Commissioner Of Central Excise And ... vs M/S.Asianet Satellite Communications ... on 23 February, 2011

[Cites 26, Cited by 1]

Madras High Court

Commissioner Of Central Excise And ... vs M/S.Asianet Satellite Communications ... on 23 February, 2011

2.These two writ petitions came to be posted before this Court on being specially ordered by the Hon'ble Chief Justice vide order, dated 19.12.2008. When they were listed before this court on 23.12.2008, this court directed the matters to be listed on 09.01.2009 with a direction to the Registry to give notice to the parties as one of the matter was transferred from the High Court of Kerala on orders of the Supreme Court. Bur for unexplained reasons, the Registry did not circulate the papers. Ultimately, they were listed on 24.3.2010. After hearing arguments, orders were reserved on 7.4.2010. But due to intervening summer vacation and also due to posting at Madurai for three months, orders could not be pronounced. For getting certain clarifications, the matters were again posted before this court on 22.2.2011. After getting those clarifications, the matters were reserved for judgment.

3.The writ petitioner in W.P.No.7931 of 2006 M/s.Asianet Satellite Communications Limited (for short ASCL) originally filed O.P.No.27493 of 2002 before the High Court of Kerala at Ernakulam, seeking for a prayer to set aside the order, dated 13.8.2002 passed by the Customs and Central Excise Settlement Commission at Chennai insofar as it had directed the petitioner ASCL to remit a sum of Rs.1,94,00,860/- as differential duty in the course of fulfillment of export obligation as per the licence granted to them, dated 23.12.1993. They also sought for a direction to the Settlement Commission to accept fulfillment of export obligation on the basis of a consolidated statement furnished by them and also for a direction to the second respondent Director General of Foreign Trade (DGFT), New Delhi to discharge the letter of undertaking given by the petitioner in compliance with conditions of EPCG license and also to order discharging the bank guarantee furnished. They have also sought for a further direction to the second respondent to revise the quantum of bank guarantee to be furnished by the petitioner taking note of the customs duty already paid by the petitioner on 27.2.2001 as also the reduced value of EPCG licence. While ordering notice on the O.P., the High Court of Kerala had granted an interim stay of all further proceedings for recovery of the amount pursuant to the impugned order. The stay was extended from time to time. The High Court had also permitted the ASCL to renew the bank guarantee from time to time.

4.In the meanwhile, the Commissioner of Central Excise and Customs, Cochin who is the third respondent in the O.P., filed a writ petition before this court in W.P.No.29008 of 2003, seeking to challenge the order of the Settlement Commission's final order No.7 of 2002, dated 13.8.2002 and sought for setting aside the same. That writ petition was admitted on 16.10.2003 by this court. In the stay application, only notice was ordered.

5.In the meanwhile, the ASCL moved the Supreme Court under Section 25 of the CPC seeking for a direction to transfer the O.P pending before the Kerala High Court to be heard along with the writ petition pending before this court being W.P.No.29008 of 2003. The said transfer petition (Civil) No.65 of 2005 was ordered by the Supreme Court vide order, dated 13.1.2006. Accordingly, the Kerala High Court had transferred the O.P to this court, which was renumbered as W.P.No.7931 of 2006 and tagged along with W.P.No.29008 of 2003.

6.Since both sides were aggrieved by the same order, it is necessary to set out the circumstances which led to the filing of both cases. M/s.Asianet Satellite Communications (P) Ltd. is engaged in providing services in the field of television network. They had availed Export Promotion Capital Goods scheme (for short EPCG Scheme) in the service sector under Chapter VI-A of the Export Import Policy (for short EXIM), 1992-1997. The EPCG licence issued by the Director General of Foreign Trade (DGFT) permitted the import of cable TV equipments valued at Rs.9,79,51,255/- at concessional rate of duty. The export obligation was fixed at US dollars 124,18,543 within a period of five years from the date of issuance of licence. The ASCL had imported capital goods valued at 19,47,373 US Dollars. Therefore, the DGFT had reduced the export obligation from the original 1,24,18,543 US Dollars to 77,89,491 US Dollars to be achieved within a period of five years from the date of issuance of the licence. The Bank guarantee for a sum of Rs.3,90,55,765.83 was executed by the ASCL on the basis of the original value of licence taking consideration which remained unabated. They also executed a legal undertaking as per condition No.5 of the licence for the discharge of duty liability in the event of failure in fulfilling the export obligation.

