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M/s. Auto Creaters Versus Union of India and others

2016 (11) TMI 855 - BOMBAY HIGH COURT

Validity of order passed by Settlement Commission - the Bill of Entry filed before the issuance of the SCN - violation of condition as set out in 1st Proviso to section 127B(1) of the Customs Act, 1962 - Held that: - admittedly the second Bill of Entry was filed before the Petitioner made its Settlement Application before Respondent No.4. In fact, it is the case of the Petitioner that they were not permitted to file this Bill of Entry before the issuance of SCN and were allowed to file the same .....

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t: - the impugned order is not sustainable on the grounds of breach of the principles of natural justice. On perusal of the record, we find that the Settlement Commission has referred to certain reports dated 1st March 2016, which were admittedly never supplied to the Petitioner. This fact is undisputed by the Revenue. This being the case, the impugned order cannot be sustained on this ground also and has to be quashed and set aside. - Petition allowed - matter remanded back. - WRIT PETITION .....

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ner has challenged the common order dated 14th March, 2016 (for short the impugned order ) [Exh. J to the Petition] passed by the Settlement Commission, Additional Bench, Customs and Central Excise, Mumbai (Respondent No.4 herein) by which it rejected the Settlement Application filed by the Petitioner. To decide the admissibility of the said Settlement Application, Respondent No.4 examined the following three conditions:- (i) Whether the Application was in respect of a 'case' .....

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mp; (ii) are concerned, the Settlement Commission held in favour of the Petitioner. However, as far as condition (iii) is concerned, the Settlement Commission inter alia held that the same was not complied with by the Petitioner in view of the fact that the requisite Bill of Entry had not been filed before the issuance of the Show Cause Notice. According to the Settlement Commission, the Petitioner had imported four containers for which two separate bills of entry were filed. One Bill of Entry ( .....

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g that is challenged in this Writ Petition. We must at once note that the Revenue has not challenged any findings or conclusions reached by Respondent No.4 in the impugned order and therefore, as far as they are concerned, the findings / conclusions arrived at in the impugned order have become final. 4. The brief facts giving rise to the present controversy are as under:- (a) The Petitioner is a proprietary concern of one Shri Satpal Singh, Mumbai. Respondent No.1 is the Un .....

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) It is the case of the Petitioner that in the normal course of business it imported Air Freshners and Choco-Pie Biscuits. Accordingly, in the month of December 2014, one Mr Zeeshan Khan approached the Petitioner for import of items being regularly imported by him and offered compensation for the same. Accordingly, an agreement was also entered into between the Petitioner and the said Mr Zeeshan Khan. It appears that during the course of import, some error occurred and extra items were dispatche .....

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the Petitioner that the Department examined the goods much before the filing of the Bill of Entry and seized the goods. The Petitioner, after repeated efforts, was permitted to file a Bill of Entry for these three containers viz. Bill of Entry No.2128700 dated 4th August, 2015. (d) In the meanwhile, the Petitioner received a SCN dated 29th July, 2015 proposing to confiscate the goods covered by both the Bills of Entry. The SCN proposed to invoke penal charges under sections 112 and 11 .....

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ter alia conveying to the Petitioner that its Application was found deficient on the grounds mentioned in paragraph 2 of the said notice. Accordingly, the Petitioner was directed to explain in writing as to why its Application should be allowed to be proceeded with as envisaged under section 127C(1) of the Act. (f) The Petitioner filed a detailed reply to the aforesaid notice vide its Advocate's letter dated 19th October, 2015 and furnished detailed clarifications to Respondent No .....

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issions on 5th February, 2016. In answer to this, the Petitioner, by their letters dated 5th February, 2016 and 25th February, 2016 made certain representations to Respondent No.4, especially in relation to the written submissions filed by the Revenue. It is in these circumstances that the Petitioner was shocked to receive the impugned order dated 14th March, 2016. According to the Petitioner, Respondent No.4 has not given a fair and just treatment to the Petitioner's Application .....

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t March, 2016, a copy of which has never been supplied to the Petitioner. This alone, according to the Petitioner, is an incurable breach of the principles of natural justice and which would make the impugned order vulnerable to challenge in writ jurisdiction. It is in these circumstances that the Petitioner is before us assailing the legality and validity of the impugned order dated 14th March, 2016 passed by Respondent No.4. 5. In this factual backdrop, Mr Kantawala, learned counsel .....

