Legal principle

Since the bar on successive settlement applications under Section 127L(2) was deleted by the Finance Act, 2010, an adjudication order passed without a noticee's participation while settlement under Chapter XIV-A is being pursued can be set aside and the noticee given a fresh opportunity to apply to the Settlement Commission.

Court decision

The writ petitions were disposed of in favour of the petitioners: the impugned Order-in-Original No.41/2024 was set aside, the second respondent was directed to pass fresh orders on merits and in accordance with law within three months, and the petitioners were left free to approach the Settlement Commission, whose discretion on any such application was left intact; no costs.

Facts

Four petitioners led by M/s Alba Industries Ltd. (the others, S.Masanam, S.Sukumar and M/s Balamurugan Chemicals (P) Ltd., being co-noticees) challenged Order-in-Original No.41/2024 dated 26.03.2024 passed by the Additional Commissioner of Customs (Preventive), Tiruchirappalli, confirming the demand made in a show cause notice dated 23.03.2021; the goods involved are not described in the extract. Before the SCN issued, the main noticee had paid the disputed amount of Rs.5,12,10,091/-, and during the writ proceedings paid further interest, including Rs.3,48,09,075/- on 15.07.2024. The petitioners had repeatedly sought adjournments of personal hearings stating they wished to settle under Chapter XIV-A, yet the order was passed without their participation. An earlier SCN dated 02.01.2020 had led to OIO No.2/2021, which this Court quashed in earlier writ petitions on payment of interest with liberty to move the Settlement Commission, and the petitioners were simultaneously undergoing insolvency proceedings under the IBC, 2016 (NCLT final order dated 16.03.2022).

Key provisions

• Section 127, Customs Act, 1962 — Award of confiscation or penalty by customs officers not to interfere with other punishments
• Section 127L, Customs Act, 1962 — Bar on subsequent application for settlement in certain cases
• Section 127B, Customs Act, 1962 — Application for settlement of cases
• Section 122, Customs Act, 1962 — Adjudication of confiscations and penalties
• Section 112(b), Customs Act, 1962 — Penalty for improper importation of goods