Amrut Ornaments vs Sett. Commission for Cus. and C. Ex.

This petition under Article 226 of the Constitution of India seeks to challenge the order dated 23 October 2012 passed by the Settlement Commission (Commission) u/s 127B of the Customs Act, 1962 ("the Act"). By impugned order dated 23 October 2012, the Commission dismissed the application of the petitioner on the ground of failure of the petitioner to make full and true disclosure of duty liability u/s 127B(1) of the Act. Briefly facts leading to this petition are as under:

(a) On specific information the Director of Revenue Intelligence (DRI) examined one container. On examination the container was seized on 29 September 2011. It was found that the petitioners had in the bill of entry dated 28 September 2011 covering the examined container declared that it had 439 carton of hair clips. However, on examination it was found that it had only 276 cartons of hair clips while remaining 163 cartons were found to contain glass chatons of different sizes. Consequently the aforesaid, container containing 439 cartons were seized under the, reasonable belief that they were liable for confiscation.

(b) On further investigation and recording of statements the owner of goods one Musatafa Shaikh Haji Lal Mohammed admitted that in the past he had imported six consignments of cutlery alongwith glass chatons. However, this was without declaring glass chatons imported along with cutlery in the bills of entry filed. During the course of investigation, the petitioner paid a sum of Rs. 2 crores being duty payable on the glass chatons imported earlier in the six consignments which had not been declared at the time of import. Alter completion of investigation on 28 March 2012, a show cause notice was issued to the petitioners seeking to demand customs duty of Rs. 78.85 lacs in respect of bill of entry dated 28 September 2011 and a duty of Rs. 4.20 crores in respect of six earlier consignments of chatons imported as cutlery on which no customs duty was paid. Besides, the petitioners were called upon to show cause why penalty should not be imposed upon them and the seized goods should not be confiscated.

On receipt of the above show cause notice, the petitioner filed an application for settlement on 9 May 2012 before the Settlement Commission. By its application the petitioners sought to settle the show cause notice dated 28 March 2012 issued under the Act to petitioners. By an order dated 29 May 2012, the application for settlement filed by the petitioner was allowed to be proceeded with. In its application the petitioners admitted the additional duty liability of Rs. 80.14 lacs i.e. Rs. 78.85 lacs in respect of chatons and Rs. 11.28 lacs in respect of under valuation of other goods as against the demand of Rs. 5.47 crores in the show cause notice. The applicants denied that any duty is payable in respect of the past six consignments on the ground that no evidence has been brought on record except retracted statement of the co-applicant i.e. petitioner No. 2. On 10 July 2012 the jurisdictional Commissioner filed his report opposing the application for settlement on the ground that the petitioners had failed to make full and true disclosure of its duty liability, particularly, their duty liability to the extent of Rs. 4.20 crores in respect of earlier six consignments containing glass chatons which were smuggled into the country. It was alleged that glass chatons had been imported without having been manifested in the IGM or finding mention in the bill of landing and in the bill of entry.

The petitioners were heard by the Commission on 28 September 2012. At the hearing the petitioners were on notice that their settlement application was being opposed on account of failure to make true and full disclosure of its duty liability to the extent of Rs. 4.20 crores in respect of the earlier six consignments. The contention of the petitioners before the Commission was that no duty is payable in respect of six earlier consignments as no evidence has been brought on record by the revenue to support its allegations save and except the retracted statement of petitioner No. 2 i.e. co-applicant before the Commission. On examination the Commission found that co-applicant one Mustafa Haji Mohammed had admitted in his original statement dated 30 September 2011 that they were smuggling chatons in the country although the same was retracted only to be affirmed again in statement made on 10 January 2012 and 23 February 2012 and the retracted statement was explained as having been made at the instance of the Advocate.

On an over all appreciation of facts, the Commission by its impugned order concluded that the petitioners application does not contain a full and true disclosure of its duty liability. Therefore, the application for settlement filed by the petitioners was dismissed by the impugned order dated 23. October 2013.

