The prayer in this writ petition is to quash the order passed by the second respondent dated 11.11.2008 and direct the second respondent to consider the application of the petitioner seeking settlement by Settlement Commission, Customs and Central Excise.
2. The facts necessary for disposal of the writ petition are as follows:
(a) The petitioner firm is a leading export house for the purpose of exports for the countries viz., Germany, Canada and other European countries. The firm has been allotted with Import Export Code No.0497012880. The respondents have offered certain duty free import items for the purpose of importing in raw material stage for the purpose of exporting the same after completing the manufacturing activity.
(b) Under Rule 19(2) of the Central Excise Rules, 2002, the petitioner firm availed certain duty free import of cotton yarns and fabrics, without paying duty for such imports. Such imported cotton yarn and fabrics were supplied to different manufacturers in Coimbatore, Salem and other parts of Tamil Nadu. According to the petitioner, due to oversight and inadvertance, certain finished products were also received and the same were re-exported to various overseas buyers and availed duty drawback concession.
(c) As per Rule 3 of the Customs and Central Excise Duty Drawback Rules, 1995, read with the notification issued thereunder the import of duty free articles shall not be subjected to any duty drawback concession and if the exporter is prohibited from claiming any duty drawback concession at the time of export of the consignment for which raw materials were imported under duty free import scheme. According to the petitioner, inadvertantly it availed duty drawback concession for the negligible quantity of raw materials and the same was exported along with other consignments during 2003-2004 and the same was brought to light only when the first respondent took action and searched the office premises of the petitioner on 19.11.2004. Petitioner claims that the same was realised and a sum of Rs.10,35,585/- was paid on 8.12.2004.
(d) The first respondent issued three show cause notices on 9.9.2008 under
section 124 of the Customs Act,1962, calling for explanation from the petitioner as to why the payments made by the petitioner shall not be appropriated for the violation of illegal claim of duty drawback concession made during the year 2003-2004. The said different show cause notices were issued since the petitioner exported from three different ports, namely Seaport, Chennai; Airport, Chennai; and Seaport, Tuticorin; though all the exports were made by the petitioner under single transaction.
(e) The petitioner firm, instead of conducting the cases, expressed its intention of invoking
section 127 of the Customs Act, 1962, and sought for amicable settlement before the second respondent. The condition precedent for invoking the jurisdiction of the second respondent as per section 127-B is that minimum duty payable by the exporter shall not be less than Rs.3 lakhs and no appeal shall be pending before any court. The petitioner claims that it is fully qualified to get the matter settled under
section 127 and submitted an application on 3.10.2008.
(f) On receipt of the said application, the second respondent raised certain queries on 28.10.2008 with regard to the compliance of the conditions contained in section 127-B of the Customs Act and interest calculation. Seven days time was given to comply with the said discrepancies. The same was complied with on 3.11.2008 and on 11.11.2008 the impugned order was passed holding that three show cause notices were issued by three adjudicating authorities in three different commissionerate and therefore there are three cases and the said cases cannot be considerd as one. As per section 127-B of the Customs Act, 1962, settlement application is maintainable if an additional amount of duty exceeds Rs.3 lakhs and therefore the application seeking settlement of three disputes cannot be treated as one and the petition is not maintainable.
(g) The said order is challenged in this writ petition on the ground that division of various commissionerate are only for the effective administration and collection of revenue. The three show cause notices are arising out of single export transaction and the same has been paid instantaneously when the mistake was brought to light and therefore the settlement application is maintainable, particularly when the import export code being common.
3. The respondents have filed counter affidavit contending that show cause notices bearing SCN.No.82/2008, 83/2008 and 84/2008, all dated 9.9.2008 were issued by the Assistant Directors, Directorate General of Central Excise Intelligence, Chennai Zonal Unit, Chennai-90, to the petitioner demanding to show cause why the duty drawback amount of Rs.2,07,784, Rs.2,83,780 and Rs.1,42,021 should not be recovered and reply was sought for by the respective Assistant Commissioner of Customs, viz., Assistant Commissioner of Customs, Seaport at Chennai; Assistant Commissioner of Customs, Seaport at Tuticorin; and Assistant Commissioner of Airport at Chennai, based on the place of export, where the cause of action arose. It is also stated in the counter affidavit that single settlement application was received on 28.10.2008 for all the three show cause notices. The said application is not maintainable as the amount demanded in each show cause notices are less than Rs.3 lakhs. As per section 127-B of the Customs Act, 1962, for maintaining an application for settlement, if a show cause notice has been issued and admitted duty liability exceeds Rs.3 lakhs, which means for each and every application, there should be a notice and the additional duty liability should be more than Rs.3 lakhs. Taking the said stand the impugned order is justified by the respondents in the counter affidvit.
