Settlement Commission has no jurisdiction to decide smuggling cases of goods specified U/s. 123 of Customs Act

Brief of the case:

The Hon’ble Delhi High Court in the case of Additional Commissioner of Customs vs. Shri Ram Niwas Verma held that acceptance of application by settlement commission in respect of gold which is covered in sec 123 is without jurisdiction as 3^rd proviso to Sec 127B (1) provide a clear bar on the applications made in respect of goods covered u/s 123.

Facts of the case:

• On 16.06.2013 the assessee landed at New Delhi Indira Gandhi International Airport, as part of his baggage, brought into India 6452.600 gms of gold.
• While he was trying to cross the green channel, a Customs Officer intercepted him and on being asked by the Customs Officer as to whether he carried any dutiable goods he replied in negative.
• On examination of him and his baggage it was found that he was carrying 6452.600 gms wrapped in brown tape which was tied to his waist by a black belt and the same was seized by the customs officer.
• The assessee made an application before Settlement Commission u/s 127B of the Customs Act to settle the duty dues and penalties.
• After examining the assessee’s application, Settlement Commission passed an order for settlement of dues.
• Revenue filed a writ petition before High Court objecting that assessee’s application before Settlement Commission is not maintainable and commission has no jurisdiction to go into the matter at all.

Contention of the Revenue:

• The settlement commission even after raising an objection from department’s end that the application is not maintable in view of subject goods being gold covered by sec 123 , decided to allow the application of assessee.
• Thus, the order passed by it for allowing settlement is plainly bad in law.

Contention of the Assessee:

• The learned counsel for assessee placed reliance on the decision of this High Court in the case of Ashok Kumar Jain 2013 (292) ELT 32 (Del) and also on the decision of Division Bench of same High Court in case of Komal Jain v. Union of India and Another: 2014 (304) ELT 675 (Del).
• In these two decisions the court decided the case in favour of assessee on the identical facts.

Issue before High Court:

• Whether the Settlement Commission was right in accepting assessee’s application by holding that gold is not covered in the goods to which section 123 applies?

Held by Hon’ble High Court:

• 3^rd Provision to Sec 127B (1) plainly provides that no application for settlement can be made if it relates to goods to which Section 123 applies. Section 123(2) specifically provides that the said Section applies to gold also.
• Thus, the joint reading of these two provisions clearly indicate that no application under Section 127B (1) can be made in relation to gold.
• Therefore, the court do not have any good reason to uphold the commission’s rejection of objection raised by revenue.
• Agreeing with the submissions made by the revenue, the court held that the acceptance of application by settlement commission was without jurisdiction and thus, the order of commission is liable to set aside.
• Further, the reliance placed by assessee’s counsel on the decision of this High court in the case of Komal Jain vs. UOI would not help here, because in that case revenue did not make any objection before settlement commission which is not so in the present case as in this case the revenue well in time raised objections on acceptance of assessee’s application.
• In result the writ petition filed by revenue was allowed.