7.It is the case of the ASCL that despite their best efforts in realising the foreign exchange through the service of cable TN network to the residents of Kerala, they had to face a number of legal disputes from the small time cable operators. Therefore, they could not fulfill the obligation as agreed to. They had approached the DGFT for extension of period for fulfillment of export obligation. It was agreed upto 22.12.1999. Further efforts to get further extension pursuant to the notice issued, dated 6.4.1999 was not responded by the DGFT even though the original value of the bank guarantee remained unaltered even after the export obligation was lowered by DGFT. It was sufficient enough to cover the quantum of duty as well as interest required to be covered as per the public notice.

8.In the meanwhile, the Department of Revenue Intelligence carried out investigation and seized materials. It is the understanding of ASCL that it is for the DGFT to certify the export performance of the EPCG licence holder and thereafter to take an action against the erring exporters. The petitioner had continuously insisted for discharge certificate from the DGFT for settling the cases. The DRI officers based at Calicut who carried out the investigation, were satisfied that the ASCL had fulfilled more than 50% of the export obligation though it was subsequently worked out to 48%. But, however, the DGFT rejected the case of ASCL and informed that they were not making any actual efforts as required under the EPCG licence.

9.Thereafter, the DRI, Calicut had seized the goods on 3.3.2000 imported by ASCL. The DGFT also instructed the bankers of ASCL, i.e., Federal Bank, Thiruvanandapuram to forfeit the bank guarantee No.36/94 and to remit the account to the Customs account. The ASCL moved the High Court with O.P.No.15605 of 2000 challenging the same. The High Court of Kerala stayed the enforcement of bank guarantee. Subsequently, the period of bank guarantee which was upto 26.7.1997 was extended upto 19.6.2000. In the meanwhile the DGFT by their letter, dated 19.5.1999 informed the ASCL that they are eligible for extension of fulfillment of their export obligation upto 31.3.2000 provided if they make a specific request along with bank guarantee covering the customs duty in proportion to the unfulfilled portion of export obligation together with 24% simple interest. The ASCL did not opt for this extension of export obligation. It was stipulated in the public notice, dated 6.4.1999. Once again, the ASCL moved the Kerala High Court with O.P.No.12798 of 2000 seeking to set aside the seizure of capital goods by DRI. The High of Court of Kerala by its order, dated 29.5.2000 had directed the DGFT to dispose of their representation. It was observed that seizure of goods will continue and final order can be passed by the department only after DGFT passes an order on the representation. The DGFT had rejected the petitioner's request. Thereafter, the ASCL contended that they have realized the foreign exchange to the tune of Rs.12,36,46,725/- for the establishment of network for supply of Satellite TV services in Kerala through their various schemes during the period upto 26.4.2000.

10.A statement dated 26.4.2000 was submitted to the DRI enclosing the certificate received from various banks detailing the quantum of revenue earned by them upto 26.4.2000. A show cause notice was issued on 30.6.2000 by the DRI, Calicut in respect of imports made through Chennai Sea Port. Two other show cause notices were also issued for clearing goods from the other ports such as Thoothukudi and Thiruvanandapuram. The show cause notices contained the details regarding the Bill of Entry. CIF value duty foregone amount, interest. But, however the show cause notice dated 30.6.2000 issued by the DRI, Calicut demanded duty of Rs.2,05,65,192/- together with interest at 24% in respect of imports made through Chennai Sea Port. The total duty foregone covered by all the three show cause notices worked out to Rs.5,53,23,579/- and interest upto 31.10.2000 worked out to Rs.7,89,27,268/-.

11.In respect of the show cause notices, the ASCL filed four separate settlement applications before the Customs and Central Excise Settlement Commission at Chennai purported to be under Section 127-B of the Customs Act, 1962 for settlement. The ASCL for the purpose of settlement pleaded before the Commission admitted its duty liability to an extent of 50% saved as per notification No.160/92 as against the export obligation of Rs.24,57,54,873/-. Their foreign exchange earned worked out to Rs.12,36,46,725/-. Non fulfillment of balance export obligation was pleaded due to reasons beyond their control. Hence, there was no justification for the Customs to confiscate the goods under Section 111(d) of the Customs Act and also to impose penalty under Section 112-A of the Customs Act as well as to demand interest. It was also pleaded that no interest was chargeable on the imported goods since imports were made in the year 1994-95 during which there was no provision to collect interest. The sanction to collect interest on duty came into effect only from September, 1996.

