Legal principle

Once the 14-day period under section 127C(1) expires without an admissibility order, a settlement application is deemed allowed to be proceeded with, and the Settlement Commission cannot thereafter reject it as inadmissible under section 127B, least of all by a final order under section 127C(5).

Court decision

The Bombay High Court allowed the writ petitions, quashed and set aside the Settlement Commission's order dated 27 March 2015, and restored the settlement applications to the Commission's file for de novo consideration in accordance with law with a reasonable opportunity of hearing to all concerned. The Court granted the Commission liberty to impose, before the de novo hearing, a condition of payment of interest as determined by it under section 28AA; if the petitioners did not comply, the applications would not be considered de novo and the impugned order would stand revived with the applications deemed rejected. Parties were left to bear their own costs.

Facts

The petitioners imported consignments of electronic components (DVD parts) through Bills of Entry cleared at Nhava Sheva Customs, and were investigated on allegations that they also imported goods using Importer Exporter Codes of dummy firms with gross undervaluation and mis-description of goods. A show-cause notice dated 31 October 2013 proposed recovery of differential duty of Rs.5,66,05,713/- under section 28 with interest under section 28AA, plus penalty and confiscation. The petitioners filed settlement applications under section 127B on 27 May 2014, admitting the duty and paying the entire differential duty without interest. While the applications were pending, the Revenue issued a Corrigendum/Addendum dated 8 August 2014 revising the demand to Rs.13,02,06,668/- based on a Hong Kong Customs valuation report. By a common order dated 27 March 2015, the Settlement Commission rejected all the settlement applications as inadmissible under section 127B.

Key provisions

• Section 127B, Customs Act, 1962 — Application for settlement of cases
• Section 127C(5), Customs Act, 1962 — Procedure on receipt of an application under Section 127B
• Section 28, Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Section 28AA, Customs Act, 1962 — Interest on delayed payment of duty