TMI Blog2001 (10) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... go arrival-cum-invoice notice from M/s. Emery World Wide, asking them to take delivery of 300 numbers of Acer CD ROM Drives arrived under HAWB No. 5500717618, dated 17-7-2000. In the said letter, they had also stated that they had not placed any such order for import purposes and they had further stated that they had not made any import so far. On a scrutiny of Bill of Entry, it was noticed that the Bill of Entry No. 235337, dated 19-7-2000 was filed in the name of M/s. Goutham Enterprises for clearance of 300 numbers of Acer CD ROM Drive, 50 X, by CHA, M/s. Sanjay Forwarders Pvt. Ltd. The Bill was assessed accepting the declaration made by the importer and was pending for payment of duty. On 20-7-2000, one Shri P. R. Sivaramakrishnan, Regional Manager (South India) of M/s. Emery World Wide (1) Pvt. Ltd., appeared before the department in person and in his voluntary statement, has stated that one Shri S. Janakiraman, the fourth respondent herein who normally comes for collecting the delivery order of M/s. Moon Star Automation Pvt. Ltd., the third respondent herein, had collected the delivery order pertaining to M/s. Goutham Enterprises stating that he will submit the authorisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57,87,200/- As the goods did not confirm to the declaration made in the Bill of Entry, the same were seized under a mahazar on the reasonable belief that the goods are liable for confiscation under Sections 111(d) and (m) of the Customs Act, 1962 (hereinafter referred to as "the Act"). 4.Shri V.C. Mohan, the second respondent herein, in his voluntary statement before the department dated 24-7-2000 has stated that he is the Director of M/s. Moon Star Automation P. Ltd., that the company is engaged in the import and trading of computer parts and accessories, that he is a regular importer at ACC, Meenambakkam, Chennai, that he wanted to make some quick money, that he approached one Shri Shekar of Singapore, that he was told by him that import of Mobile Phones into India was having good profit margin, that if the same were brought into India without declaring them they would be making greater profit, that they did not want to import the same in their own name so that they cannot be held responsible if detected by the customs authorities that he approached one by name Shri Janakiraman, a clearing clerk and that he has been advised to book the consignment in the name of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Sanjay Forwarders P. Ltd., and Goutham Chand Jain of M/s. Goutham Enterprises had already stated. Further investigation was carried on and statements of other individuals were also obtained. Based upon the above said investigation, a notice dated 19-9-2000 under Section 124 of the Act was issued to respondents 2 to 4 and M/s. Goutham Enterprises. 5.A proposal for detention of the second respondent under COFEPOSA Act, 1974 was also sent to the Government and accordingly a detention order was issued to the second respondent. It is at this stage, respondents 2 to 4 filed application before the Customs and Central Excise Settlement Commission (hereinafter referred to as "the Commission") under Section 127B of the Customs Act, 1962. The said application was filed on the ground that the import was made by M/s. Moonstar Automation P. Ltd., in the name of M/s. Goutham Enterprises and the second respondent claimed the goods before Customs due to some mis-understanding between them, that on examination of the goods, huge discrepancy in the description and value of the goods were found and therefore, they filed the application as the issue to be decided is a case as defined under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been infringed nor he has sustained any injury. Secondly, learned Counsel submitted that the goods imported are not prohibited goods and these goods can be released on payment of redemption fine and therefore, the goods are not automatically liable for confiscation. In such circumstances, even if the goods were not declared in the Bill of Entry, the import cannot be considered as smuggling goods. Thirdly, learned Counsel submitted that the application filed before the Commission is with reference to "a case" as defined under Section 127A(b) of the Act. The second respondent is also entitled to make an application in terms of second proviso to Section 127B of the Act, which prohibits an application only in case of the goods to which Section 123 applies or to the goods in relation to which any offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985) has been committed. In this case, the goods are not covered under Section 123 of the Act. Since the Cellular Mobile Phones are not the prohibited goods, they can very well be imported. In the absence of any prohibition for the second respondent to approach the Commission in respect of the goods not covered unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outright smuggling of Cellular Mobile phones in quise of the import of the Acer CD ROM Drives. On the basis of the Investigation and the statements recorded from respondents 2 and 4 and Goutham Chand Jain of M/s. Goutham Enterprises and others, a show cause notice under Section 124 of the Act was issued on 19-9-2000 by the Deputy Commissioner, SIIB, who is subordinate officer to the writ petitioner herein. A recommendation has also been made to the State Government for initiating action against the second respondent for detention under COFEPOSA. Prior to the above, the second respondent was arrested on 25-7-2000 under the supervision of the petitioner and was remanded to judicial custody. Paragraph 21.0 of the show cause notice dated 19-9-2000 reads as under : In view of the above, Shri V.C. Mohan, Shri S. Janakiraman"21.0 are hereby called upon to show cause the Commissioner of Customs (Airport), Chennai within 30 days from the date of receipt of this notice as to why : I. the value of the goods should not be revised to Rs. 43,56,189/- (CIF) and Rs. 57,87,200/- (MV) from Rs. 4,71,450/- (CIF); II. the goods should not be confiscated under Section 111(i) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Commission under Section 127B of the Act. Under Section 127C of the Act, on receipt of an application under Section 127B of the Act, the Settlement Commission shall call for report of 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. As per second proviso to Section 127C of the Act, when a report was called for from the Commissioner, he shall furnish such a report within a period of one month on 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 application and the date of such hearing shall be communicated by the Settlement Commission to the applicant and the Commissioner of Customs within a period not exceeding two months from the date of receipt of such application. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and the same is proceeded with and disposed of by the Commission when the very power of the Commission to entertain the application is questioned by the writ petitioner. The issue estoppel as pleaded by the second respondent cannot be applied to the facts of the present case as the mere payment of the additional liability of customs duty by the second respondent will not disentitle the petitioner from questioning the jurisdiction of Commission under the provisions of the Act. Hence, I do not find any merit in the submission of the learned Counsel for the second respondent. 