Madras High Court
M/S.Bond Stores Pvt. Ltd vs Customs & Central Excise Settlement on 21 March, 2011
Author: R.Sudhakar
Bench: R.Sudhakar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 21-3-2011
CORAM:
THE HONOURABLE MR.JUSTICE R.SUDHAKAR
W.P.No.5916 of 2008
and M.P.No.1 of 2008
M/s.Bond Stores Pvt. Ltd.,
Represented by its Director
Mr.Ajay K.Menon
VII/1131, Shreyas
Kappalanandimukku
Cochin. ... Petitioner
Versus
1. Customs & Central Excise Settlement
Commission
Additional Bench
II Floor, Narmada Block
Custom House,
No.60, Rajaji Salai
Chennai 1.
2. Commissioner of Customs (Imports)
Custom House
No.60,Rajaji Salai
Chennai 1.
3. The Assistant Commissioner of Customs (DIU)
Custom House
No.60,Rajaji Salai
Chennai 1. .... Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India for the relief of issuance of writ of certiorarified mandamus to call for the records of the first respondent culminating in the Final Order dated 28.2.2008 issued from file C.No.VIII/10/95, 103-109/2007 SC quash the same and direct the first respondent to reconsider the application on merits with the assistance of the Commissioner (Investigation).
For Petitioner :- Mr.S.Murugappan
For Respondents :- Mr.T.R.Senthilkumar
Senior Standing Counsel
O R D E R
The above writ petition is filed for issuance of a writ of certiorarified mandamus to call for the records of the first respondent culminating in the Final Order dated 28.2.2008 issued from file C.No.VIII/10/95, 103-109/2007 SC quash the same and direct the first respondent to reconsider the application on merits with the assistance of the Commissioner (Investigation).
2. The writ petition is filed challenging the final order of the first respondent dated 28.2.2008 which reads as follows:-
"25. Accordingly, we find no alternative but to send the case back to the jurisdictional Customs Officer under Section 127I of the Customs Act. He shall dispose of the case in accordance with the provisions of the act as if no application under Section 127B has been made."
3. The brief facts which are necessary for the disposal of the present writ petition are as follows:-
The petitioner is operating a duty free shop in Chennai Port and based on the investigation done a show cause notice in No.OS-16/2006-DIU dated 1.3.2007 demanding customs duties and imposing penalties on the company and the officers of the company was issued. The petitioner filed a case before the first respondent for settlement of the case by admitting a total liability of Rs. 67,05,357/-. The case was admitted by the first respondent by its order No. 14/2007-Cus dated 4.6.2007. Even before the admission of the case, at the time of investigation the petitioner paid Rs.25 lakhs towards duty involved on 30.8.2006 and Rs. 10 lakhs on 8.9.2006 and further sum of Rs. 10 lakhs on 20.9.2006. The petitioner also furnished bank guarantee and based on a joint discussion with the respondent department, the petitioner gave a letter dated 2.7.2007 asking the department to encash the bank guarantee for Rs. 42,55,000. This was followed by a reminder dated 26.7.2007. It however, appears that the department informed the Settlement Commission that it has not encashed the bank guarantee by letter dated 31.7.2007. It is pertinent to point out that the bank guarantee given by the petitioner on 24.8.2007 is to the tune of Rs. 1,23,55,000. At this point of time, the first respondent Settlement Commission after admitting the case by order No. 14/2007-Cus proceeded to resolve the matter as provided in Chapter XIV-A which relates to the settlement of cases. Section 127C prior to amendment provides the procedure on receipt of an application under Section 127B and the relevant portions which would be useful for the disposal of the writ petition are as follows:-
"127C Procedure on receipt of application under Section 127B (1) on receipt of an application under Section 127B, the Settlement Commission shall call for a report from 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 :
Provided that an application shall not be rejected under this sub-section unless an opportunity has been given to the applicant of being heard:
Provided further that the Commissioner of Customs shall furnish such report within a period of one month of 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, unless the presiding officer of the Bench extends the said period of two months, after recording the reasons in writing.
(2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Commissioner of Customs having jurisdiction.
(3) Subject to the provisions of sub-Section (4), the applicant shall, within thirty days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the amount of additional duty admitted by him as payable and shall furnish proof of such payment to the Settlement Commission.
(4) If the Settlement Commission is satisfied, on an application made under sub-section (1) that the applicant is unable for good and sufficient reasons to pay the amount referred to in sub-section (3) within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments, if the applicant furnishes adequate security for the payment thereof.
