By TIOL News Service

MUMBAI, SEPT 19, 2016: IN the matter of applications filed for settlement, by a Majority decision the same were sent back for adjudication.

According to the Majority decision, the disclosures for settlement were only a request to reclassify the fitments to the Pontoon, alongwith the Pontoon, and adjust the duty paid initially in 2007 against the fitments classified under the respective CTH.

Taking this view, the Members who constituted the Majority rejected the Settlement Applications of the Petitioners for not making proper disclosures amounting to non-cooperation in the proceedings and non-payment of any admitted duty and interest as required under clause (c) to the 1st proviso to section 127B(1), and accordingly sent the matter back to the proper officer in terms of Section 127-I of the Customs Act, 1962 for disposal of the SCN as required under law.

A Writ Petition has been filed against this order.

The petitioner, inter alia, pleaded that in the proceedings before the Commission itself wherein the submissions of the Advocate for the Petitioners were recorded, it is mentioned that they were not disputing the change in classification proposed by Revenue in the SCN and that they have accepted the classification of the whole Barge with the fittings under heading 8905 which attracts duty of 5% and, therefore, the finding of the majority view of the Commission is wholly perverse; that the impugned order cannot be sustained and the same ought to be set aside and the Settlement Applications filed by the Petitioners be remanded back for being decided afresh.

The counsel for the Revenue supported the order of the Settlement Commission.

The High Court narrated the genesis of the provisions of Settlement and after extracting sections 127B and 127C of the Customs Act, 1962 observed thus -

++ It is an admitted fact that a notice was issued on 29th October, 2013 to the Petitioners as contemplated under Section 127C(1) and the Petitioners were called upon to give a written explanation whether the Settlement Applications filed by them fulfill the criteria as laid down under Section 127B of the Customs Act, 1962 and also inform the Commission whether the bar as set out under Section 127L of the Customs Act, 1962 is applicable in their cases.

++ By detailed reply, the Petitioners not only answered the discrepancies that were raised by the Settlement Commission but a categorical statement was made in the said reply that the Settlement Applications have not been made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975.

++ After receiving this reply, the Settlement Commission passed an order dated 12th November 2013 under which it was ordered that the Settlement Applications filed by the Petitioners be allowed to be proceeded with.

++ Considering these facts, we are clearly of the view that the majority view of the Settlement Commission was in grave error in coming to the conclusion that the Settlement Applications filed by the Petitioners were liable for rejection on the ground of non co-operation in the proceedings and non payment of any admitted duty and interest as required under Section 127B.

++ Petitioners had explained that they had not made any additional payment of duty because in the past they had deposited the amount of duty which was far in excess of what was demanded in the SCN. This explanation was accepted by the Settlement Commission, and it was only thereafter that the case was allowed to be proceeded with. We, therefore, think that it was not correct on the part of the Settlement Commission (the majority view) to reject the Settlement Applications of the Petitioners on the ground of non payment of any admitted duty and interest as required under Section 127B.

++ As far as the findings of the majority view that the dispute in the present case related to classification, we equally find this finding to be incorrect.

++ In view of the fact that the Settlement Commission itself had allowed the Settlement Applications of the Petitioners to be proceeded with under section 127C would only mean that at the threshold itself, the Commission was satisfied that the Settlement Applications filed by the Petitioners was not made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975.

++ This apart, it was also the case of the Petitioners that they are not disputing any classification as proposed by the Revenue in the SCN. In view of all this, we are clearly of the view that the Settlement Applications filed by the Petitioners could not have been rejected on this ground, as well.

The impugned order was quashed and the matter was remanded to the Settlement Commission.

(See 2016-TIOL-2179-HC-MUM-CUS)