4. Heard the learned counsel for the petitioner as well as respondents.
5. The point in issue is whether common settlement application filed by the petitioner in respect of three show cause notices is maintainable in terms of section 127-B of the Customs Act, 1962 ?
6. Section 127-B of the Customs Act, 1962, reads as follows:
"127-B. Application for settlement of cases.- (1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, in respect of a case, relating to him make an application, before adjudication to the Settlement Commission to have the case settled, in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short levy on account of misclassification, under-valuation or inapplicability of exemption notification but excluding the goods not included in the entry made under this Act and such application shall be disposed of in the manner hereinafter provided:
Provided that no such application shall be made unless,-
(a) the applicant has filed a bill of entry, or a shipping bill, in respect of import or export of such goods, as the case may be, and in relation to such bill of entry or shipping bill, a show cause notice has been issued to him by the proper officer;
(b) the additional amount of duty accepted by the applicant in his application exceeds three lakh rupees; and
(c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under section 28-AB:
Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending in the Appellate Tribunal or any Court:
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:
Provided also that no application under this sub-section shall be made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975 (51 of 1975).
(1-A) Notwithstanding anything contained in sub-section (1), where an application was made under sub-section (1) before the 1st day of June, 2007 but an order under sub-section (1) of section 127-C has not been made before the said date, the applicant shall within a period of thirty days from the 1st day of June, 2007 pay the accepted duty liability failing which his application shall be liable to be rejected.
(2) Where any dutiable goods, books of account, other documents or any sale proceeds of the goods have been seized under
section 110, the applicant shall not be entitled to make an application under sub-section (1) before the expiry of one hundred any eighty days from the date of the seizure.
(3) Every application made under sub-section (1) shall be accompanied by such fees as may be specified by rules.
(4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant."
From the above section it is clear that the intention of the legislature is that for a single show cause notice a settlement application can be filed, provided the additional amount of duty accepted by the applicant exceeds Rs.3 lakhs. The bill of entry or a shipping bill in respect of import or export of such goods as the case may be issued by the proper officer, shall also be essential.
7. Here in this case, admittedly as stated in the counter affidavit, the duty drawback amount demanded in the show cause notices is less than Rs.3 lakhs i.e., Rs.2,09,784, Rs.2,83,780 and Rs.1,42,021. Therefore the second respondent has rightly rejected the application seeking settlement in accordance with section 127-C, where the procedures to be followed on receipt of the application under Section 127-B are contemplated. Section 127-C of the Customs Act, 1962, reads as follows:
"127-C. Procedure on receipt of an application under section 127-B.-
(1) On receipt of an application under section 127-B, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the application made by him should be allowed to be proceeded with and after taking into consideration the explanation provided by the applicant, the Settlement Commission, shall, within a period of fourteen days from the date of the notice, by an order, allow the application to be proceeded with or reject the application, as the case may be, and the proceedings before the Settlement Commission shall abate on the date of rejection:
Provided that where no notice has been issued or no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with."
By a reading of Section 127-C it is evident that on receipt of application under section 127-B, the Settlement Commission shall within a period of 7 days issue notice to the applicant and within 14 days from the date of notice, by an order, allow the application to be proceeded with, or reject the application, as the case may be, and if it is not rejected, the application shall be deemed to have been allowed to be proceeded with.
8. In the case on hand, the settlement application was filed by the petitioner on 22.10.2008 for three show cause notices. Notice was issued on 28.10.2008 and the peitioner replied through its counsel on 3.11.2008 and 10.11.2008 and the impugned order was passed on 11.11.2008. The said order is in terms of section 127-C i.e, rejecting the application for settlement, specifically for non-compliance of
section 127-B(1)(b).9. The petitioner's contention that under a single code it exported goods in a calendar year and hence the same is to be treated as single export, cannot be sustained, as the requirement as per section 127-B of the Customs Act, 1962, is to do export by a bill of entry or shipping bill. Admittedly, bill of entry or shipping bill was issued by three authorities and three show cause notices are issued. Unless the amount mentioned in the show cause notice in a case exceeds Rs.3 lakhs, the Settlement Commission has no jurisdiction to entertain the settlement application under section 127-B, under which the petitioner filed the settlement application.
There is no merit in the writ petition and the writ petition is dismissed. No costs. Connected M.P.No.1 of 2009 is also dismissed.
vr To
1. The Principal Secretary, Ministry of Finance, Directorate of Central Excise & Intelligence, Chennai Zonal Unit, C3, C Wing, Rajaji Bhawan, Besant Nagar, Chennai 600 090.
2. The Customs & Central Excise Settlement Commission, Additional Bench, II Floor, Narmada Block, Customs House, No.60, Rajaji Salai, Chennai 600 001