1997 along with the interest @ 24% p.a. should not be recovered from M/s. SCL under provision of Notification No. 30/97 dated 1-4-1997 read with proviso to the Section 28 and Section 143A of the Customs Act, 1962. III. A penalty should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity in February, 1999 and 4-6-1999 requesting for extension of six months for discharge of its export obligation. 2.10 In short, the defence of the petitioner No. 1 company was not on any factual dispute but on the ground that there was no mala fide on part of the company in not fulfilling the export obligation and that failure on part of the company to meet with such obligation was on account of reasons entirely beyond its control. In addition to above defence taken in the reply to the show-cause notice, the petitioner No. 1 company also pointed out that against the import of 20000 metric tonnes of steam coal under licence No. 19993, dated 3-6-1997 containing export obligation of 1,00,000 metric tonnes of Clinker, the company has already discharged its obligation to the tune of 71.35% in terms of quantity and 72.56% in terms of value. Any recovery of unpaid duty, therefore, must co-relate to the undischarged portion of the obligation and not for the entire imports made. The company, therefore, contended that against such licence, the correct value of duty foregone on the steam coal imported comes to Rs. 66,64,222/-. 2.11 The petitioners No. 2 and 3 i.e. the Director and the Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms duty amounting to Rs. 1,31,74,972/- on M/s. GSCL under the provision to Section 28 of the Customs Act, 1962 and order to cover the same from them along with interest amount at the appropriate rate as per provision of Section 28AB of the Customs Act, 1962. The amount of Rs. 70,48,593/- already paid as mentioned in SCN and thereafter by M/s. Gujarat Sidhee Cement Ltd., should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. The Deputy Commissioner, Customs, Porbandar should verify the duty amount paid so far and payable and also calculate the interest amount thereon at the rate as prescribed by the Government. (iv) I also impose penalty under Section 112(a) read with 140 of the Customs Act, 1962 on the following persons : 1. Shri B.L. Kalwar, President Rs. 50,000/- (Rupees Fifty Thousand only) 2. Shri M.S. Gilotra, M.D. Rs. 50,000/- (Rupees Fifty Thousand only) 2.14 Saurashtra Cement and the Directors filed separate appeals challenging such order of the adjudicating officer before the Customs, Excise and Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the petitioners by common order dated 24-5-2006. The Commission confirmed the customs duty demand of Rs. 73,67,859/- which was already previously paid. The Commission reduced the interest from 24% to 15% on account of retrospective amendment in law. With respect to penalty, the Commission imposed separate penalties of Rs. 7,00,000/- each on Saurashtra Cement as well as on its two Directors. The Commission granted immunity from prosecution to all the applicants under sub-Section (1) of Section 127H of the Customs Act, 1962. The Commission in its operative portion of the order stated as under : - Customs Duty : The Customs duty in this case is settled at Rs. 73,67,859/-. This amount stands paid. Interest : The Bench observes that consequently the rate of interest prescribed in Notification No. 30/97-Cus., dated 1-4-1997 was @ 24% which was modified and reduced to 15% with retrospective effect vide clause 127 of the Finance Act, 2003. As a result the interest payable by the applicant is @ 15% and not 24%. The interest shall be charged from the date it was due till the date(s) of payment of the duties. The Revenue shall calculate the interest liability at simple rate of 15% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ports are as under : - Licence No. & Date Port of Import Commo-dity Bill of Entry No. & Date Quantity (MTs) CIF Value (Rs.) Duty Foregone (Rs.) 20071 26-9-97 Veraval Coal F-05 2-1-98 6991 11414787.00 1731224.00 20108 16-10-97 Veraval Coal F-04 13-10-97 9804 14817529.00 2244856.00 20109 16-10-97 Veraval Coal F-04 13-10-97 9804 14817529.00 2244856.00 20110 16-10-97 Veraval Coal F-04 13-10-97 9804 14817529.00 2244856.00 20111 16-10-97 Veraval Coal F-04 13-10-97 7369 11137329.00 1687306.00 Veraval Coal F-05 2-1-98 2411 3936640.00 596361.00 20112 16-10-97 Veraval Coal F-05 2-1-98 9806 16011071.00 2425513.00 Total Duty Foregone 13174972.00 3.1 The details of export obligation in terms of quantity and value of the finished product are as under :- Licence No. & Date Import Allowed Export Obligation Item Qty. (MTs) CIF Value (Rs.) Item Qty (MTS) FOB Value (Rs.) 20071 26-9-97 Coal 7200 17633716.00 Cement 36000 55728000.00 MR Bricks 10,800 20108 16-10-97 Coal 1000 15130440.00 Clinker 50000 58500000.00 MR Bricks 15 20109 16-10-97 Coal 1000 15130440.00 Clinker 50000 58500000.