12.The Settlement Commission took up those applications on file and after issuance of notice to the official respondents, by a final order No.7/2002, dated 13.8.2002 issued an order under Section 127C (7) of the Customs Act and settled the issues as follows:

"16.In terms of Section 127C(7) of the Customs Act, 1962, the four applications are settled as follows:

(i)The correct duty liability of the applicant in this case is Rs.4,63,46,499/-. The applicant have paid an amount of Rs.2,69,45,639/- in pursuance to the Admission Order. The balance duty payable by them is Rs.1,94,00,860/-. They shall pay this amount within 30 days from the date of receipt of this order. The detailed work sheet of the duty liability is contained in the annexure enclosed to this order.

(ii)Immunity from payment of fine is granted under Sec.127H of the Customs Act, 1962. The seized capital goods shall be released to the applicant after payment of the balance duty amount mentioned in para (i) supra.

(iii)No interest is chargeable under the provisions of the Customs Act, 1962. There is, therefore, no question of grant of immunity from payment of interest.

(iv)Immunity is granted from penalty and prosecution for offences under the Customs Act 1962 in terms of Sec.127H of the Customs Act, 1962, in respect of the case covered by the applications and the show cause notices in question."

The Commission had found that no interest was chargeable under the Customs Act, 1962 at the relevant time. It felt no need to grant any immunity from the payment of interest. Both parties were aggrieved by the order of the Settlement Commission.

13.While attacking the order, it was the stand of ASCL that the Commission's direction to pay the amount of Rs.1,94,00,860/-, the differential customs duty relatable to unfulfilled portion of export obligation was illegal. The Commission having clothe with extensive power under Chapter XIV-A of the Customs Act and under Section 127B, it enables an application to be made by making full and true disclosure of duty liability to have the case settled. Under Section 127F, the Settlement Commission shall also have power vested in an officer of the Customs under the Customs Act. In terms of Section 127F(2), the Commission has extensive jurisdiction to exercise its power to deal with the function of any officers of customs from the date at which the application under Section 127B was preferred until an order is passed under Section 127J of the Act. Therefore, it has got full power to grant immunity. The power is also given to the Commission to waive levy of any interest otherwise statutorily leviable under the Customs Act. The order passed by the Settlement Commission under Section 127J should be conclusive as to the matters stated therein under the Act or under any law time being in force.

14.The application preferred by the ASCL is for settlement of issues which arose out of show cause notices issued by DRI, Calicut in relation to unfulfilled export obligation corresponding to imports made by the petitioner in terms of EPCG licence. The show cause notices alleged contravention of provisions of the Customs Act. Therefore, the power include even the matters which could be settled by the DGFT. But, the Settlement Commission did not exercise its power as contemplated under the Act. The Settlement Commission's conclusion that the ASCL had discharged only 14% of export obligation and treating the certification given by the DGFT as final and conclusive without independently assessing the quantum of export obligation was erroneous. Since the Customs Officer is empowered to access the differential duty payable by any licensee under the EPCG Scheme, such power is also exercisable by the Settlement Commission in terms of Section 127F(1) of the Customs Act. The petitioner in their application had made a consolidated statement of export/redemption made and also the bank remittance certificate was also produced. They should have exercised the power relating to fulfillment of export obligation to the tune of 47.74% as the same has been supported by two documents mentioned under the EPCG Scheme. Though the DGFT had noted only 14% fulfillment of export obligation, series of correspondence that took place between the ASCL and DGFT which were made available to the Settlement Commission would have shown that the foreign exchange earnings which were produced by ASCL should be accepted. The foreign exchange earnings earned by the petitioner through the TV network service providers should be deemed to be the export of services and it is accepted as a part of service sector in the EXIM policy. The actual percentage of export obligation fulfilled corresponds to nearly 50.31%. Therefore, the Commission's direction to pay differential customs duty of Rs.1,94,00,860/- was illegal.

