Cus - Rejecting application on ground that B/E has to be filed before issuance of SCN would go against very spirit for which settlement machinery was constituted: HC
By TIOL News Service
MUMBAI, NOV 22, 2016: CLAUSE (a) of the first proviso to section 127B(1) of the Customs Act, 1962 in the matter of filing application for settlement reads –
Provided that no such application shall be made unless -
(a) the applicant has filed a bill of entry, or a shipping bill, or a bill of export, or made a baggage declaration, or a label or declaration accompanying the goods imported or exported through post or courier, as the case may be, and in relation to such document or documents, a show cause notice has been issued to him by the proper officer;
The facts :
+ Petitioners in the normal course of business imported Air Freshners and Choco-Pie Biscuits.
+ It appears that during the course of import, some error occurred and extra items were dispatched in the consignment. On examination of the Bill of Entry dated 31st January 2015, the Department found Air Fresheners, Perfumes, Body Spray and other items such as cigarettes , cylinders of refrigerant-22 gas , fabrics etc.
+ This Bill of Entry was with reference to one container and there is no dispute that this Bill of Entry has been filed long before the issuance of the SCN.
+ As far as the balance three containers were concerned, it is the case of the Petitioner that the Department examined the goods much before the filing of the Bill of Entry and seized the goods. The Petitioner, after repeated efforts, was permitted to file a Bill of Entry for these three containers on 4th August 2015.
+ In the meanwhile, the Petitioner received a SCN dated 29th July, 2015 proposing to confiscate the goods imported in the four containers.
An application was filed seeking settlement of the case on 7th October, 2015 and it is this application which has been rejected by the Settlement Commission by its order dated 14th March 2016.
The Settlement Commission while rejecting the application for settlement held that the condition of filing of a Bill of Entry as stipulated in clause (a) above was not complied with by the Petitioner.
Inasmuch as the Commission noted that One Bill of Entry (and which related to one container) was filed before the issuance of the Show Cause Notice whereas the other Bill of Entry (for balance three containers) did not find mention in the Show Cause Notice as it was filed after the issuance of the same.
The petitioner has challenged this order and also argued that there has been a breach of the principles of natural justice in the sense that while passing the impugned order a reference is made to a report dated 1 st March 2016 of the investigating agency, which copy was never supplied to the petitioner.
The High Court extracted the provisions of section 127B of the Customs Act, 1962 and observed -
++ In the facts of the present case, it is an admitted fact that the Bill of Entry No.8158086 was filed before the issuance of the SCN. It is also an admitted fact that Bill of Entry No.2128700 was also filed by the Petitioner, though after the issuance of the SCN, but before the Settlement Application was filed by the Petitioner before Respondent No.4. It is also not in dispute that these two Bills of Entries were filed in relation to four containers which are the subject matter of the SCN dated 29th July, 2015 and which was sought to be settled by filing the aforementioned Settlement Application.
++ On reading the clause (a) of the 1st Proviso to sub-section (1) of section 127B, we cannot agree with the submission (of the counsel for the Revenue) that the Bill of Entry has to be filed before the issuance of the SCN . If we were to accept the submission, it would go against the very spirit for which Chapter XIV-A was brought into force under the Customs Act, 1962.
++ In the facts of the present case, admittedly the second Bill of Entry was filed before the Petitioner made its Settlement Application. In fact, it is the case of the Petitioner that they were not permitted to file this Bill of Entry before the issuance of SCN and were allowed to file the same only after the SCN was issued. This has not been controverted by the Revenue.
Holding that the Settlement Commission was in error in coming to the conclusion that the Application filed by the Petitioner was not admissible as it had failed to fulfill the condition viz. that the Petitioner had not filed a Bill of Entry as stipulated in clause (a) of the 1st Proviso to section 127B(1) of the Customs Act, 1962, the order was quashed and set aside and the application was restored for de novo consideration.
The High Court added that the order cannot also be sustained on the grounds of breach of the principles of natural justice as the reports dated 1st March 2016 were admittedly never supplied to the Petitioner.
In passing:
• Third proviso to section 127B(1) reads – Provided also that no application under this sub-section shall be made in relation to goods to which Section 123 applies or to goods in relation to which any offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985) has been committed:
• Notification 204/84 dt. 20.07.1984 superseded by 103/2016-Cus (NT).
(See 2016-TIOL-2839-HC-MUM-CUS)
