Legal principle

Even cases involving alleged fraud, smuggling or deliberate mis-declaration can be settled under Section 127-B of the Customs Act, provided the statutory conditions — including issue of a show cause notice — are satisfied.

Court decision

The Division Bench allowed the appeal, set aside the single Judge's order and restored the Settlement Commission's admission order dated 15.2.2001, holding that even cases in which fraud, smuggling or deliberate mis-declaration is alleged can come within Section 127-B for settlement if the stated conditions are satisfied, and in favour of the appellant.

Facts

The appellant, V.C. Mohan, Managing Director of Moonstar Automation Pvt. Ltd., filed bill of entry No.235337 dated 19.7.2000 in the name of M/s. Goutham Enterprises for clearance of 300 Acer CD-ROM drives valued at Rs.4,71,450/- CIF. Examination on 24.7.2000 revealed the consignment actually contained 246 Acer CD-ROM drives, 736 cellular mobile phones with chargers, ear phones, flip tops and hard disc drives worth Rs.43,56,189/- CIF, so the goods were seized for mis-declaration of description and value. A show cause notice dated 19.9.2000 was issued under Section 124 proposing revision of value, confiscation under Section 111(i)(l) and (m) and penalty under Section 112(a), also citing violation of Section 46(4). The appellant applied under Section 127-B for settlement; the Settlement Commission admitted the application on 15.2.2001, but the single Judge quashed the admission order on the Commissioner's writ petition, leading to this appeal.

Key provisions

• Section 127, Customs Act, 1962 — Award of confiscation or penalty by customs officers not to interfere with other punishments
• Section 110, Customs Act, 1962 — Seizure of goods, documents and things
• Section 125, Customs Act, 1962 — Option to pay fine in lieu of confiscation
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 111(i)(l), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Rule 3, Customs (Settlement of Cases) Rules, 2007 — Form and manner of application
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 46(4), Customs Act, 1962 — Entry of goods on importation