15.The Settlement Commission need not have accepted the cut off date prescribed by the department and it should not have gone by the certification given by the DGFT. There was certification available by bankers in respect of foreign exchange earnings made by it corresponding to the service rendered by the petitioner which need not be doubted. The money outflow in favour of the petitioner in various NRE accounts are accompanied by a corresponding diminution on account of the concerned in the different banks, authorised dealers in foreign exchange. Therefore, the nexus between the EPCG licence and earning in the foreign exchange has been clearly established. Hence the Settlement Commission should have accepted the stand of the ASCL that they had fulfilled 50% of the duty obligation. When the ASCL gave an undertaking to discharge the export obligation by furnishing the bank guarantee, it was originally fixed at Rs.3,90,55,765.83 on the basis of the original export obligation projected as per the licence. A revision in the value of goods permitted to be imported and consequent reduction of export obligation to be fulfilled was not reflected against the corresponding diminution in the bank guarantee. But the ASCL was directed to keep the bank guarantee for the entire amount. Therefore, the Settlement Commission should have directed the DGFT to extent the time for fulfillment of the export obligation, especially when the activities of the company continues.

16.It was further submitted that the Commission also did not consider the circular issued under the EPCG scheme which has been issued in exercise of power under Section 151A of the Customs Act. By the said power, the Board's circular is binding on the officers. The Commission on finding that the petitioner had discharged the export obligation to the tune of Rs.12.36 crores should have made necessary findings on the same. Once it is accepted that the petitioner had fulfilled the export performance at 50.31%, then it should not have directed payment of duty of Rs.1,94,00,860/- and should not have given its imprimatur to the certification given by the DGFT. If only the ASCL was given extension of time, they would have fulfilled the export obligation. In that view of the matter, they sought for setting aside the Settlement Commission's order to a limited extent.

17.Per contra, the Revenue submitted that the ASCL had imported the capital goods as against the EPCG licence , dated 23.12.1993 at a concessional rate of 15% basic customs duty under the Customs Notification No.160/92. But as per condition No.5 of the licence, they were also required to execute a legal undertaking and a bank guarantee in terms of paragraph 102 of the Handbook of procedure. It was DGFT which is the monitoring authority. Therefore, for discharging their obligation under the letter of undertaking/bank guarantee, a certificate has to be obtained from the DGFT for closure of the case. The ASCL should have executed a bond to the Customs before clearing of goods. Since the capital goods have been imported in accordance with the conditions specified in paragraph 38 of ITC 92-97 under the Customs Notification No.160/92, the importers will have to prove to the satisfaction of the Assistant Collector of Customs that the condition in the circular has been complied with. In case of their failure to fulfill their export obligation, they will have to pay duty on demand. The undertaking to fulfill the export obligation equivalent to four times of CIF value of the capital goods within a period of five years and obtaining of discharge certificate from the licensing authority, i.e., Assistant Collector of Customs within the stipulated time is mandatory. Any amount becoming due under the bond is recoverable in terms of Section 142(1) of the Customs Act without prejudice to any other mode of recovery. The Settlement Commission had failed to note that as per paragraph 102 of Handbook of procedures for the period from May, 1992 to March, 1997, there is provision to demand interest at the rate of 24%. unless interest was also paid along with the export obligation, no discharge certificate need be issued by the DGFT.

18.It was further submitted that the Commissioner had merely relied upon the DGFT's letter, dated 5.10.2000 for holding that the ASCL had achieved 14% of the export obligation. Therefore, computing liability to Rs.4,63,46,499/- and that interest was not chargeable under the Customs Act was erroneous. This had brought substantial revenue loss to the Government. Instead of settling the matter in such a hurry, the Commission should have waited for discharge certificate. The DGFT can issue such discharge certificate only if the interest is paid with duty foregone and the importers are bound to produce such discharge certificate to the Customs. The licence holder was fully aware of his duty liability and must ensure fulfillment of specified export obligation as he had already executed a letter of undertaking and bond as well as bank guarantee to the DGFT and bond to the Customs. Only by the production of the discharge certificate from the DGFT and when the same is submitted to the Customs within the stipulated time, it can be said that he had fulfilled his obligation. Even when the Settlement Commission exercised its power under Section 127B(1) of the Customs Act, it can do so only when the applicant makes a full and true disclosure of duty liability. Since the licence holder was fully aware of the liability and had not disclosed his full liability, the Commissioner should not have entertained its case. Since the licence holder had abused the EPCG scheme and allowed himself to be proceeded against the penal action under the EXIM policy, the interest demanded by the department is very much covered by the provisions of the scheme.