12.In view of the above findings as to the maintainability of the writ petition, let me consider the issues 1 and 2. The establishment of Settlement Commission has some background. Serial No. 83 of the List I (Union List) of the Seventh Schedule to the Constitution of India, refers to "duties of customs including export duties". Under the said List, number of statutes for levy of duties and collection of customs depending on mode of import were enacted and one such enactment was the Customs Act, 1962 (No. 52 of 1962). The said law provides for levy and collection of duty of customs on goods imported into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be now seen the relevant provisions relating to Settlement of cases : "Section 127A(b) : "Case" means any proceedings under this Act or any other Act for the levy, assessment and collection of customs duty, or any proceeding by way of appeal or revision in connection with such levy, assessment or collection, which may be pending before a proper officer or the Central Government on the date on which an application under sub-section (1) of Section 127B is made : Provided that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause. Section 127B : Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, at any stage of a case relating to him make an application 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 lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, unless the Presiding Officer of the Bench extends the said period of two months, after recording the reasons in writing. A copy of every order under sub-section (1) shall be sent to(2) the applicant and to the Commissioner of Customs having jurisdiction." There cannot be a dispute that the powers of the Settlement Commission shall be restricted only to some of those areas enumerated under Chapter XIVA of the Customs Act and not beyond that. Under Section 127A(b) of the Act, "Case" means any proceeding under this Act or any other Act for the levy, assessment and collection of customs duty. Under Section 127B of the Act, any importer, exporter or any other person may, at any stage of a case relating to him make an application to the Settlement Commission 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 in respect of which he admits short-levy on account of mis-classification or otherwise of goods. In order to avail the benefit of filing of an application under Section 127A of the Act, an importer, exporter or any other person should first establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bill of Entry could be called as goods smuggled and the issue cannot be called as a mis-classification as contended by the learned Counsel for the second respondent to bring the "Case" under the definition of Section 127A(b) of the Act and to sustain the application under Section 127B of the Act. 14.The Supreme Court had an occasion to consider a similar provision of Section 245A(b) of the Customs Act in Commissioner of Income Tax, Madras v. Express Newspapers Ltd. [1994 (2) S.C.C. 374]. While considering the power of the Settlement Commission to entertain the application under the relevant provisions of the Income-tax Act, the Supreme Court held - "If the Assessing Officer (or the income-tax authority) has already discovered it and has either gathered the material to establish the particulars of such income or fraud fully or is at a stage of investigation/enquiries where the material gathered by him is likely to establish the particulars of such income or fraud, the assessee cannot be allowed to defeat or forestall, as the case may be, the entire exercise of the income-tax authorities just by approaching the Commission. In such a case, it cannot be said that he is acting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other sum chargeable or imposable …......... under this Act has been established". Now, so far as the assessment year 1977-78, is concerned, the draft order does bear out the aforesaid facts and since the assessee's case and all the material facts are one and the same for all the three assessment years (as set out in its own application filed under Section 245C) it must be said that the very same facts also establish the said factors even with respect to the two latter assessment years. In the circumstances, it must be said that the main limb of sub-section (1A) was fully satisfied in this case. No valid or relevant reasons have been assigned by the Commission, within the meaning of the proviso to sub-section (1A) to admit the application for the two latter assessment years. It was a gross case where the assessee brazenly and deliberately perpetrated fraud upon the Revenue with a view to evade the taxes legitimately and lawfully payable by him. The fraud played by him, which was discovered by the Income-tax Officer even by the date of submission of report by the Commissioner, disentitles the assessee from claiming that this case should be admitted for settlement by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (CRI) 1326]. That was a case arose under the Negotiable Instruments Act, 1881 and the Supreme Court held, "If a compliant is found to be premature, it can await maturity or be returned to the complainant for filing later and its mere presentation at an earlier date need not necessarily render the complaint liable to be dismissed". On the facts of the case as discussed above, I do not find that the said judgment referred to by the Commission is applicable to the present case as the issue in entertaining the application does not fall on the category of premature but, it relates to the power of the Settlement Commission to entertain the very application under Section 127B of the Act. I do not also accept the conclusion arrived by the Commission to entertain the application on the ground that even though the Bill of Entry has been filed in respect of certain goods, the second respondent has complied with proviso (a) to Section 127B(1) of the Act, in view of my findings above in regard to the jurisdiction of the Commission to entertain the application under the said Act. It is also to be noted that even though the Commission has found that there were some inconsistence stand taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in relation to the action taken under Section 111(i) and (m) of the Act, relating to confiscation of goods and imposition of penalty should be ignored. When a notice is considered, it should be considered as a whole. As per para 21.0 (ii) and (iii) of the show cause notice, it is clear that they do not relate to a case of levy, assessment and collection of customs duty, which would fall under the definition of "case" under Section 127B of the Act to give cause of action for the second respondent to make an application before the Commission. Hence, for the above reasons, I do not agree with the submissions of the learned Counsel for the respondent that it is a case as defined under Section 127A(b) of the Act. When once this Court comes to a conclusion that the facts and circumstances of the case does not indicate a case of levy, assessment and collection of customs duty and short-levy on account of this classification or otherwise of goods, the application filed by the second respondent cannot be brought under Section 127B of the Act. When once the said conclusion is arrived, the submission of the learned Counsel for the second respondent as to the second proviso to Section 127B ..... 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