(5) Where the additional amount of customs duty referred to in sub-section (3) is not paid by the applicant within the time specified or extended period, as the case maybe, the Settlement Commission may direct that the amount which remains unpaid, together with simple interest at the rate of eighteen per cent per annum or at the rate notified by the Board from time to time on the amount remaining unpaid, be recovered as the sum due to the Central Government by the proper officer having jurisdiction over the applicant in accordance with the provision of Section 142.
(6) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner of Customs having jurisdiction and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner (Investigation) to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case.
(7) After examination of the records and the report of the Commissioner of Customs received under sub-section (1) and the report, if any of the Commissioner (Investigation) of the Settlement Commissioner under sub-section (6) and after giving an opportunity to applicant and to the Commissioner of Customs having jurisdiction to be heard either in person or through a representative duly authorised in this behalf and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner of Customs or the Commissioner (Investigation) under sub-section (1) or sub-section (6).
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9. Every order passed under sub-section (7) shall provide for the terms of settlement including any demand by way of duty, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud, or misrepresentation of facts. "
4. In accordance with the above provisions, the first respondent directed the Commissioner (Investigation) to conduct an investigation on rival claims and furnish a factual report as provided under Section 127C(6). Accordingly an investigation was conducted by the Commissioner (Investigation) and a report in C.No. VIII/10/95/2007-SC dated 18.2.2008 was filed and it is a detailed report which gives the various parameters that were considered for determining the duty liability for the purpose of settlement commission to come to a conclusion as to how the issue should be resolved. Paragraph 9 of the report clearly states the nature of the order passed by the first respondent which runs as follows:-
"9. In view of the irreconcilable positions taken by the rival parties, Addl. Bench hereby directs Commissioner (Investigation) attached to this Bench to conduct investigation on rival claims and file a factual report to the Bench. Any other matter not referred to above but relevant to the facts in issue may also be investigated and reported. "
It is, therefore, clear that the commission took a conscious decision to order investigation by the Commissioner.
5. On the basis of the order of the first respondent, the investigation was thoroughly done and a detailed report was filed. The report proceeds to give a detailed working sheet showing as to how the calculations as regards the quantum of duty demanded in the show cause notice and the quantum of duty admitted by the petitioner should be considered. In paragraph 2.4 the various heads like duty demanded and admitted in application, duty demanded and duty accepted after first joint sitting and proportionate duty demanded and duty accepted after scrutiny of Bond Register have been tabulated and in this tabulated column the demand of duty as per show cause notice is shown as Rs.1,69,22,098.80. The said tabulation containing category wise split up of the originally admitted duty along with the revised versions. The category wise duty calculation as per report is extracted below:-
Category of Bills Total No. of cash memos Duty demanded in SCN and admitted in application Proportionate duty demand and duty accepted after joint sitting 1 Proportionate duty demand and duty accepted after scrutiny of Bond Register No signature of crew member 102 42,80,113.52 10,16,323.04 25,70,027 25,70,027 20,13,102 20,13,102 No such crew member 54 12,05,987.90 12,05,987.90 6,04,451.90 6,04,451.90 4,73,467 4,73,467 Purchase denied by Master 52 19,25,870.66 14,76,814 11,94,895.18 7,83,278,16 9,36,010 6,13,590 No such Vessel 21 5,63,607.49 Nil 2,36,736.22 Nil 1,85,435 Nil Sales made to Coastal Vessels 58 25,05,588.49 Nil 12,20,357.23 4,25,959.64 9,55,906 3,33,654 Signature not tallying 324 64,40,930.75 30,06,228.46 32,34,341.34 Nil 25,33,571 Nil Total Duty demanded in SCN Total Duty Accepted 611 1,69,22,098.80 67,05,353.63 90,61,809 43,83,717.17 70,97,432.42 34,33,814.25
6. The investigating authority has given various reasons as to why after investigation the duty liability has been scaled down from that of the duty demanded in the show cause notice and all the particulars have been thoroughly investigated and analysed in the report which runs to nearly 17 pages. For the purpose of determining the issue, the Commissioner (Investigation) also relied upon the final order passed by the Settlement Commission in its earlier Final order No.57/2007 in the case of M/s. Flemingo DFS. On the basis of the said earlier order passed by the Settlement Commission and considering material documents and the evidence produced by the Revenue as well as the petitioner, the investigation report was filed.