19.Before going into the rival submissions, the findings rendered by the Commission in respect of the stand of the parties must be first noted. In the impugned order, the Commission had framed the following four issues:

"(i)Whether the amounts claimed to have been realised through NRI/NRE subscriptions for cable connections provided in Kerala to the relatives of NRI can be accounted towards fulfillment of EO under the EPCG licence in question?

(ii)What is the extent to which the applicant had fulfilled the EO?

(iii)Whether duty is to be realised proportionate to the quantum of unfulfilled EO or the entire duty saved in terms of Notification No.160/92 Cus. Dated 20-4-92?

(iv)Whether interest is to be charged on the duty?"

20.In respect of issue No.1, in paragraph 10.1, the Commission had answered as follows:

"10.1 Question (i) :

The answer to the first question is found in the erstwhile para 46 E of the EXIM Policy 1992-97, which governs the EPCG licence in question. This para permitted receipt of payment in freely convertible currency for services rendered by licence holder regardless of whether services are rendered in India or abroad. In their application dated 11.11.93 to DGFT, the applicant had given the details of the scheme and plans for earning foreign exchange. They have very specifically mentioned the export services proposed to be rendered in India and have referred to erstwhile paras 46 B-11/46 E of the EXIM Policy. The Bench observed that though the license in question was issued under para 38 of the Policy; an amendment has been made on the body of the license changing it to para 46-A. In view of this amendment, the provisions of para 46-E of the Policy become relevant."

21.In respect of issue No.2, in paragraph 10.2.4, the Commission had answered as follows:

"10.2.4.The applicant has stated that the DGFT was still considering their request. However, the matter cannot be kept pending for an unduly long time defeating the very objective of the Settlement mechanism. While the applicant has not submitted any such certificate, DGFT in their letter 20/316/94/EPCG111/1246, dt.5.10.2000 to DC, Tuticorin has stated that the applicant has achieved 14% (approximately) of the export. This has been reiterated in their letter no.20/316/94/EPCG111/565, dt.15.6.2001 to a specific query from this office. Even though there are letters from DGFT entertaining doubts on whether the activities undertaken by the applicant amounted to exports; this letter dt.15.6.2001, or the earlier one dt.5.10.2000 have not been withdrawn by DGFT. The Bench is therefore, constrained to hold the export obligation achievement as 14% only. Even though these letters have computed the export performance upto 30.6.1998 only, as seen from the annexure to Form 10C submitted by the applicant to DGFT in their letter dt.28.8.2001, the subsequent earnings are in Indian Rupees only, as seen from the break-up figures given by the Advocate in his letter dt.18th July, 2002 and not freely convertible currency. Though the advocate has requested to take the earnings subsequent to 22.12.1999 also when export obligation period expired as they had kept the bank guarantee alive, as required under PN No.3 (RE-01/1997-2002, dt.31.03.2001), this Bench is unable to accept this plea as DGFT have repeatedly rejected their request for extension of export obligation period. Similarly, even though the applicant has referred to the report of DRI, Calicut mentioning the extent of fulfillment of export obligation as 51.31%, the Commissioner (Investigation) in his report has said that the DRI has merely gone by the version of the applicant, without undertaking any verification. Thus, this Bench concludes that the applicant has achieved only 14% of the export obligation."

22.In respect of issue No.3, in paragraph 10.3, it had answered as follows:

"10.3 Question (iii) :

As per Condition No.(iii) of the Notification No.160/92 Cus. dated 20.4.92, the importer of capital goods under EPCG scheme has to file a declaration to the AC/DC of Customs at the time of clearance of the capital goods "binding himself to pay on demand an amount equal to the duty leviable on such capital goods but for the exemption contained in respect of which the conditions specified in Col.(2) of the Table have not been complied with." It is, therefore, evident that the duty to be charged is only proportionate to the extent of nonfulfillment of the export obligation. The Revenue has also taken a similar stand as is seen from the clarification from the CBEC to Commissioner of Customs (EP), Mumbai in their letter F.No.607/14/2000-Dbk dt.13th March, 2000. The stand of the Commissioner of Customs, ACC, Chennai is, therefore, not sustainable."

