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Mr. Vinod Kumar Mathur and others Versus Union of India and ors.

2015 (9) TMI 455 - BOMBAY HIGH COURT

Misclassification due to suppression of facts – Imposition of penalty – Settlement Commission vide order imposed penalty upon on petitioner – Main issue was of misclassification arising due to alleged suppression of facts regarding source of insoluble sulphur crystex HB OT 20 by petitioners – Held that:- if letter, informing source of elemental sulphur, issued from overseas supplier was required so as to term dispute as not genuine or bonafide, that aspect has not been at all considered by Commi .....

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ion to examine whether it can impose penalties on parties and if it can in law whether there are circumstances justifying such imposition – Commission to re-examine this aspect and uninfluenced by its earlier order – Petition disposed of. - Writ Petition No.8678 of 2014, Writ Petition No.8679 of 2014, Writ Petition No.8680 of 2014 - Dated:- 9-3-2015 - S.C. Dharmadhikari and S.P. Deshmukh, JJ. For the Petitioner : Mr. V. Sridharan, Sr. Counsel with Mr. Jas Sanghavi and Ms. N. Hakani i/by PDS Lega .....

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s employees deem it necessary to challenge the penalty imposed. Mr. Sridharan learned Senior Counsel submitted that imposing of penalty has other legal consequences. Tomorrow, the petitioners may not be permitted to approach the Settlement Commission and in any other case. Therefore, imposition of penalty will prejudice them. 3) The second argument was that when the Settlement Commission has passed an order not directing payment of additional customs duty over and above that paid by the company .....

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oner can be termed as guilty of suppression, misclassification or mis declaration of facts. There was a dispute and which was genuine. The Bench has assigned reasons in Para 8.4 that there is a letter dated 14 January 2009 on record from the overseas supplier of the petitioner company informing that source of elemental sulphur contained in the imported product insoluble sulpher crystex HB OT 20, was obtained from refining of crude oil. Mr. Sridharan submits that this letter firstly could not hav .....

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above that specified in the tariff and in terms of Section 3(1) of the Customs Tariff Act, 1975. However, the Commission has overlooked the statutory scheme which indicates as to how the provisions of Customs Act, 1962 and the rules and regulations made thereunder have a limited applicability. Therefore, in matters covered under Customs Tariff Act, 1975 by virtue of sub section 5 of section 3 thereof the provisions enacting imposition of penalty under the Customs Act 1962 have not been incorpora .....

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unconditional acceptance of the duty demand, then, it is not open for the petitioners to argue now to the contrary. He therefore, submits that the aforesaid writ petitions be dismissed. 6) After having heard both sides and perusing the petition and all annexures thereto we find that there were allegations as set out in the show cause notice. The issue was of misclassification arising due to alleged suppression of facts regarding source of the insoluble sulphur crystex HB OT 20 by the petitioner .....

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r that this classification under tariff item 2503 0090 was disputed for the first time and therefore, this clarification from the foreign supplier was obtained. However, the petitioner's officer Mr. Vinod Kumar Mathur had in his statement dated 11 October 2011 stated that the classification was accepted by the Nhava Sheva Customs and even if the duty is paid under Tariff Act, 1975 the same is available as cenvat credit to them. Therefore, they have not made any saving and it was revenue neut .....

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supplier was required so as to term the dispute as not genuine or bonafide, that aspect has not been at all considered by the Commission. The Commission must render a finding when it is pointed out that the petitioners are liable to penal action as proposed in the show cause notice. The Commission ought to be aware of the ramifications of imposing penalty. In such circumstances, when the Commission has failed to apply its mind to this important aspect of the matter that we are constrained to set .....

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