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Case Law Details

Case Name : Union of India Vs Pratibha Construction Engineers & Contractors (India) Pvt. Ltd. (Bombay High Court)
Appeal Number : Writ Petition No. 2005 of 2010
Date of Judgement/Order : 01/12/2022
Related Assessment Year :

Union of India Vs Pratibha Construction Engineers & Contractors (India) Pvt. Ltd. (Bombay High Court)

Section 127H of the Act of 1962 confers power on the Settlement Commission to grant immunity from prosecution and penalty. Section 127H(1) as it read prior to 1 June 2007 empowered the Settlement Commission, upon satisfaction of the conditions laid down in the provisions, to grant immunity either wholly or in part from the imposition of any penalty, fine and interest.

Thereafter section 127H(1) was amended by the Finance Act, 2007 brought into effect from 1 June 2007. By this amendment, the phrase “interest” has been deleted from section 127H(1).

The show-cause-notice is dated 4 September 2008. The application for settlement filed by Respondent No.1 is dated 16 December 2009. The assertion in the petition that after the amendment and post 1 June 2007, the Settlement Commission would not have power in respect of prosecution and penalty has gone uncontroverted.

Neither the Respondent No.1 has filed reply controverting this position nor has given any instruction to his advocate. Therefore, we set aside the the complete immunity granted to Respondent No.1 in respect of interest.

Accordingly Rule is made absolute in terms of prayer clause (b). The impugned order of the Settlement Commission to the extent that it grants complete immunity to Respondent No.1 as regards interest, is quashed and set aside. No order as to costs.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

Heard the learned counsel for the parties.

2. By this petition, the Union of India through Commissioner of Customs (Import) has challenged the order dated 21 April 2009 passed by the Settlement Commission granting of immunity to Respondent No.1 towards the interest liability.

3. When the petition came up on board on the last occasion, learned counsel for Respondent No.1 had stated that in spite of repeated communications, no response is being received from Respondent No.1. By way of indulgence, the matter was adjourned and Respondent No.1 was put to notice that if none appears on the next date, it would be presumed that Respondent No.1 is not interested in sustaining the order of the Settlement Commissioner and appropriate order would be passed. The orders of this Court are uploaded on the website and are accessible to the litigants. Today also the learned counsel for Respondent No.1 reiterates that has no instructions.

4. Respondent No.1 is a private limited company engaged in business of civil engineering works. At the relevant time, Respondent No.1 received a work order from Maharashtra State Road Development Corporation for construction of a road. Respondent No.1 filed a Bill of Entry in respect of imported Electronic Control Speco Asphalt Hot Mixing Plant and claimed benefit of exemption under notification dated 1 March 2002 read with List 18 and Condition 40 appended to the notification. Respondent No.1 at the time of importing the Hot Mixing Plant had undertaken that the machine will be exclusively used for the work of construction of national highways and will not be sold before the expiry of five years of import. A show-cause-notice was issued to Respondent No.1 under section 124 read with section 28 of the Customs Act, 1962- in respect of evasion of customs duty amounting to Rs.83,75,069/- on the import of the Asphalt Hot Mixing Plant stating that the Petitioner had unduly availed the exemption of Notification No.21/2002 dated 1 March 2002 (as amended). The show-cause-notice was pursuant to the intelligence gathered by the department that Respondent No.1 had claimed certain duty exemption benefits and diverted the same to some other company. Also that the Respondent No.1 is that Respondent No.1 disposed of the imported Hot Mixing Plant within five years from the importation in violation of the undertaking given to Customs Department at the time of import.

5. The Commissioner of Customs (Import) by order dated 26 March 2007 directed provisional release. The Respondent No.1 filed an application on 16 February 2009 under section 127-B of the Customs Act, 1962 for settlement of duty of Rs.83,75,069/- arising out of show-cause-notice dated 4 September 2008. Respondent No.1, in the application for settlement, admitted the duty liability of Rs.83,75,609 and paid the amount of Rs.54,58,709 towards interest liability. Respondent No.1 stated that interest under section 28AB of the Act was not due from Respondent No.1 and sought immunity in respect of the same. The claim of Respondent No.1 in respect of interest liability was opposed by the Petitioner- Department.

6. The Settlement Commission referred to its earlier decision in the case of one Valecha Engineering Ltd., and by a cryptic order held that no interest appears to be leviable. Accordingly, the Settlement Commission granted complete immunity to Respondent No.1 from the liability of interest.

7. Mr. Jetly, learned Senior Advocate appearing for the Petitioner states that Exh.D is erroneously annexed and the Petitioner is not relying on this document as the impugned order discloses all the relevant facts for challenge.

8. Mr. Jetly submitted that the order passed by the Settlement Commission is without any jurisdiction or power as the Settlement Commission has completely omitted the amendment to section 127H(1) of the Act of 1962. Mr. Jetly submitted that the amendment to relevant provision has taken away the power to grant immunity in respect of interest.

9. Section 127H of the Act of 1962 confers power on the Settlement Commission to grant immunity from prosecution and penalty. Section 127H(1) as it read prior to 1 June 2007 empowered the Settlement Commission, upon satisfaction of the conditions laid down in the provisions, to grant immunity either wholly or in part from the imposition of any penalty, fine and interest. The relevant provision before amendment read thus:

“127H. Power of Settlement Commission to grant immunity from prosecution and penalty.

(1) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 127B has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his duty liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Actor under the Indian Penal Code or under any other Central Act for the time being in force and also either wholly or in part from the imposition of any penalty, fine and interest under this Act, with respect to the case covered by the settlement:

…..                  …..                 …..                 …..                 …..                 …..                 …..                 …..”

(emphasis supplied)

Thereafter section 127H(1) was amended by the Finance Act, 2007 brought into effect from 1 June 2007. By this amendment, the phrase “interest” has been deleted from section 127H(1). The amended provision reads thus:

“(1) The Settlement Commission may, if it is satisfied that any person who made the application for settlement under section 127B has co-operated with the Settlement Commission in the proceedings before it and has made a full and true disclosure of his duty liability, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act and also either wholly or in part from the imposition of any penalty and fine under this Act, with respect to the case covered by the settlement:

…..                  …..                 …..                 …..                 …..                 …..                 …..                 …..”

(emphasis supplied)

The show-cause-notice is dated 4 September 2008. The application for settlement filed by Respondent No.1 is dated 16 December 2009. The assertion in the petition that after the amendment and post 1 June 2007, the Settlement Commission would not have power in respect of prosecution and penalty has gone uncontroverted.

Neither the Respondent No.1 has filed reply controverting this position nor has given any instruction to his advocate. Therefore, we set aside the the complete immunity granted to Respondent No.1 in respect of interest.

10. Accordingly Rule is made absolute in terms of prayer clause (b). The impugned order of the Settlement Commission to the extent that it grants complete immunity to Respondent No.1 as regards interest, is quashed and set aside. No order as to costs.

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