Ratio of the Case: With effect from 1 June 2007 an amended provision was brought into force by which the Settlement Commission cannot any longer grant a waiver or immunity from the liability to pay interest.
CLR Editorial Notes: The Petitioner is this case had challenged an order of the Settlement Commission under section 127 C (5) of the Customs Act, 1962 which directing them to pay interest in terms of the provisions of Section 28AB of the Act on the full amount of the duty in the case. Multiple petitions were filed to the department on this interest payment which were summarily rejected. A writ petition was the preferred before the High Court by the Union of India which was allowed on 19 March 2010 by directing the Commission to reconsider the issue of interest.
The Hon’ble High Court Held:
“Section 127 H of the Customs Act, 1962, prior to its amendment by Act No.22 of 2007, empowered the Settlement Commission to grant immunity, inter alia, either wholly or in part of any part of the interest. With effect from 1 June 2007 an amended provision was brought into force by which the Settlement Commission cannot any longer grant a waiver or immunity from the liability to pay interest. The application which was filed by the Petitioner and on the basis of which proceedings before the Settlement Commission proceeded, was the application dated 23 July 2008. The contention of the Petitioner is that the events which had transpired were before the amendment. That, in our view, is of no consequence in law. Under section 127B, the jurisdiction of the Settlement Commission can be invoked only after the applicant has filed a bill of entry or a shipping bill in support of the import or the export goods, as the case may be, and where in relation to such bill of entry a show cause notice is issued by the appropriate officer. This requirement is spelt out in the proviso to Section 127B. Admittedly, the application filed by the Petitioner to the Settlement Commission was after the amended provisions of Section 127H were brought into force with effect from 1 July 2007. The Settlement Commission has no jurisdiction to grant an immunity or a waiver from the statutory liability to pay interest. The liability to pay interest on delayed payment of duty under section 28AB is mandatory where any duty has not been levied or paid or has been short levied or short paid or erroneously refunded.”
—————————————————-
Frontier Cycle Industries (P.) Ltd.
v.
Union of India
Writ Petition No. 1818 of 2012
Date of Pronouncement 23.01.2013
ORDER
1. The Petitioner has challenged an order of the Settlement Commission dated 24 March 2011 under section 127C(5) of the Customs Act, 1962 directing the Petitioner to pay interest in terms of the provisions of Section 28AB of the Act on the full amount of the duty in the case.
2. The Petitioner had initially filed an application before the Settlement Commission even before the issuance of a notice to show cause which was rejected on 9 January 2007 precisely for that reason. The Petitioner moved a second application for settlement on 29 May 2007 which was rejected on 9 October 2007. A notice to show cause was issued to the Petitioner on 24 January 2008 for the recovery of duty in the amount of Rs. 93.75 lakhs upon which the Petitioner then moved the Settlement Commission with a valid application. By its order dated 27 April 2009, the Settlement Commission directed payment of duty of Rs. 93.75 lakhs and granted immunity from penalty in excess of Rs. 3.00 lakhs and from prosecution. A writ petition was preferred before this Court by the Union of India which was allowed on 19 March 2010 by directing the Commission to reconsider the issue of interest. All contentions were kept open. The Settlement Commission has by its order impugned in these proceedings directed that the interest be paid under section 28AB.
3. Section 127 H of the Customs Act, 1962, prior to its amendment by Act No.22 of 2007, empowered the Settlement Commission to grant immunity, inter alia, either wholly or in part of any part of the interest. With effect from 1 June 2007 an amended provision was brought into force bywhich the Settlement Commission cannot any longer grant a waiver or immunity from the liability to pay interest. The application which was filed by the Petitioner and on the basis of which proceedings before the Settlement Commission proceeded, was the application dated 23 July 2008. The contention of the Petitioner is that the events which had transpired were before the amendment. That, in our view, is of no consequence in law. Under section 127B, the jurisdiction of the Settlement Commission can be invoked only after the applicant has filed a bill of entry or a shipping bill in support of the import or the export goods, as the case may be, and where in relation to such bill of entry a show cause notice is issued by the appropriate officer. This requirement is spelt out in the proviso to Section 127B. Admittedly, the application filed by the Petitioner to the Settlement Commission was after the amended provisions of Section 127H were brought into force with effect from 1 July 2007. The Settlement Commission has no jurisdiction to grant an immunity or a waiver from the statutory liability to pay interest. The liability to pay interest on delayed payment of duty under section 28AB is mandatory where any duty has not been levied or paid or has been short levied or short paid or erroneously refunded.
4. The judgment of the Supreme Court in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh AIR 1953 SC 221 that was relied by the Petitioner during the course of the hearing would not support of the submission of the Petitioner. The judgment of the Supreme Court holds that a pre-existing right of appeal is not destroyed by an amendment, if the amendment is not made retrospective by express words or necessary intendment. In the present case, it was only upon the issuance of the notice to show cause that the provisions of Section 127B could have been and were validly invoked. The proceeding was, therefore, governed by the amended provisions of Section 127H under which the Settlement Commission has no jurisdiction to grant waiver or immunity from the statutory liability to pay interest.
5. So considered, there is no merit in the petition and the order of the Settlement Commission does not suffer from any error. As no other submission is urged, the petition stands dismissed. There shall be no order as to costs.
6. However, on the request of the counsel appearing on behalf of the Petitioner, we extend the time for compliance by four weeks from today.
*****