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of Section 28AB of the Customs Act, 1962. The amount of Rs. 70,00,000/- already paid as mentioned in SCN and there after by M/s. Saurashtra Cement Ltd. should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. (iii) I confirm the demand of Customs duty amounting to Rs. 1,31,74,972/- on M/s. GSCL under the provision to Section 28 of the Customs Act, 1962 and order to cover the same from them alongwith interest amount at the appropriate rate as per provision of Section 28AB of the Customs Act, 1962. The amount of Rs. 70,48,593/- already paid as mentioned in SCN and there after by M/s. Gujarat Sidhee Cement Ltd., should be adjusted against the Customs duty, interest thereof and penalty imposed vide this order. The Deputy Commissioner, Customs, Porbandar should verify the duty amount paid so far and payable and also calculate the interest amount thereon at the rate as prescribed by the Government. (iv) I also impose penalty under Section 112(a) read with 140 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case of the applicant which is a sister concern of M/s. Saurashtra Cement Ltd. and the same co-applicants as in the other pending case is also relating to illegal imports of coal and the duty liability settled in this case is Rs. 1,24,15,822/-. It appears that the applicant and co-applicants are habitual offenders and importing the same goods adopting similar modus operandi to evade the payment of duty and in the light of the same, their conduct is not clean and needs to be taken cognizance of. Accordingly, the Bench imposes penalty of Rs. 12.50 lakh on the applicant. For the same reasons, penalty of Rs. 12.50 lakhs each is also imposed on S/Shri B.L. Kalwar and M.S. Gilotra respectively (the co-applicants). The Bench grants immunity both to the applicant and the co-applicants from prosecution. This order of settlement shall be void in terms of sub-section (9) of Section 127C of the Act, if the Settlement Commission subsequently finds that it has been obtained by fraud or misrepresentation of facts. 3.8 It is this order the petitioners have challenged before us in the present petition. 4. On the basis of our documents on record, learned senior counsel Shri Mihir Thakore fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the earlier default. He, therefore, submitted that the Settlement Commission committed an error in making substantial enhancement in the penalty against the petitioners. 4.2 With respect to Gujarat Sidhee Cement and its Directors, the counsel submitted that this was the first default on part of the company. There was no previous instance and the Commission committed a grave error in taking note of the earlier defaults of Saurashtra Cement and the present parallel proceedings in case of the other company to enhance the penalties. 4.3 With respect to the scope of judicial review against a decision of the Settlement Commission, the counsel relied on the following decisions :- (1) Jyotendrasinhji v. S.I. Tripathi and Others reported in 1993 Supp (3) SCC 389 (2) M/s. R.B. Shreeram Durga Prasad and Fatehchand Nursing Das v. Settlement Commission (IT & WT) and Another reported in (1989) 1 SCC 628 (3) Kuldeep Industrial Corporation and Others v. Income Tax Officer and Others reported in (1997) 3 SCC 377 (4) Sanchit Bansal and Another v. Joint Admission Board and Others reported in (2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g wide powers for settlement of the duty demand on an application by any person subject of course to conditions laid down in Section 127D of the Act, also has special power of granting immunity from prosecution under the Customs Act, the Indian Penal Code or any other Central Act provided of course the Commission is satisfied that such person has co-operated with the proceedings and has also made full and true disclosure about his duty liability. Secondly, the provisions do not provide that the Settlement Commission while considering an application for settlement, must confine itself to the duty demand or the monetary penalties imposed by the departmental authorities. It would, thus, appear that it is always open for the Settlement Commission to suitably modify the duty demand and monetary penalties imposable under the Act, of course, subject to the limits provided in the Act itself. 