Legal principle

Co-operation with the Settlement Commission does not, ipso facto, insulate an applicant from penalty, though non-cooperation does disentitle an applicant thereto — immunity under Section 127H(1) is discretionary and may be granted only wholly or in part.

Court decision

The writ petition was dismissed with no order as to costs. The court held there was no error apparent on the face of the Final Order: the penalty was premised on the overall merits of the case, not solely on the impugned finding; under Section 127H(1) co-operation and full and true disclosure do not entitle an applicant to immunity from penalty as of right, and the penalty — only about 10% of the duty evaded — was not unreasonably high. However, the court entered a caveat: Section 127B(5) applications must be heard in open court and disposed of by reasoned orders, and the SIO's unreasoned administrative communication of 18 February 2019 was 'completely intolerable in law'; yet, since the decision on merits suffered no infirmity in law or on facts, interference was declined in favour of the Settlement Commission's decision.

Facts

Acting on information that signage materials imported from China and Taiwan were being undervalued and misdescribed by various importers, DRI searched the premises of M/s Taneja Technocom and then the office-cum-godown of the petitioner, a proprietary concern of Puneet Taneja (brother of Manish Taneja), seizing imported goods and recovering dual-invoicing evidence. In his Section 108 statement Puneet Taneja admitted under-invoicing, remittance of the differential value to overseas suppliers through hawala channels, and maintenance of proforma invoices showing true values alongside undervalued commercial invoices presented to Customs. Show Cause Notice No. 09/2017 dated 24 March 2017 proposed re-determination of value under Section 14, recovery of differential duty of ₹79,21,701 under Section 28, confiscation under Section 111(m) and penalties under Sections 112 and 114AA. The petitioner did not contest but applied under Section 127B; by Final Order dated 1 November 2018 the Settlement Commission settled the case on appropriation of ₹84,28,058 duty, ₹22,12,969 interest and payment of penalty of ₹8,54,000. Its rectification application against the penalty was rejected by communication dated 18 February 2019 stating there was no error apparent, prompting this writ petition.

Key provisions

• Section 127B, Customs Act, 1962 — Application for settlement of cases
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 112, Customs Act, 1962 — Penalty for improper importation of goods
• Section 114AA, Customs Act, 1962 — Penalty for use of false and incorrect material
• Section 127C(5a), 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 111(m), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Section 127H(1), Customs Act, 1962 — Power of Settlement Commission to grant immunity from prosecution and penalty