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Judgment
R. Sudhakar, J.—Both the writ petitions are filed challenging the orders of the Settlement Commission. The petitioner in these cases
imported superior kerosene oil through the port of Cochin. The imports are under the Duty Exemption Passbook Licences (DEPB) and the
licences were issued originally in favour of M/s OM Corporation, Mumbai and M/s Global Exports, Mumbai. The said licences were purchased
through an agent-Bhagyalakshmi Exports, Chennai and the Telegraphic Release Advice (TRA) was issued for the importation of the goods in
question. The customs department, on verification, found that the TRA used for clearance of kerosene imported by the petitioner was false and
was not issued by Nava Sheva Customs House, Mumbai and, therefore, a show cause notice was issued inter alia demanding duty and other
liabilities. At the stage of show cause notice, the petitioner filed an application before the Settlement Commission and the matter was admitted and
the petitioner-Company paid the entire duty liability as per show cause notice as per the direction of the admission order and pleaded for immunity
from interest, penalty and prosecution. The Settlement Commission, after hearing the department and after considering the conduct of the petitioner
in surrendering the balance DEPB licence and on noticing the error, came to the conclusion that the petitioner should be given the benefit of
settlement of the case by granting immunity from prosecution and penalty under the provisions of the Customs Act and the duty paid was
acknowledged and discharged the petitioner from further payment of duty. So far as the interest is concerned, it was fixed at 10% per annum on
the amount settled above. The operative portion of the said order reads as follows:-
In view of the foregoing, we are inclined to consider favourably the request for immunities from imposition of penalty and prosecution under
Customs Act. As far as the immunity from interest is concerned we note that while imports have taken place in March 2003, the SCN was issued
on 29.4.2003, the duty had been paid only on 26.2.2004 after the admission of the application and directions therein to pay the admitted duty.
Thus, in view of the approximate delay of 11 months after knowing the duty liability, we are not inclined to grant full immunity from interest.
Accordingly, the case is settled as under:
a) The duty liability is settled at Rs. 41,40,276/-. Since this amount has been paid in full, no further duty is payable.
b) Immunity from prosecution and penalty under the Customs Act 1962 are granted.
c) Immunity from interest in excess of 10% per annum is accorded on the amount settled above. The Revenue should calculate the interest payable
and communicate within 15 days from the receipt of this order to the applicant and the applicant should pay the same within 15 days thereafter and
report compliance along with proof of payment of duty.
The above order is under challenge in this writ petition primarily contending that interest should not have been levied, since the petitioner co-
operated with the Settlement Commission and discharged the duty liability in terms of the admission order passed by the Settlement Commission.
The learned counsel for the petitioner relied upon an order of this Court in M/S. Swasthik Tobacco Factory Vs. The Customs and Central Excise
Settlement Commission, Additional Bench, Narmadha Block, 2nd Floor, Custom House, No. 60, Rajaji Salai, Chennai - 600 001 and The
Commissioner of Central Excise, No. 1, Williams Road, Cantonment, Trichy - 620 001 for total relief from interest portion. It has been held in the
above decision as follows:-
There is no dispute/quarrel with regard to the dictum laid down by the Hon''ble Supreme Court in Union of India (UOI) and Others Vs. Ind-
Swift Laboratories Ltd., , that a finding of fact recorded by the Settlement Commission are not open for examination. In this case, two findings of
facts were recorded by the Settlement Commission, viz.,
(1) the petitioner made full disclosure and
(2) the petitioner co-operated fully with the Commission and therefore the said findings are not interfered with and in fact it supports the petitioner.
What has been interfered with by this Court is the manner in which the discretion given u/s 32K of the Central Excise Act, 1944, was exercised
without properly appreciating the prevailing circumstances under which the petitioner was placed. Therefore, the judgment fully supports the
petitioner''s case.
One another factor is that the similarly placed persons were already given total immunity from payment of entire interest, as in the case in Re:
K.B. Steels reported in 2003 (159) E.L.T. 1090, 1090 (Sett. Comm.) and in Commissioner of Service Tax Vs. Lumax Samlip Industries Ltd. and
Custom, Excise and Service Tax Appellate Tribunal, South Zonal Bench, ). Therefore, following the same also, the petitioner is entitled to the
relief.
Accordingly, the impugned order is set aside and the petitioner is granted full immunity as prayed for.
Per contra, Mr. K. Ravindranath, learned Senior Central Government Standing Counsel for the respondents relied upon a decision of the
Supreme Court in Sanghvi Reconditioners Pvt. Ltd. Vs. Union of India (UOI) and Others, to contend that the order of the Settlement Commission
cannot be dissected and a part of the order alone cannot be challenged. In the said judgment, the Supreme Court held as follows:-
We also find substance in the contention of the learned counsel for the Revenue that having observed that the appellant had not made a full and
true disclosure, their application should have been rejected by the Settlement Commission on that count itself and no relief should have been
granted to the appellant. However, in view of the fact that order dated 8.2.2001 passed by the Settlement Commission allowing the application of
the appellant to be proceeded was not challenged by the Commissioner nor such a plea was urged by the Revenue before the High Court or in
their reply to the present appeal, we find it difficult to reject the application at this stage, though, having perused some of the documents available
on record, we are convinced that the appellant had not made a full and true disclosure of its affairs before the Settlement Commission. Be that as it
may, we are of the opinion that having opted to get their customs duty liability settled by the Settlement Commission, under Chapter XIV-A of the
Act, the appellant cannot be permitted to dissect the Settlement Commission''s order with a view to accept what is favourable to them and reject
what is not.
This Court is in agreement with the plea taken by the respondent''s counsel based on the above decision for the following reasons. The
Settlement Commission has thought it fit to accept the duty liability which was not paid in respect of the goods imported. It was subsequently
demanded under the show cause notice together with interest and penalty. The Revenue is entitled to recover the duty that has not been paid in
respect of the goods imported and along with the claim for duty, interest is also payable under the provisions of the Act. The Settlement
Commission has, in its discretion, accepted the voluntary payment of duty and has taken into consideration the relevant factors to impose interest
for the duty that was not paid at the time of import of the goods. The Settlement Commission is entitled to pass appropriate orders on interest at its
discretion.
This Court, sitting under Article 226, is not inclined to go into the merits of the discretion exercised by the Settlement Commission one way or
other. The factum of full disclosure and co-operation is not the matter in dispute, but, as to what will be the interest that may be levied on the duty
that has not been paid in time, is a matter for the Commission to decide from case to case. Further, as held by the Apex Court, the order of the
Settlement Commission cannot be dissected and challenged only in respect of interest and accepting the rest. It is to be noticed that Revenue has
lost substantially due to non-payment of duty at the time of import. In the result, this Court finds that the order of the Settlement Commission is a
well considered order based on the materials disclosed. The exercise of discretion with regard to interest alone does not require to be interfered
with. Further, when the Revenue is entitled to interest in terms of Chapter XVI-A of the Customs Act as well, the levy of interest stands justified.
For all the above reasons, finding no merit, the writ petitions stand dismissed. No costs.