Cus - No distinction can be made between seizure during course of examination of cargo or seizure of goods after they left customs barrier - s.123 of CA applies, hence application for settlement rightly rejected: HC
By TIOL News Service
CHENNAI, NOV 28, 2017: BY a Writ Petition filed in the year 2007, the petitioner challenged an order passed by the Settlement Commission holding that the application is not maintainable in view of third Proviso to Sub-Section (1) of Section 127B of the Customs Act, 1962 and accordingly, rejected the same under Section 127C(1) of the Act.
The referred proviso 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:
The facts:
The petitioner filed a Bill of Entry for clearance of consignment of Polyester Fabrics containing 85% or more by weight of nontexturized polyster filament yarn and for the purpose of availing customs duty exemption under Notification No.14/2006-Cus.
DRI drews samples from the consignment which was sent to Central Silk Technological Research Institute, Bangalore for testing and which revealed that the fabric which was imported is made up of 100% polyester filament yarn and the percentage of nontexturized filament yarn is 0%.
The goods were seized and thereafter the petitioner paid a sum of Rs.19.20 lakhs being the differential duty amount and bond was also furnished.
Subsequently, SCN was issued proposing rejection of the classification as sought and for rejecting the claim of exemption by classifying under Chapter heading 54075290 and demanding the Customs duty.
At this stage, the petitioner filed an application for settlement u/s 127B of the Act and which application was rejected by the impugned order.
The petitioner submitted that the Settlement Commission relied upon the order passed in the case of Idris Y. Probunderwala and wherein the seizure had taken place of the goods in the godown of the importer. However, in their case, the consignment was still in the customs barrier and the petitioner has also remitted the differential duty and therefore, it is a fit case where the matter can be taken up for settlement before the Commission.
The counsel for the Revenue submitted that on the subject matter much water has flown and in a recent decision, the Delhi High Court in the case of Additional Commissioner of Customs vs. Ram Niwas Verma - 2015-TIOL-2010-HC-DEL-CUS, after considering the scope of Section 123 and Section 127B of the Act allowed the appeal filed by the revenue and set aside the order of Settlement Commission as being without jurisdiction. Reliance is also placed on the decision in Dharmesh Devchand Pansuirya vs. Union of India - 2016-TIOL-1194-HC-AHM-CUS .
After extracting section 123 of the Customs Act, the High Court observed -
++ A reading of Sub-Section (1) of Section 123 of the Act shows that the place, time and manner of seizure of the goods under the provisions of the Act is immaterial as the section only contemplates that "Where any goods to which this section applies are seized". Therefore, no distinction can be made between seizure during the course of examination of cargo or seizure of the goods after they left the customs barrier, etc. This is precisely what the petitioner wants the Court to do which is impermissible under the Statute.
++ This decision (in the case of Idris Y.Probunderwala) was considered by the Division Bench of the High Court of Gujarat and it was held that once the goods to which Section 123 of the Act applies, the Settlement Commission would have no jurisdiction to deal with the matter. The law on the issue being well settled in the decisions relied on by the revenue, it has to be necessarily held that the impugned order passed by the Settlement Commission is just and proper and calls for no interference.
The Writ Petition was dismissed.
(See 2017-TIOL-2474-HC-MAD-CUS)
