Case Law Details
Commissioner of Customs Vs Evergreen Shipping Agency India Pvt. Ltd. (Delhi High Court)
Introduction: The case of Commissioner of Customs Vs Evergreen Shipping Agency India Pvt. Ltd. presents a pivotal ruling by the Delhi High Court, challenging a decision by the Custom Excise & Service Tax Appellate Tribunal (CESTAT). The appeal pertains to penalties imposed against the respondent, raising crucial questions regarding liability and settlement under customs law.
Detailed Analysis: The dispute arose from a common Show Cause Notice issued to multiple parties, including the respondent, Evergreen Shipping Agency India Pvt. Ltd. The Tribunal’s decision, which favored the respondent, was based on the premise that immunity granted by the Settlement Commission to co-noticees also extended to the appellant, the Commissioner of Customs.
However, the Delhi High Court, drawing from precedent and legal principles, overturned this ruling. Citing a prior judgment in a similar matter, the court emphasized that settling the liability of one party, whether through payment or settlement before the Settlement Commissioner, does not absolve other noticees from their obligations. This stance was reaffirmed by the Hon’ble Supreme Court’s dismissal of a Special Leave Petition challenging the precedent.
The court’s decision underscores the principle of individual liability under customs law. It clarifies that each noticee is independently responsible for addressing allegations and liabilities specified in a Show Cause Notice. Thus, immunity granted to one party does not automatically extend to others named in the same notice.
Conclusion: The ruling by the Delhi High Court in Commissioner of Customs Vs Evergreen Shipping Agency India Pvt. Ltd. serves as a significant clarification regarding liabilities and settlements in customs cases. By overturning the CESTAT ruling, the court reaffirms the fundamental principle that each party named in a Show Cause Notice is accountable for their actions and must address allegations independently. This decision emphasizes the importance of upholding individual responsibility in customs proceedings, ensuring fair and impartial adjudication of disputes.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. Appellant, Commissioner of Customs, impugns order dated 10.05.2023 passed by the Custom Excise & Service Tax Appellate Tribunal (hereinafter referred to as the “Tribunal”), whereby, the appeal of the respondent impugning a penalty imposed against the respondent was allowed.
2. The Tribunal noticed that a common Show Cause Notice dated 14.08.2017 had been issued to the respondent along with other noticees i.e. M/s. A.K.S. Apparels, Mr. Nitin Gupta, Mr. Imran Mirza and M/s. A.P.L. India Pvt. Ltd.
3. M/s. A.K.S. Apparels and Mr. Nitin Gupta had approached the Settlement Commission and the Settlement Commission vide its final order dated 20.04.2018, granted immunity to said M/s. K.S. Apparels and Mr. Nitin Gupta from prosecution etc.
4. The Tribunal by the impugned order dated 10.05.2023 held that since the appellant was a co-noticee along with M/s. A.K.S. Apparels and Mr. Nitin Gupta, appellant was also entitled to immunity granted by the Settlement Commission to the main noticee.
5. Aggrieved by the said observation, the Commissioner of Customs has filed the subject appeal.
6. Reference may be had to the judgment of a Coordinate Bench of this Court dated 18.05.2023 in CUSAA No. 88/2022 titled M/s Seville Products Ltd. Vs. Commissioner of Customs & Exports, wherein the Division Bench has held that discharge of liability of one of the noticees either by making a payment without contest or by settlement before the Settlement Commissioner would not absolve other noticees from their liability.
7. We are informed that a Special Leave Petition impugning the said judgment in M/s. Seville Products being SLP (C) (Diary) 45245/2023 has been dismissed by the Hon’ble Supreme Court on 12.01.2024.
8. In view of the judgment of the Coordinate Bench in M/s. Seville Products. (supra) as upheld by the Hon’ble Supreme Court the reasoning of the Tribunal extending immunity granted to the other co-noticees to the respondent is not sustainable.
9. Accordingly, the impugned order dated 10.05.2023 passed by the Tribunal granting immunity to the respondent is set aside. The appeal of the respondent is restored on the records of the The matter is remitted to the Tribunal to decide the appeal filed by the respondent on merits in accordance with law.
10. The appeal is accordingly disposed of in view of the above.
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