By TIOL News Service

CHENNAI, DEC 21, 2017: A SCN was issued to the petitioner by the Additional Director General, DRI, Chennai, demanding differential duty to the tune of Rs.1,33,95,654/- along with applicable interest, as the goods which were imported by the petitioner did not conform to the declaration made in the bill of entry, but, what was imported was an insecticide.

The petitioner filed an application before the Settlement Commission accepting the duty amount of Rs.38,00,498/- and Rs.4,21,582/- as interest and enclosing proof of payment of the aforesaid amounts.

The application was entertained by the Settlement Commission and comments were called for and received from the Jurisdictional Commissionerate.

The Settlement Commission by order dated 18.08.2016, in exercise of its power conferred under Section 127-I (1) of the Customs Act, 1962, sent the case back to the adjudicating authority for adjudication in accordance with the provisions of the Customs Act. The Commission viewed that the petitioner has not made true and full disclosure of the duty liability and have failed to provide cooperation to the Settlement Commission to settle the case in a true spirit of settlement.

The correctness of this order is challenged before the Madras High Court.

The High Court observed that there is no specific reason assigned by the Settlement Commission, as to why, it came to the conclusion that there was no true and full disclosure.

The petitioner submitted that they are not canvassing the matter on merits and all that the petitioner pleads is to give one more opportunity to him to go before the Settlement Commission and contest the matter on merits.

The counsel for the Revenue raised a preliminary objection with regard to the maintainability of the writ petition on the ground that the writ petition is liable to be dismissed on the Doctrine of Forum Conveniens, as substantial and intrinsic cause of action has arisen in the State of Andhra Pradesh and has not arisen within the jurisdiction of this Court.

Inasmuch as the jurisdiction conferred on the Chennai Bench of the Settlement Commission covers the States of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Lakshadweep and this is for administrative convenience only.

It is further submitted that the events leading to filing of the application before the Settlement Commission was the search and seizure operations conducted by the DRI, Hyderabad and the SCN issued by the CC at Hyderabad, both of whom are outside the territorial jurisdiction of this Court. Thus, the significant part of the cause of action arises in the State of Andhra Pradesh and this Court should refuse to entertain this writ petition.

Reliance is placed on the following decisions in support of the above submission -

(i) Kusum Ingots & Alloys Ltd. - 2004-TIOL-117-SC-CX-LB

(ii) M/s.Zeenath International Supplies - 2014-TIOL-304-HC-MAD-CUS

(iii) Sun Pharmaceutical Industries - 2007-TIOL-237-HC-MUM-CUS

(iv) West Coast Ingots (P) Ltd. - 2006-TIOL-407-HC-DEL-CX

The petitioner referred to the decisions in Sanjos Jewellers v. Syndicate Bank (2007) 5 CTC 305, Union of India vs. Adani Exports Ltd. (2002) 9 SCC 567 and M/s. Ambica Industries - 2007-TIOL-97-SC-CX to substantiate their contention that the writ petition is maintainable.

The High Court considered the submissions and after adverting to the decisions relied upon by both sides observed –

+ the process of settlement of case is independent of the other provisions of the Act as this provision fall under Chapter XIV-A of the Customs Act. Therefore, the decision of the Hon'ble Full Bench in the case of Sanjos Jewellers (supra), would not be applicable to the facts of the present case.

+ the impugned order has not been passed on the merits of the petitioner's claim for settlement, but the application has been rejected on the ground that the petitioner failed to provide the required cooperation to the Settlement Commission to settle the case in a true spirit of settlement. The facts recorded by the Settlement Commission in paragraph 7.4 shows the conduct of the petitioner. It appears that the authorized representative, who was engaged by the petitioner, did not extend full cooperation.

+ therefore, I find every justification on the part of the Settlement Commission for having refused to entertain the application. However, one more reason assigned by the Commission in Paragraph 7.8 of the impugned order is that the petitioner failed to make full and true disclosure in the application for settlement. However, this conclusion is not supported by adequate findings.

+ thus, it can be safely concluded that the application was rejected for non-cooperation. In such circumstances, it cannot be stated that the revenue would be prejudiced or put to difficulty for appearing before the Settlement Commission at Chennai, especially when the respondents admit that the Chennai Bench of the Settlement Commission exercises jurisdiction over the State of Andhra Pradesh.

+ therefore, considering the hard facts and going by the settled legal principle that on account of the fault commited by a counsel or an authorized representative or that matter a Court or a Tribunal, a party or a litigant should not suffer, this Court is inclined to exercise its discretion in entertaining these writ petitions challening the order passed by the Settlement Commission.

The impugned order was set aside and the matter was remanded to the respondent for fresh consideration with a specific direction to the petitioner to extend the full cooperation for the disposal of the matter by the Settlement Commission without seeking for adjournment on vexatious or untenable grounds.

The Writ petition was allowed.

(See 2017-TIOL-2621-HC-MAD-CUS)