By TIOL News Service

MUMBAI, APR 02, 2015: THE appellant is engaged in the business of buying and selling of cars and was approached by one Sunil Lulla who was interested in purchase of an imported vehicle. The appellant helped in clearance through Customs of a vehicle 'Toyota Land Cruiser' imported by Toparapu Narsaiah under Transfer of Residence Rules (TR) and arranged the sale of the vehicle to Shri Sunil Lulla.

Later, it was found by the Customs department that the impugned vehicle was cleared by mis-declaring the year of manufacture as 1997 instead of the actual year of manufacture which is November 1999. It was alleged by the department that the vehicle was sold in violation of "no sale for 2 years" condition for import of cars under TR Rules. It was also alleged that the year of manufacture was wrongly declared to avail the higher depreciation on the import value leading to less payment of duty.

A SCN came to be issued and the adjudicating authority upheld the allegations levelled. A penalty of Rs.3,00,000/- was imposed on the appellant u/s 112(a) of the Customs Act, 1962.

Incidentally, it is also recorded in the order that Sunil Lulla had approached the Settlement Commission who passed final order No. 92/CUS/HDS/2009 dt. 28.10.2009; that Sunil Lulla had complied with the order and paid the differential duty of Customs amounting to Rs.7,12,169/- along with interest of Rs.2,38,430/-, redemption fine of Rs.40,000/- and penalty of Rs.10,000/- and, therefore, no further action was required to be taken as far as Sunil Lulla is concerned.

Since the appeal filed against the imposition of penalty of Rs.3 lakhs was dismissed by the Commissioner(A), the appellant is before the CESTAT.

Whereas the appellant inter alia relied on the decision in S.K. Colombowala - 2007-TIOL-441-CESTAT-MUM to submit that once a case is settled in the Settlement Commission, the same cannot be reopened for co-noticees and the case is to be considered as fully settled in totality, the AR placed reliance on the Bombay High Court decision in Yogesh Korani Vs. Union of India in which it was held that where the liability of main notice and co-noticee arise under two independent causes of action then the co-noticee cannot claim immunity on the basis of declaration made by the main noticee.

After hearing both sides, the CESTAT observed -

++ The provisions of Section 127A to 127N of the Customs Act, 1962 deal with the Settlement of cases. It is clear from Section 127B that an importer may make an application in relation to a case disclosing the full and true duty liability before the proper officer. In the present case, we find that the Additional Commissioner has not challenged the deposit of duty made by Shri Sunil Lulla. Therefore he has treated Shri Sunil Lulla as the importer. In other words he has consented that Shri Sunil Lulla is entitled to file an application before the Settlement Commission, as an importer.

++ The provisions of Section 127A(b) define a 'case', the provisions of Section 127F give exclusive jurisdiction to the Settlement Commission in relation to the case and Section 127J which provides that every order passed under Section 127C shall be conclusive - all lead to a reasonable conclusion that once a case has been decided in respect of the importer or the applicant by the Settlement commission, it is not open to Revenue to proceed against other co-noticees. I agree with the reliance placed on the judgments of the Tribunal.

After extracting from the case law cited by the AR, the same was distinguished by the Bench, thus -

But the circumstances of the case at hand are that the car was illegally got sold from the importer to Shri Sunil Lulla through the goodwill of the appellant. In other words, there are no multiple causes of action and the total action of sale is a indivisible act. Therefore, the said judgment has to be appreciated in this sense. Further, the case of S.K. Colombowala (supra) relied on the Apex Court judgment in the case of Union of India Vs. Onkar S. Kanwar - 2002-TIOL-924-SC-MISC which held that "we have heard the parties. In our view, a reading of the Kar Vivad Samadhan Scheme (Removal of Difficulties) Order shows that where a declaration had been made in respect of a tax arrear and where in respect of the same matter a show cause notice had also been issued to any other person, then the settlement in favour of the declarant has to be deemed to be full and final in respect of other persons on whom show cause notices has been issued. It is settled law that when an appeal is pending there is no finality to the proceedings. The proceedings are then deemed to be continuing". The provisions of Kar Vivad Samadhan Scheme and the provisions of Settlement are similar and therefore the principle laid down in the case of Onkar S. Kanwar (supra) would apply in the present case.

In fine, the order passed by the Commissioner(A) was set aside and the appeal was allowed with consequential relief.

In passing : Also see 2008-TIOL-2515-CESTAT-BANG.

(See 2015-TIOL-601-CESTAT-MUM)