By TIOL News Service

MUMBAI, MAR 12, 2014: ON specific information, the DRI examined and seized a container on 29 September 2011. It was found that the petitioners had in the bill of entry declared that the container had 439 cartons of hair clips. However, on examination it was found that it had only 276 cartons of hair clips while remaining 163 cartons were found to contain glass chatons of different sizes. Consequently the aforesaid container containing 439 cartons were seized under the reasonable belief that they were liable for confiscation.

On further investigation and recording of statements the owner of goods admitted that in the past he had imported six consignments of cutlery alongwith glass chatons. However, this was without declaring glass chatons imported along with cutlery, in the bills of entry filed. During the course of investigation, the petitioner paid a sum of Rs.2 crores being duty payable on the glass chatons imported earlier in the six consignments which had not been declared at the time of import.

After completion of investigation, on 28 March 2012, a show cause notice was issued to the petitioners inter aliaseeking to demand customs duty of Rs.78.85 lacs in respect of the impugned bill of entry and a duty of Rs.4.20 crores in respect of six earlier consignments of chatons imported as cutlery on which no customs duty was paid. The SCN also proposed penalty and confiscation of the seized goods.

In the month of May, 2012, the petitioner filed an application before the Settlement Commission seeking to the settle the case covered by the SCN. In its application the petitioners admitted the additional duty liability of Rs.80.14 lacs i.e. Rs.78.85 lacs in respect of chatons and Rs.11.28 in respect of under valuation of other goods as against the demand of Rs.5.47 crores in the show cause notice. The applicants denied that any duty is payable in respect of the past six consignments on the ground that no evidence has been brought on record except retracted statement of the co applicant i.e. petitioner No.2.

The jurisdictional Commissioner filed his report opposing the application for settlement on the ground that the petitioners had failed to make full and true disclosure of its duty liability, particularly, their duty liability to the extent of Rs.4.20 crores in respect of earlier six consignments containing glass chatons which were smuggled into the country.

On an overall appreciation of facts, the Commission by its impugned order concluded that the petitioners' application does not contain a full and true disclosure of its duty liability. Therefore, the application for settlement filed by the petitioners was dismissed by the impugned order dated 23 October 2012.

Against this order, the petitioner is before the Bombay High Court.

The counsel submitted that there has been a failure of justice in view of the fact that after the hearing before the Settlement Commission on 28 September 2012 they were able to obtain documents/inspection reports in respect of six earlier consignments carried out by the Customs department which would indicate that goods imported were only cutlery as declared in the bills of entry. Consequently, by letters dated 19 October 2012, 22 October 2012 and 31 October 2012 the petitioners requested the Commission to grant an additional hearing so as to provide further clarification in the matter.

They, therefore, seek that the impugned order be set aside and the Commission be directed to consider further documents which are now in their possession before deciding upon the petitioners' application for settlement.

The Counsel for the Revenue submitted that the owner of the offending goods in his statement during investigation had very clearly admitted that glass chatons have been imported without declaring the same in the bill of entry filed by them. And that an application for settlement is different from adjudication proceeding and the party who seeks to settle must come to the Commission with clean hands and must make a clean breast of his affairs.

The High Court observed that the order passed by the Settlement Commission is a well-reasoned order and -

++ Before the Commission the revenue had filed a report opposing the settlement for failure to disclose fully and truly all facts on the part of the petitioners particularly, in respect of the six earlier consignments. Therefore, the petitioners were on notice about the objection of the revenue and they could have led evidence in support yet the petitioner chose to contest the Commissioner's report only on the ground that the statement made by the co-applicant i.e. petitioner No.2 had been retracted and there is nothing on record to indicate that the petitioner had imported glass chatons on six earlier occasions.

++ The proceedings before the Commission is not an adjudicating proceedings where it is for the other side to prove its case. In settlement proceedings a party seeks to end the dispute and is meant for a person who is sorry about his conduct and wants to make amends. It is not an alternative adjudicating forum. A person approaching the Settlement Commission must show utmost good faith. In any event the case of the petitioners is belied by the statements of petitioner No.2 on more than one occasion confirming to the modus operandi adopted to import glass chatons without disclosing it in the bills of entries.

++ In the present case, the order of the Settlement Commission is based on appreciation of facts which were placed before it and its conclusion that the petitioner had not made a true and full disclosure in their settlement application cannot be said to be perverse and/or arbitrary warranting an interference by this Court.

++ The letters addressed to the Commission do not attach any documents nor do they make mention of any documents or mention the clarification the petitioners want to make. Moreover, the issue as to whether or not the petitioner had imported glass chatons on the basis of inspection report is a matter of adjudication and the petitioner may, in adjudication proceeding, on the basis of the inspection report be able to satisfy the adjudicating authority that they have not imported glass chatons. However, this process would require adjudication i.e. resolving a lis.

++ A course of settlement under the Act is available only where the petitioners on their own want to make clean breast of their affairs and not where the petitioner wants to resist the notices by challenging several statements relied upon by the revenue in support of its case. In such a case the petitioner would be well advised to seek remedy under the Act in the adjudication process.

Holding that there is no reason to interfere with the impugned order of the Settlement Commission, the High Court dismissed the petition.

(See 2014-TIOL-312-HC-MUM-CUS)