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ioner was not allowed to file this Bill of Entry until after the issuance of SCN. However, as soon as the SCN was issued, the Department allowed the Petitioner to file the Bill of Entry. According to Mr Kantawala, the Settlement Commission has proceeded on a completely incorrect footing that the filing of the Bill of Entry should precede the issuance of the SCN. He submitted that there is no such mandate in section 127B of the Act for the Settlement Commission to come to the aforesaid .....

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sought to be settled by the Petitioner by filing a Settlement Application before Respondent No.4. Looking to these facts, Mr Kantawala submitted that the impugned order is contrary to the spirit of settlement and more particularly set out in Chapter XIV-A of the Act. Mr Kantawala submitted that the impugned order is likely to send completely wrong signals to citizens aspiring to have their cases settled under the provisions of the Customs Act, 1962. 6. In the alternative, Mr Kantawala .....

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sideration the representations made by the Petitioner vide its letters dated 5th February, 2016 and 25th February, 2016 respectively, but instead has relied upon the aforesaid reports. This, according to Mr Kantawala, has resulted in the gross miscarriage of justice inasmuch as the impugned order has been passed in clear breach of the principles of natural justice and is therefore liable to be quashed and set aside. In conclusion, Mr Kantawala submitted that for all the reasons set ou .....

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e Respondent No.4 correctly refused to entertain the Settlement Application filed by the Petitioner. Mr Dwivedi submitted that as per the mandate of section 127B, no Application can be entertained by Respondent No.4 unless the Applicant has filed a Bill of Entry, or a shipping bill, or a bill of export, or made a baggage declaration, or a label or declaration accompanying the goods imported or exported through post or courier, as the case may be, and in relation to such document or documents, a .....

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n Writ Petition including the annexures thereto including the impugned order dated 14th March, 2016. We have also given our anxious consideration to the relevant statutory provisions. To understand the controversy raised in the present Writ Petition, it would be necessary to make note of the relevant provisions of the Customs Act, 1962. Chapter XIV-A of the Customs Act, 1962 deals with settlement of cases. This Chapter contains sections 127A to 127N and was inserted w.e.f. 01-08-1998 by section .....

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eant for providing a chance to a tax-evader who wants to turn over new leaf as recommended by the Direct Taxes Inquiry Committee, popularly known as the Wanchoo Committee . Keeping the aforesaid objective in mind, this Chapter viz. Chapter XIV-A was inserted in the Customs Act, 1962 under which the Settlement Commission is constituted. 9. Having set out in brief the objects for which Chapter XIV-A was inserted in the Customs Act, 1962, we shall turn our attention to some of the statu .....

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case settled, in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, und .....

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ocuments, 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 three lakhs rupees; and (c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28-AA; Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending in the Appellate .....

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1 [***]2 (3) Every application made under sub-section (1) shall be accompanied by such fees as may be specified by rules. (4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant. (emphasis supplied) 10. As can be seen from the above reproduction, section 1 Sub-S (1-A) omitted by Act 20 of 2015, S.86. Prior to its omission, Sub-S (1-A) read as under - (1- A) - Notwithstanding anything c .....

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under - (2) Where any dutiable goods, books of account, other documents or any sale proceeds of the goods have been seized under section 110, the applicant shall not be entitled to make an application under sub-section (1) before the expiry of one hundred and eighty days from the date of the seizure. 127B(1) gives an opportunity to a person to approach the Settlement Commission to settle a case relating to him before the same is adjudicated and have the same settled. For .....

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ction 127B clearly stipulates that no Settlement Application shall be made unless the Applicant has filed a bill of entry, or a shipping bill, or a bill of export, or made a baggage declaration, or a label or declaration accompanying the goods imported or exported through post or courier, as the case may be, and in relation to such document or documents, a show cause notice has been issued to him by the proper officer. 11. In the facts of the present case, it is an admitted fact that .....

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e aforementioned Settlement Application. On reading the clause (a) of the 1st Proviso to sub-section (1) of section 127B, we cannot agree with the submission of Mr Dwivedi that the Bill of Entry has to be filed before the issuance of the SCN. If we were to accept the submission of Mr. Dwivedi, it would go against the very spirit for which Chapter XIV-A was brought into force under the Customs Act, 1962. In the facts of the present case, admittedly the second Bill of Entry (No.2128700) was filed .....

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