7. In paragraph 4.4. of the final report, the Commissioner (Investigation) has recorded the operative portion of the admission order dated 4.6.2007 passed by the Settlement Commission directing the Revenue to encash the bank guarantee given by them to realise the amount and also to pay the balance amount of admitted duty. The Commissioner (Investigation) has also stated that the petitioner has paid Rs.25 lakhs towards duty and the bank guarantees were encashed by the Department during January 2008 insofar as the admitted duty of Rs.67,05,347. After receipt of the report, the Settlement Commission, heard the parties on 20.2.2008. The petitioner made their written submissions and they also relied upon the earlier decision of the Settlement Commission in the case of M/s. Flemingo (DFS) Pvt. Ltd., .
8. The first respondent Bench however, on considering the entire arguments made on either side and after narrating the various events that had happened suddenly took a view that in respect of the duty demand there is a huge gap of Rs.1.07 crore i.e more than three times of the admitted amount. The Bench was of the view that the disclosure made by the petitioner cannot be considered as a full and true disclosure as there were demonstrable contradictions, inconsistencies and incompleteness in the disclosures made one after another by the petitioner. The Bench relied upon the decision of the Apex Court in the case of Union of India Vs. Anil Chanana (2008 TIOL 09 SC -CUS) to come to the conclusion that full and true disclosure of facts relating to the case have not been made by the petitioner and accordingly remitted the case to the jurisdictional Customs Officer under Section 127I of the Customs Act. Challenging the same the present writ petition has been filed.
9. Primarily Mr. S.Murugappan, the learned counsel appearing for the petitioner contended as follows:-
(i). The admitted fact is that the show cause notice has been issued for a higher sum of Rs.1,69,22,099. After the joint sitting held between the department and the petitioner, as per order of the Settlement Commission to the Commissioner (Investigation), the department conceded that the proportionate duty demand should be Rs.90,61,809 against which the petitioner accepted a liability of Rs.43,83,717.17. Thereafter, on the basis of the investigation report and the earlier orders of the Settlement Commission the Department conceded that the show cause notice demand should be Rs.70,97,432.42. The petitioner however, accepted for Rs. 34,33,814.25. The basis for computation of these figures was based not merely on the plea taken by the petitioner but also on the basis of the investigation and analysis of the documents by the department which can be discerned from various instances cited in the investigation report. When the matter was investigated on the basis of the order of the first respondent Settlement Commission, the claim of the department was split up into various categories which are as follows:-
1. No signature on the crew member/master in the cash bill.
2. No such crew member master available at the time of sale
3. Purchase denied by the master/crew member
4. No such vessel berthed during the date of sale
5. Sales made to coastal run vehicles
6. Signature not tallied with the declaration made by crew to the customs.
(ii). All these categories were analysed and the objections of the petitioner and the observation of the department are set out in the relevant paragraphs of the report. The major duty component falls under category 6 which is based on the earlier orders of the Settlement Commission in the case of M/s.Flemingo (DFS) dated 4.6.2007.
(iii) On the basis of this report, the Settlement Commission should have decided the issue and computed the duty liability for settlement of the case. Without doing so, the first respondent has thrown the entire blame on the petitioner as if the petitioner has been making different disclosures each time one at variance with the other. This fact is not correct as admittedly in paragraph 24 of the order it has been recorded that the Revenue has conceded that there were errors in the calculation and the demand in the show cause notice should be brought down from Rs.1,69,22,099 to Rs.1,41,60,362. It will be necessary to extract paragraph 24 of the order which is as follows:-
24. The Bench considered carefully the S.C.N, the submissions and the rival claims of the applicant and the Revenue. The applicant has made disclosures many a time, each one at variance with the other. The Revenue has conceded that there were some errors in the calculation and brought down the demand from Rs.1,69,22,099/- to Rs.1,41,60,362/- As against that the amount admitted by the applicant is only Rs.34,33,814/-. There is thus, a huge gap of about Rs.1.07 cr. i.e. more than three times the admitted amount. The evidence furnished by this department is based on official records and the bills issued by the applicant and as such the demand of the department is prima facie corroborated. The applicant has been adopting various basis for making varying disclosures from time to time. In view of the above, the Bench feels that the disclosure of limited liability by making shifting exclusions made by the applicants cannot be considered full and true, especially in this case which is fraught with gross fraudulent and illegal practices by the applicant over a long period of time and where there are demonstrable contradictions, inconsistencies and incompleteness in the disclosures made one after another by the applicant.
When the department itself accepts difference in calculation of duty liability, the department is not justified in blaming the petitioner of varying disclosure which plea is also denied.