23.In respect of issue No.4, the Commission in paragraph 11 had answered as follows:

"11.The Bench observes in this context that irrespective of whether the Policy/Hand Book provides for levy of interest, neither the notification under which the impugned goods have been assessed nor the Customs Act based on which the said exemption notification was issued contained, during the material period, any authority to levy interest on the duty due consequent to failure to fulfill export obligation. The stand taken by the Commissioner of Customs and Central Excise, Cochin is correct in that the provisions to charge interest for delayed payment of duty came to be incorporated in the Customs Act in September, 1996, whereas, the impugned imports took place much prior to that. During the period when the applicant imported the capital goods i.e., July 94 to Dec. 95, there was no provision in the Customs Act to levy interest for delayed payment of duty nor under Notification No.160/92-Cus. under which the import in question was assessed. In fact, citing the judgements of the Hon'ble High Courts at Madras and Andhra Pradesh, this Bench has taken a similar view on an application filed by M/s.Ganapathy Smelters reported in 2001 (133) ELT 251 (SETT. COM). The Commissioner of Customs (Sea Port), Chennai has stated that the interest has not been demanded u/s 28 of Customs Act and hence the applicant's argument on this score is under a mistaken impression by linking to the date from when the Section relating to demand of interest came to be incorporated in the Customs Act. No doubt, the SCN does not quote Sec.28 for the demand of interest but, it does not also cite any other authority for demanding interest. Accordingly, the Bench holds that no interest is chargeable under the provisions of the Customs Act, 1962 in respect of the subject imports."

24.In the light of the rival contentions, it has to be seen whether the order passed by the Settlement Commission calls for any interference?

25.Mr.V.Giri, learned Senior Counsel appearing for ASCL referred to a judgment of the CESTAT, South Zonal Bench, Bangalore in Femco Filters (P) Ltd. Vs. Commissioner of Customs, Bangalore reported in 2006 (203) E.L.T. 494 (Tri.-Bang.) and stated that under notification No.160/92, there cannot be any demand of interest if at the relevant time, there was no interest chargeable.

26.He further submitted that the appeal filed against the said order of Bangalore Tribunal was rejected by the Supreme Court in Special Leave to Appeal (Civil) No.4341 of 2007 on 14.9.2007 which is since reported in 2007 (218) E.L.T. A124(S.C.).

27.The learned Senior Counsel further referred to a judgment of the CESTAT, South Zonal Bench, Chennai in FAL Industries Ltd. Vs. Commissioner of Customs, Chennai reported in 2008 (231) E.L.T. 524 (Tri.-Chennai) and contended that under notification No.160/92, levy of interest is not available. While passing the said order, the CESTAT, Chennai referred to CESTAT, Mumbai order in Philips (India) Ltd. Vs. Commissioner of Customs, Mumbai reported in 2001 (137) E.L.T. 697 (Tri.- Mumbai) wherein similar finding was rendered regarding interest.

28.A reference was also made to a judgment of this Court in TAN India Ltd. Vs. Collector of Central Excise, Madras reported in 1996 (82) E.L.T. 448 (Mad.) and also a judgment of the Andhra Pradesh High Court in Delta Paper Mills Ltd. Vs. Collector of Central Excise, Guntur reported in 1995 (77) E.L.T. 544 (A.P.) to contend that there is no liability to pay interest at the relevant time. Therefore, the notification No.160/92 cannot be relied upon.

