By TIOL News Service

MUMBAI, APRIL 20, 2018: REVENUE has challenged an order dated 27th January, 2005 passed by the Settlement Commission.

The applicant before the Commission, a manufacturer of rolled steel products, namely, TMT Bars was served with a SCN on 17 September 2004 alleging clandestine removal of the manufactured goods by issuing parallel invoices and seeking recovery of CE duty of Rs.1,05,35,493/-.The period covered is from November, 2001 to March, 2002 and March, 2004.

The assessee filed an application on 8 November 2004 for settlement of this case and while admittinga duty liability of Rs.71,75,961/-sought immunity from fine, penalty and adjustment of interest and dropping of the prosecution.

In response to the application made for settlement, the Assistant Commissioner – now petitioner, submitted a report in terms of section 32F(1) of the CEA, 1944 in which two prayers were made - one of which was that the application for settlement be rejected in the light of section 32E of the CEA, 1944 and the law laid down by the Madras High Court in the case of Commissioner of Customs (AIR), Chennai vs. CCESC - 2003-TIOL-36-HC-MAD-CUS and that even if the application is admitted, the prayer made by the applicant for grant of immunity from penalty and interest be rejected.

Pursuant to the hearing held on 27th January, 2005 , the applicant assessee sought re-working of the duty liability by seeking cum-duty benefits and resultantly the revised duty liability was admitted to the extent of Rs.91,38,562/-and which was paid.

The petitioner-Assistant Commissioner submits that he objected to the admission of the application and also strongly opposed the claim for extending benefit-cum-duty price and grant of any immunity; a prayer was also made that the Department should be permitted to engage a special counsel to defend the case but that application was rejected, final hearing was concluded and on the same day, the impugned order was passed.

In summation, the petitioner contends that the Settlement Commission completely bypassed the mandatory requirements stipulated in law and entertained the application and which is a gross violation of the principles of natural justice.

The respondent assessee submitted that this is a fairly old case; the reduced admitted duty liability has been entirely paid; the records relevant and germane to the issue are lost; that such an old matter should not be now reopened and in any event, there is complete compliance with the procedure set out in law and the principles of natural justice; that since there is no error of law apparent on the face of the record, then, the petition deserves to be dismissed.

The High Court referred to the provisions of Settlement contained in the CEA, 1944 and after poring over the facts involved observed thus -

“13. Now, it is too late for the Revenue then to complain and particularly in the facts and circumstances of the case that there is any non-compliance with the mandatory provisions of law. It is evident from this order and impugned in the petition that when the matter was taken up, the representative of the second respondent as also the petitioner was present. There is, therefore, a clear understanding that the matter can proceed. The consent of the Revenue was far too obvious. The facts, as reflected from the records and to be found in the order of the Settlement Commission, therefore, do not permit the petitioner to raise any contention and of the nature that the impugned order contravenes the provisions of law or is in breach of the principles of natural justice. In these circumstances, we feel that this argument is purely an afterthought. It is in the peculiar facts and circumstances of the case that the Commission proceeded with and decided the matter. There was never any objection raised, much less serious for all this was done in the presence of the Revenue officials. The whole matter was allowed to be proceeded with and was brought to an end with the consent of the Revenue officials."

Clarifying that it is not endorsing or approving the course adopted by the Settlement Commission, but upholding it in the facts and circumstances of the case, the High Court concluded that the said order did not call for any interference in its extraordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution of India.

The Writ Petition was dismissed.

(See 2018-TIOL-751-HC-MUM-CX)