TMI Blog2010 (7) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... in which, the petitioners were called upon to show cause as to why the following amounts should not be demanded and recovered from the petitioners towards customs duty on account of underinvoicing of the said goods : (i) Rs. 5,90,323/ , in respect of 3 shipments of the said goods in relation to which, the DRI had obtained export declarations by the foreign suppliers from the Hong Kong Customs, details whereof were given in Chart III to the show cause notice; (ii) Rs. 23,01,077/ in respect of 7 shipments of the said goods in respect of which no export declarations were available as detailed in Chart IV to the show cause notice. 3. On 2nd June, 2000, the petitioners made an application to the Settlement Commission admitting the additional duty liability of ₹ 4,60,078/ . This amount represented duty in respect of the 3 shipments in respect of which export declarations were available but the amount was recalculated by the petitioners based on the actual amount of freight and insurance available. The amount demanded in the show cause notice of ₹ 5,90,323/ was calculated on the basis of addition of notional freight and insurance @ 21.125% in terms of Rule 9(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commission, for which leave was granted by this Court. The Settlement Commission, however, rejected the application for rectification vide order dated 4th December, 2001. Hence the present petition was filed by the petitioner impugning the orders dated 2nd August, 2001 and 4th December, 2001 passed by the Settlement Commission. 7. This Court, by its order dated 25th February, 2002, had earlier dismissed the present writ petition. The petitioners preferred a Special Leave Petition (SLP) from the said order of dismissal dated 25th February, 2002. The Special Leave Petition filed by the petitioners was allowed and by an order dated 13th August, 2004 passed in Civil Appeal No. 5245 of 2004, the Hon ble Supreme Court remanded the case for examination by this Court. While remanding the case, the Hon ble Supreme Court, vide order dated 13th August, 2004 has, inter alia, recorded as under : .. In this regard, the learned senior counsel appearing on behalf of the appellants has placed reliance on Rule 5(3) of the Customs Valuation Rules, 1988 which lays down that in applying this rule, if more than one transaction value of identical goods is found, the lowest such value shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son Electronics Pvt. Ltd. are totally different from the facts and circumstances of the present case and therefore, the ratio thereof is not at all applicable. 10. It is submitted that having regard to the Rule 5(3) of the Valuation Rules, the Settlement Commission, ought to have settled the case in respect of the 7 shipments for ₹ 3 lacs instead of ₹ 23,01,077/ . It is further submitted that sub-section (7) of Section 127C, as it stood at the relevant time, enjoins on the Settlement Commission to pass an order in accordance with the provisions of the Act which necessarily encompass the Valuation Rules, framed thereunder. 11. It is submitted that this Court in Aurora Fibers Ltd. v. Union of India, 2009 (243) E.L.T. 327, while dealing with the case of imposition of penalty by the Settlement Commission, held after noticing sub section (7) of Section 127C of the Customs Act, that the Settlement Commission passed an order in accordance with the provisions of the Act, which in that case, was with reference to Section 124 of the Customs Act. The ratio of this case applies also to the present case, because, in the present case, the Settlement Commission ought to have fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners have adopted the course of settlement it has to be governed by the provisions of the said Chapter XIVA of the Act. Resultantly, the benefit, which could have been availed when the matter of determination of duty was before a customs officer is not attracted to the cases of a settlement undertaken under the provisions of Chapter XIVA of the Act. 16. It is further submitted that in the first instance, if the petitioners felt that no import duty was payable in respect of the 7 Bills of Entry, there was no occasion for the petitioners to prefer an application before the Settlement Commission more so when in respect of the remaining 3 Bills of Entry, the petitioners had accepted and paid the customs duty. If according to the petitioners, no customs duty was payable and/or customs duty different to what is determined was payable then on the plain language of Section 127B of the Act, the petitioners application before the Settlement Commission was not maintainable. An application under Section 127B of the Act would be maintainable only if it discloses duty liability, which had not been disclosed to the proper officer. Obviously, a disclosure contemplated is in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable as detailed in Chart IV to the show cause notice. 21. The allegation in respect of 7 shipments contained in Paragraph 8.3 of the show cause notice, is reproduced hereunder : 8.3 Further, similarly, a separate Chart IV has been prepared showing the amount of customs duty evaded in 7 consignments imported by M/s. MAPL from M/s. Pearl Industrial Company, Hong Kong during the period August, 1995 to June, 1996 for which the corresponding export declarations could not be received from Hong Kong Customs Excise Department as this did not keep records beyond 2 years. The chart has been prepared on the basis of value given in export declarations received from Hong Kong Customs for exactly identical goods and the actual value of the goods as admitted by Shri Maninder Pal Singh Bakshi in his statement dated 15-4-1999. The Chart IV is annexed herewith this show cause notice. (Refer Annexure No. 14). It is therefore clear that the show cause notice sought to redetermine the value of 7 shipments based on the value of exactly identical goods . 22. Rule 5(3) of the Valuation Rules provides how the value of such imported goods should be determined and is reproduced hereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory on the part of the respondents to adopt the lowest value of such transaction value of contemporaneous imports of identical and similar goods, as required under Rule 5(3) and Rule 6(3) of the Valuation Rules. 26. Though it is true that settlement and adjudication are two different proceedings under the scheme of the Act, it is not as if the Settlement Commission can settle the case de hors the provisions of the said Act. As pointed out by the petitioners, this Court has held in its decisions in the cases of Aurora Fibers Ltd. (supra) and Kamat Printers Pvt. Ltd. (supra) that the Settlement Commission must also pass orders in accordance with the provisions of the said Act, as provided for in sub-section (7) of Section 127C of the said Act. It therefore follows that in settling the case of undervaluation, the Settlement Commission is also required to determine the duty liability by adopting the lowest value in terms of Rule 5 and Rule 6 of the Valuation Rules. The Settlement Commission cannot ignore and/or overlook the provisions of Rule 5 and Rule 6 of the Valuation Rules. Reference to Section 127 I is irrelevant in the facts and circumstances of the present case as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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