29.The learned Senior counsel also placed reliance upon a judgment of the Supreme Court in Jyotendrasinhji Vs. S.I. Tripathi and others reported in 1993 Supp (3) SCC 389 for contending that the power of this court under Article 226 to go behind the order of Settlement Commission is very limited. Reliance was placed upon the following passage found in paragraph 16 of the said judgment which reads as follows:

"16.It is true that the finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this Court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this Court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this Court under Article 136. A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is a limitation which this Court imposes on itself having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review. Maybe, there is also some force in what Dr Gauri Shankar says viz., that the order of the Commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not be permitted to accept what is favourable to him and reject what is not. According to learned counsel, the Commission is not even required or obligated to pass a reasoned order. Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in Section 245-D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud and malice which, of course, constitute a separate and independent category. Reference in this behalf may be had to the decision of this Court in R.B. Shreeram Durga Prasad and Fatechand Nursing Das v. Settlement Commission (IT and WT)1 which too was an appeal against the orders of the Settlement Commission. Sabyasachi Mukharji, J., speaking for the Bench comprising himself and S.R. Pandian, J. observed that in such a case this Court is concerned with the legality of procedure followed and not with the validity of the order. The learned Judge added judicial review is concerned not with the decision but with the decision-making process. Reliance was placed upon the decision of the House of Lords in Chief Constable of the N.W. Police v. Evans2. Thus, the appellate power under Article 136 was equated to power of judicial review, where the appeal is directed against the orders of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that the order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant. The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised. The Commission has interpreted the trust deeds in a particular manner. Even if the interpretation placed by the Commission on the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be a violation of the provisions of the Income Tax Act. It is equally clear that the interpretation placed upon the said deeds by the Commission does not bind the authorities under the Act in proceedings relating to other assessment years."

Since the ASCL has made full and true disclosure before the Commission, the Commission having exercised its jurisdiction, the same cannot be interfered with. 30.The argument of the learned Senior Counsel that while pointing out the limited scope of judicial review available to this court in attacking the order of the Settlement Commission, yet the ASCL itself wants relief from this court with reference to the finding arrived at regarding the actual export obligation implemented by them. In the additional typed set filed by the ASCL, they had pointed out the bank's statement and the foreign exchange earnings received through payment made in India and that should be taken as fulfillment of export obligation.

31.But as rightly pointed out by the Commission, those earnings now brought on record were shown to have earned subsequent to the export obligation period. Since the request for extension of export obligation period was rejected by the DGFT, the Commission cannot go behind the same. Therefore, the Commission on the basis of the available materials had reached the conclusion that there was only 14% export obligation. It is perhaps with a view to have the period of export obligation extended in the O.P. In prayer No.b, they have sought this court to grant a direction to the Settlement Commission to accept their consolidated statement. In a writ in the nature of mandamus, no direction can be given to any statutory authority either to act contrary to the statute or to disobey the statutory provisions. Therefore, the request made by the ASCL in this regard cannot be accepted.

32.Further argument that if the ASCL was given time extension to fulfill its obligation, then there would have been any necessity to pay duty as demanded will not arise. It must be noted that their request for extension was rejected by the DGFT as it is beyond the period under which the original licence was granted. In this context, it is necessary to refer to a judgment of the Supreme Court in Taarika Exports v. Union of India reported in (2007) 5 SCC 254. In paragraph 10, the Supreme Court had observed as follows:

"10.The stand that the conditions were incapable of compliance seems to be at variance with the stand taken earlier. By letter dated 22-12-1992 the appellants made a request to the Regional Licensing Authority for grant of extension of six months to enable them to export the balance quantity by 30-4-1993. They again applied to the Joint Director General of Foreign Trade, Bombay Office for further extension. The same was rejected. Period of export obligation expired on 30-4-1993. Subsequently, the appellants approached DGFT office several times for extension of export obligation period which was rejected. Therefore, the plea that the conditions were incapable of compliance has been rightly turned down by the authorities and the High Court."

33.With reference the contention made by the learned Additional Solicitor General of India that interest is payable by virtue of Notification No.160/92 is also not maintainable in the line of the decisions already referred to above.

34.In view of the above, there is no case made out to entertain both the writ petitions. Accordingly, both writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.

vvk To

1.The Secretary.

Settlement Commission, Customs and Central Excise, Narmada Block, Custom House, 33,Rajaji Salai, Chennai-600 001

2.The Director General of Foreign Trade, Udyog Bhavan, New Delhi.

3.The Commissioner of Central Excise and Customs, Cochin-1.

4.Commissioner of Customs, Airport, Chennai.

5.Commissioner of Customs, Seaport, Chennai.

6.Deputy Commissioner of Customs, Tuticorin

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Madras High Court