9. The Settlement Commission is a special body constituted for the purpose of settlement of revenue cases. It is well-recognized that the order that the Settlement Commission passes would be effective only for that particular case and would not bind the department in later years. The Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in Section 245-D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same - Whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud & malice which, of course, constitute a separate and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on the relevant date when the order was passed, that is to say, August 24, 1977 the order was a nullity because it was in violation of principles of natural justice. See in this connection, the principles enunciated by this Court in State of Orissa v. Dr (Miss) Binapani Dei as also the observations in Administrative Law by H.W.R. Wade, 5th edn., pages 310-311 that the act in violation of the principles of natural justice or a quasi-judicial act in violation of the principles of natural justice is void or of no value. In Ridge v. Baldwin and Anisminic Ltd. v. Foreign Compensation Commission the House of Lords in England has made it clear that breach of natural justice nullifies the order made in breach. If that is so then the order made in violation of the principles of natural justice was of no value. If that is so then the application made for the settlement under section 245-C was still pending before the Commission when the amendment made by Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objections of the Commissioner. Dr. V. Gauri Shankar, appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in such cases would be very limited and interference would be permissible only when there is violation of any enactment or on the ground of mala fide or ulterior motive or where the procedure adopted is arbitrary and capricious. 14. We may also notice that in the case of Ajmera Housing Corporation and Another v. Commissioner of Income Tax reported in (2010) 8 SCC 739, the Apex Court confirmed the decision of the High Court setting aside the order passed by the Settlement Commission when it was found that the assessee had not made full and true disclosure before the Commission. The Apex Court rejected the assessee's objection to the interference made by the High Court in exercise of writ jurisdiction making the following observations :- "47. As regards the argument of the learned counsel for the assessee that the scope of judicial review being limited, the High Court should not have interfered with the order of the Settlement Commission in exercise of its power under Article 226 of the Constitution, in our opinion, the argument is stated to be rejected. Having conceded before the High Court that the assessee was not pressing the point of maintainability of the writ petition be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law nor for the courts to step into the areas exclusively reserved by the suprema lex to the other organs of the State. The court observed that the limited scope of judicial review is (i) Courts, while exercising the power of judicial review, do not sit in appeal over the decisions of administrative bodies; (ii) A petition for a judicial review would lie only on certain well-defined grounds. (iii) An order passed by an administrative authority exercising discretion vested in it, cannot be interfered in judicial review unless it is shown that exercise of discretion itself is perverse or illegal. (iv) A mere wrong decision without anything more is not enough to attract the power of judicial review; the supervisory jurisdiction conferred on a Court is limited to seeing that the Tribunal functions within the limits of its authority and that its decisions do not occasion miscarriage of justice. (v) The courts cannot be called upon to undertake the government duties and functions. The court shall not ordinarily interfere with a policy decision of the State. Social and economic belief of a judge sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, would stand on a somewhat different footing. In case of this company, the Commissioner had originally imposed penalty of Rs. 10,00,000/- in lieu of confiscation of goods and had separately imposed penalty of Rs. 50,000/- each on the two Directors. Even this order was quashed by the Tribunal and the proceedings were remanded before the Commissioner. Ultimately, on an application filed by the company and its Directors, the Settlement Commission imposed penalty of Rs. 12,50,000/- each. Thus, the Commission revised the total penalty to Rs. 37,50,000/-, all put together. In doing so, the Commission took into consideration the separate application filed by Saurashtra Cement Ltd. as also penalty of Rs. 3,00,000/- imposed on Saurashtra Cement with respect to its earlier default which order was passed in October, 2002. The Commission noted that in addition to Saurashtra Cement filing its settlement application, the present company i.e. Gujarat Sidhee Cement had also applied for settlement. The Commission noted that the two Directors are common in both the companies. The Commission, therefore, recorded that the company and the Directors are habitual offenders and are importing the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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