(iv). The petitioner at the time of admission of the application has clearly admitted a liability of Rs.67,05,357 as against Rs.1,69,22,099 and the case was admitted vide admission order dated 4.6.2007. Thereafter, the investigation was ordered. The question of calculation arose only because of the direction issued by the Settlement Commission for an investigation report in terms of Section 127C (6). Once the investigation was going on the petitioner was allowed to participate and point out the error in calculation and only at that point of time, the mistakes could be culled out and pointed out so as to work out proper duty liability. It was, therefore, contended that the first respondent without considering the detailed investigation report has thrown the entire blame on the petitioner without any justification. The so called huge duty difference between the show cause notice and the admitted liability cannot be a ground to throw away the case after admission. The petitioner has co-operated with the department.
(v). The investigation report and the calculations made therein is partly based on the earlier order passed by the settlement commission in a similarly situated case in M/s.Flemingo DFS and, therefore, even as per the department's case there is a clear and distinct dispute with regard to the duty demanded. In both cases the Revenue has admitted that there is an error in calculation in respect of the amount demanded as per the show cause notice. Such being the case, the first respondent cannot throw the blame on the petitioner and state that there is variance in the disclosures made by the petitioner. According to the petitioner there is only one disclosure at the time of application to an admitted duty liability of Rs. 67,05,357/-. The various calculations that are found in the investigation report are based on the documents analysed by the investigating authority. It is on the basis of the direction issued by the first respondent Settlement Commission. The petitioner cannot be found fault for these variations. It is for the Settlement Commission to arrive at a proper conclusion particularly in view of the earlier order passed in the case of M/s. Flemingo DFS where it is to be noted that duty demand on each head varies. Without going into merits, the Settlement Commission came to an erroneous conclusion that there are more than one disclosures made by the petitioner. It is pleaded that what is contained in the investigation report cannot be called as disclosure by the petitioner. The enquiry conducted by the competent authority in terms of Section 127C(6) cannot be called as disclosure of the petitioner. It is only an investigation and therefore the first respondent's observation that the disclosures were made one after another by the petitioner and there were demonstrable contradictions, inconsistencies and incompleteness in the disclosures has no basis and it is based on misconception of the provision of law.
10. The learned counsel appearing for the petitioner also distinguished the case relied upon by the first respondent in UNION OF INDIA VS. ANILA CHANANA AND ANOTHER (2008 IND LAW SC 112) stating that the facts are not similar to the facts of the present case as the said decision of the Apex Court relied on by the first respondent relates to a case of compounding of an offence in terms of Section 137(3) of the Act . In that case the Apex Court has accepted the contention of the Union of India that at time of disclosures there should not be any inconsistencies or incompleteness and the person who made the disclosure in the application for compounding the offence did not make true and proper disclosures whereas in the present case, the learned counsel stated that the admitted liability was Rs. 67,05,357/- whereas even as per the calculations made in the investigation report the errors were pointed out only to show that the demand made in the show cause notice is without proper basis. There is no subsequent disclosure by the petitioner except pointing out the infirmity in the demand. In such view of the matter the learned counsel for the petitioner stated that the decision of the Apex Court relied on by the first respondent will not be applicable to the facts of the present case.
11. Mr. T.R.Senthilkumar, the learned counsel appearing for the respondents pleaded that going by the investigation report, the various details contained therein require a proper adjudication by the competent adjudicating authority and the Settlement Commission, in view of the various inconsistencies pointed out in the investigation report, declined to entertain the application for settlement. He also stated that the petitioner did not co-operate with the settlement Commission by making the payment in time.
12. As regards the contention of the department that the petitioner has not co-operated with the Settlement Commission by paying the admitted duty, this court is not able to accept the same for the simple reason that part duty was paid even before the issuance of show cause notice, at the investigation stage, and the balance amount was directed to be realised by way of encashing the bank guarantee by the Settlement Commission in its admission order dated 4.6.2007. Paragraph 16 of the said order is usefully extracted hereunder:-
16. In view of the representation from the advocate for the applicants, we grant them 15 days time to sit with the Revenue and verify the documents together and arrive at a consensus if possible. Revenue should ensure that all the relevant documents are made available to the applicants so that further disputes are avoided. This exercise should be done within 15 days and report compliance. The Revenue may encash the Bank Guarantee given by them to realise the amount. In the meantime, the applicants have fulfilled all the conditions for admission. Accordingly, the Bench is of the view that the application merits admission. The application is, therefore, admitted and allowed to be proceeded with under Section 127C(1) of the Customs Act, 1962 and the applicants are directed to pay the balance amount of admitted duty within 30 days from the date of receipt of this order.
