Legal principle

Chapter XIV-A settlement provisions must be strictly construed — the Settlement Commission has no jurisdiction over cases of deliberate mis-declaration or smuggling, and the third proviso to Section 127B expressly bars settlement applications in respect of goods to which Section 123 applies.

Court decision

The writ petition was allowed: the Karnataka High Court quashed the Settlement Commission's order dated 26-9-2001 in SA(C) 10/2001 by writ of certiorari, holding the Commission lacked jurisdiction since the case involved mis-declaration/smuggling (not mis-classification) and Section 123 notified goods excluded by the third proviso to Section 127B. The respondent was relegated to normal adjudication and directed to appear before the adjudicating authority on 15-2-2006; no order as to costs.

Facts

The respondent, returning from Singapore on 3-12-1999, cleared goods as personal baggage declaring them to be only toys, which the department alleged was a mis-declaration since the baggage actually contained mobile phones (including in CKD condition), computer ROMs and notebook ROMs — items notified under Section 123 — brought for commercial sale. The department issued a show cause notice dated 23-5-2000 under Section 124 proposing duty of Rs. 18,38,300 along with penalty and confiscation. Instead of contesting adjudication, the respondent filed a settlement application under Section 127B, and the Settlement Commission determined duty at Rs. 11,25,040, levied a penalty of Rs. 25,000 under Section 112(b)(v) for 'brazen attempt at... smuggling', and granted immunity from prosecution under Section 127H. The Commissioner of Customs, Bangalore challenged this settlement order dated 26-9-2001 by writ petition.

Key provisions

• Section 112(b)(v), Customs Act, 1962 — Penalty for improper importation of goods
• Section 3, Customs Act, 1962 — Classes of officers of customs
• Section 127H, Customs Act, 1962 — Power of Settlement Commission to grant immunity from prosecution and penalty