Mr. Advani learned Counsel appearing for the petitioners submits that there has been a failure of justice in view of the fact that after the hearing before the Settlement Commission on 28 September 2012 they were able to obtain documents/inspection reports in respect of six earlier consignments carried out by the Customs department which would indicate that goods imported were only cutlery as declared in the bills of entry Consequently, by letters dated 19 October 2012, 22 October 2012 and 31 October 2012 the petitioners requested the Commission to grant an additional hearing so as to provide further clarification in the matter. Therefore, all that the petitioner seeks now is that the impugned order be set aside and the Commission be directed to consider further documents which are now in their possession before deciding upon the petitioners'' application for settlement.

As against the above, Mr. Pradeep Jetly, learned Counsel for the revenue supports the order of the Commission and points out that the owner of the offending goods i.e. petitioner No. 2 in his statement during investigation had very clearly admitted that glass chatons have been imported without declaring the same in the bill of entry filed by them. It was also submitted that an application for settlement is different from an adjudication proceeding and the party who seeks to settle must come to the Commission with clean hands and must make a clean breast of his affairs. The application before the Commission cannot be sustained on the basis of lack of evidence led by the other side. This is for the reason that the opportunity to settle a notice before the Commission is to enable to an repentant person to come clean before the Commission to settle the dispute and not adjudicate.

We find that the impugned order of the Commission dated 23 October 2012 is a well reasoned order. The petitioners in this case is in receipt of show cause notice dated 28 March 2012 seeking to recover duties of Customs not only in respect of the consignment which was seized but also six earlier consignments. The petitioners in their application sought to settle only the dispute with regard to the seized consignment. Before the Commission the revenue had filed a report opposing the settlement for failure to disclose fully and truly all facts on the part of the petitioners particularly in respect of the six earlier consignments. Therefore, the petitioners were on notice about the objection of the revenue and they could have led evidence in support yet the petitioner chose to contest the Commissioner''s report only on the ground that the statement made by the co-applicant i.e. petitioner No. 2 had been retracted and there is nothing on record to indicate that the petitioner had imported glass chatons on six earlier occasions. The proceedings before the Commission is not an adjudicating proceedings where it is for the other side to prove its case. In settlement proceedings a party seeks to end the dispute and is meant for a person who is sorry about his conduct and wants to make amends. It is not an alternative adjudicating forum. A person approaching the Settlement Commission must show utmost good faith. In any event the case of the petitioners is belied by the statements of petitioner No. 2 on more than one occasion confirming to the modus operandi adopted to import glass chatons without disclosing it in the bills of entries. In the present case, the order of the Settlement Commission is based on appreciation of facts which were placed before it and its conclusion that the petitioner had not made a true and full disclosure in their settlement application cannot be said to be perverse and/or arbitrary warranting an interference by this Court.

Moreover, it is noted that the hearing before the Commission took place on 28 September 2012. Thereafter, only on 19 October 2012, 22 October 2012 and 31 October 2012 the letters were addressed to the Commission merely seeking to grant an additional hearing to make clarifications. These letters do not attach any documents nor do they make mention of any documents nor even do they mention the clarification the petitioners want to make. Besides the Commission had passed an order on 23 October 2013. Moreover, the issue as to whether or not the petitioner had imported glass chatons on the basis of inspection report is a matter of adjudication and the petitioner may in adjudication proceeding on the basis of the inspection report be able to satisfy the adjudicating authority that they have not imported glass chatons. However, this process would require adjudication i.e. resolving a lis. A course of settlement under the Act is available only where the petitioners of their own want to make clean breast of their affairs and not where the petitioner wants to resist the notices by challenging several statements relied upon by the revenue in support of its case. In such a case the petitioner would be well advised to seek remedy under the Act in the adjudication process. Thus, we find no reason to interfere with the impugned order dated 23 October 2013. Accordingly, the petition is dismissed with no order as to costs.