Legal principle

Once an order of settlement imposes a penalty on the applicant, Section 127L of the Customs Act, 1962 forever bars that person from making any subsequent application for settlement, even in a different matter, and such an application cannot be circumvented by styling it as a fresh application under Rule 3 of the Customs (Settlement of Cases) Rules, 2007.

Court decision

The writ petition and connected miscellaneous petition were dismissed with no costs. The Court held that the bar under Section 127L applied on all fours because the first settlement order dated 07.07.2020 had imposed a penalty of Rs.4,50,000/-, and 'any other matter' bars the assessee from ever approaching the Settlement Commission again in the three situations specified in Section 127L(1); styling the application as a fresh one under Rule 3 could not circumvent the bar, and the Commission was entitled to consider the lineage and relief sought in rejecting it.

Facts

The petitioner, an importer of chemicals holding an Import Export Code, was investigated by the Directorate of Revenue Intelligence for misclassification of goods, and a consignment imported through Nhava Sheva Port was seized. A show cause notice dated 25.06.2018 demanded duties totalling Rs.1,58,75,497/- for Nhava Sheva and Chennai consignments covering June 2014 to July 2017. Separately, a demand notice dated 30.03.2018 (amended by corrigendum dated 05.12.2018) covered 17 bills of entry for 21.05.2016 to 17.02.2017, proposing reclassification, interest, confiscation under Section 111(m) and penalty under Sections 112(a)/114(a); the petitioner settled that duty and interest belatedly on 14.08.2020. The petitioner's settlement application dated 04.07.2019, confined to the show cause notice transactions, was settled by the Settlement Commission's final order dated 07.07.2020 under Section 127C, imposing differential duty, a redemption fine, and a penalty of Rs.4,50,000/- with immunity from excess penalty and prosecution. A fresh application styled under Rule 3 of the Customs (Settlement of Cases) Rules, 2007, filed on 14.08.2020 seeking immunity for the 17 bills of entry, was rejected by the Commission on 19.08.2020 invoking the bar under Section 127L, without hearing the petitioner.

Key provisions

• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 114(a), Customs Act, 1962 — Penalty for attempt to export goods improperly etc
• Section 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Rule 3, Customs (Settlement of Cases) Rules, 2007 — Form and manner of application