13. It could be seen from the various letters which have been pointed out by the learned counsel for the petitioner that the petitioner has already informed the Revenue to encash the bank guarantee for the balance amount by letter dated 2.7.2007 followed by reminder dated 26.7.2007. It is the Department which refused to encash the bank guarantee for one reason or other. However, thereafter it comes to light that the department had encashed the bank guarantee and the delay if at all could be attributed to the Revenue and not to the petitioner. The fact that the admitted liability has been discharged by the petitioner is admitted in the investigation report in paragraph 4.4.which has been already extracted above.
4.4 Regarding Bank Guarantee:-
The SCN demanded Rs.1,69,22,099/- as customs duty evaded. Initially the applicants admitted an amount of Rs.67,05,347/-. They had already paid Rs.25 lakhs towards duty. The Bench directed vide Admission order dated 4.6.2007 as follows:
"The Revenue may encash bank guarantee given by them to realise the amount... The applicants are directed to pay the balance amount of admitted duty within thirty days from the date of receipt of this order.
The same were encashed by the department during Jan 2008.
Therefore, the plea of non-compliance of the direction of the Settlement Commission for payment of the admitted duty does not stand to reasons.
14. Insofar as the first contention is concerned , the Settlement Commission has chosen to admit the case and has called for an investigation by the Commissioner in accordance with the Section 127C(6). The said provision makes it clear that if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner (Investigation) to make further enquiry or investigation and furnish a report. Thereafter in terms of Section 127C (7) the Settlement Commission has to examine the records and the report of the Commissioner (Investigation) and after giving the applicant an opportunity of being heard and on examination of further evidence as may be placed before it or obtained by it, the Settlement Commission can pas appropriate orders on the matters covered by the application. Clause (7) of Section 127C also provides that the Settlement Commission may pass appropriate orders on any other matter relating to the case not covered by the application as well, which clearly reveals that the Settlement Commission has wide powers to pass appropriate orders once an application is admitted.
15. In this case, the Commissioner (Investigation ) has given a detailed report running to 17 pages and has considered six categories of the claim in the show cause notice. He has also given a working sheet on the basis of which the show cause notice has to be reconsidered. It is an admitted fact that the original demand has been scaled down by the Investigating Commissioner based on the verification of the records. The Commissioner (Investigation) also relied on the earlier order passed by the Settlement Commission to determine the duty liability and as to the manner in which the case should be resolved. At no point of time, the Commissioner (Investigation) has stated that the petitioner has not co-operated with the Settlement Commission nor are there material to substantiate the reasons given by the Settlement Commission that there are demonstrable contradictions, inconsistencies and incompleteness in the disclosures made by the petitioner in the Commissioner's report. It is, therefore, unclear as to how the first respondent could come to the conclusion that the petitioner has shown contradictions, inconsistencies and incompleteness in the disclosure. There is no basis for this finding. The finding of the first respondent that the petitioner made disclosures one after another is a fallacy. There was only one application for settlement under Section 127C and thereafter an enquiry was conducted by the Commissioner (Investigation) based on the order passed by the Settlement Commission in terms of 127C (6). At the time of enquiry the petitioner has pointed out his version of the case and that has been accepted and a report has been filed. Therefore, there is no multiple disclosures as stated by the Settlement Commission. This finding of the first respondent is totally erroneous. In the application the admitted duty liability is given and it has been paid. This establishes petitioner's co-operation in the settlement case.
16. In para 24 of the order, the first respondent has observed that the Revenue has conceded that there were errors in the calculation and the demand made in the show cause notice should be scaled down. This is evident from the investigation report. The various methods of calculation clearly reveal that the original demand as per the show cause notice has to be suitably modified or reduced for the purpose of settlement of the case. It is for the Settlement Commission to accept the report or reject the report and pass appropriate orders.
17. The first respondent having sought for a report by the Commissioner (Investigation) has chosen to completely ignore the investigation report in its entirety. This court, therefore, finds that the first respondent has prima facie failed to consider the investigation report on its merits. The Settlement Commission has failed to consider the investigation report submitted by the Commissioner which the Settlement Commission is bound to consider in terms of Section 127C(7) for passing appropriate order under Section 127C(9). Though at one stage the Settlement Commission has stated that the Revenue has conceded there were some errors in the calculation, in paragraph 24 of the order passed by the first respondent it has been stated that the evidence furnished by the department is based on the official records and the bills issued by the applicant and as such the demand of the department is prima facie corroborated. This finding of the first respondent is contrary to the findings in the earlier order in the same paragraph that the Revenue has conceded that there were some errors in the calculation and the demand made in the show cause notice should be scaled down drastically. This is evident from paragraph 24 of the investigation report, which has already been extracted.
