KBS Industries Ltd & Anr. Vs Customs Central Excise And Service Tax Settlement Commission Principal Bench New Delhi & Ors. (Delhi High Court)
Conclusion: Since the nature of the order passed under Section 127C was that of a settlement of a case, the applicant was required to accept the same in its entirety. It was not open for an applicant to dissect the order passed by the Settlement Commission or to seek merit review of the such an order.
Held: Assessee-company and its directors had filed an application under Section 154 seeking rectification of the impugned order to the extent that it imposed the interest of ₹1,15,13,067/- (Rupees One Crore Fifteen Lacs Thirteen Thousand and Sixty-Seven only), which was rejected. The Settlement Commission held that the rectification of errors under Section 154 was confined to arithmetical or clerical errors and assessee’s application was beyond the scope of the Section 154. The Settlement Commission found that there was no clerical or arithmetical error which would warrant any rectification of the impugned order. Assessee assailed the impugned order to the limited extent that the Settlement Commission had imposed interest computed at ₹1,15,13,067/- on the delayed payment of duty. Assessee were essentially aggrieved by the computation of the interest. According to assessee, the same also included the interest of Countervailing Duty (CVD) imposed under Section 3 of the CT Act as well as the Special Additional Duty (SAD) under Section 3A of the CT Act, which was contrary to the law. The sole question to be addressed was whether the impugned order to the extent that it imposed the interest amounting to ₹1,15,13,067/- warranted any interference in these proceedings. It was held that the Scheme of Chapter XIV-A that the provisions contained therein were for settlement of cases and not for adjudication of disputes. It was not open for an applicant to dissect the order passed by the Settlement Commission or to seek merit review of the such an order. Since the nature of the order passed under Section 127C was that of a settlement of a case, the applicant was required to accept the same in its entirety. Assessee had availed of a scheme, which enabled the importer to import material against advance authorization without payment of any custom duty, special additional duty, safeguard duty and anti-dumping duty. The said scheme expressly provided for levy of interest at the rate of 15% per annum from the date of clearance of the goods if the conditions for availing such exemption – which included obligations to export – were not complied with. The exemptions as availed by assessee were extended in terms of the Notification No.18/2015-Cus dated 01.04.2015 issued under Section 25. Admittedly, assessee had bound themselves to the said conditions and had availed the benefit of the said Notification. In this view, the impugned order imposing interest on delayed payment of duties was contrary to law. Assessee did not challenge the grant of advance authorizations and permission to import the goods in question without payment of duties on the condition of fulfilling the export obligations. Clearly, if the conditions were not satisfied, assessee would be liable to pay the duties on the material imported. Admittedly, such duties would be payable on the date of clearance of the goods and therefore stipulating that the interest would be payable on such dates if the conditions were not satisfied could not by any stretch be stated to be arbitrary or unreasonable.