18. It therefore, follows that the first respondent has failed to consider the report of the Commissioner (Investigation) and pass appropriate orders and simply shirked its duty by throwing the blame on the petitioner as if the petitioner had been making disclosures many a time each at variance with the other. As pointed out earlier there has been only one disclosure at the time of admission. The clarifications given by the petitioner is only at the time of investigation by the Commissioner (Investigation) who was duly authorised by the first respondent in terms of Section 127C(6). Such clarification or statement cannot be equated to disclosure. Therefore, it is for the first respondent to accept the disclosure originally made on the basis of the investigation report and come to the conclusion as to what will be the appropriate amount that should be demanded by way of duty and what will be the penalty and interest which should be levied for the purpose of settlement. In this case, this court finds that the Settlement Commission has grossly mislead by itself by failing to consider the investigation report which it had called for and thereby fell into error by accepting the untenable plea of the Revenue that there are inconsistencies in the disclosures. Such finding is based on no evidence and contrary to the records. Merely because there is a huge difference in duty between the show cause notice and the admitted amount, the case of the petitioner cannot be thrown out.
19. It will be pertinent to point out that in the earlier case relied upon by the Settlement Commission in M/s.Flemingo (DFS) Pvt. Ltd. the duty demanded was Rs.3,87,63,211 approximately and the amount admitted by the respondents therein was Rs.82,25,502 which was paid and settled. It has to be pointed out that nowhere in the provisions of Chapter XIVA the quantum demanded in the show cause notice and the amount to be settled is to be considered as an issue. It is for the Settlement Commission to decide as to what will be the duty liability to be settled and consequent penalty and interest to be levied.
20. Mr.T.R.Senthil Kumar, the learned counsel appearing for the respondents submitted that aggrieved by the order of the Settlement Commission in the case of M/s.Flemingo (DFS) Pvt. Ltd., the Revenue filed writ petition before this court and the same was dismissed. Thereafter, the Revenue filed an appeal and it is pending. The pendency of the earlier case has no relevance for the disposal of the present case as this Court is deciding the issue relating to the order passed by the first respondent only on the ground that the first respondent has failed to consider the investigation report submitted by the Commissioner (Investigation), which it obtained in terms of Section 127C(6). The first respondent is duty bound to consider the same either way before deciding the case, instead of throwing out the case of the petitioner at the threshold. The reasons given by the first respondent are totally not germane to the issue and not supported by the facts or records or evidence.
21. The reliance placed on the Supreme Court decision in UNION OF INDIA VS. ANIL CHANANA AND ANOTHER (cited supra) as has been rightly pointed out by the petitioner's counsel, it is a case relating to false disclosures at the time of filing the compounding application under Section 137(3). If the petitioner's case is one of false disclosure the 1st respondent Commission would have thrown it out at the threshold. Having admitted the case by an order dated 4.6.2007, it will not be appropriate to state that the disclosures made by the applicant was improper or erroneous. Therefore, the above stated case would not apply to the facts of the present case. Further in the present case, the admitted liability has been paid and encashed by the department. Therefore, the issue to be considered is whether the petitioner's case requires settlement in terms of Chapter 14A or not.
22. For the foregoing conclusion, this court is of the clear view that the first respondent failed to consider the vital and relevant documents viz., the investigation report which had been called for by the Settlement Commission before deciding the issue finally. The non-application of the mind of the first respondent on this vital relevant document clearly goes to the root of the matter. The order impugned suffers from error apparent on the face of the records.
23. This court , therefore, is constrained to set aside the order passed by the Settlement Commission. The matter, however, is remitted back to the first respondent for reconsideration of the issue on the basis of the various evidence adduced and the report of the Commissioner(Investigation). The petitioner shall be given an opportunity at the time of enquiry of the matter on merits. The writ petition is allowed by way of remand. Consequently, the connected M.P is closed. No costs.
krr/ To
1. Customs & Central Excise Settlement Commission Additional Bench II Floor, Narmada Block Custom House, No.60, Rajaji Salai Chennai 1.
2. Commissioner of Customs (Imports) Custom House No.60,Rajaji Salai Chennai 1.
3. The Assistant Commissioner of Customs (DIU) Custom House No.60,Rajaji Salai Chennai 1