Legal principle

A settlement application under Section 127B cannot be rejected as non-maintainable without a reasonable opportunity of hearing, and prima facie the second proviso to Section 127B(1) bars only applications where proceedings for the levy, assessment and collection of customs duty — not prosecution proceedings — are pending before the Appellate Tribunal or a Court.

Court decision

The Madras High Court allowed the writ petition with no costs and set aside the impugned order No.1/2013-Cus dated 20.02.2013, deciding in favour of the petitioner on the procedural point. It directed the petitioner to appear before the Settlement Commission on 14.11.2019, with the Commission to pass an order after hearing the petitioner on the question of maintainability, expressly making clear that none of its observations would stand in the way of the Commission deciding that legal issue independently and in accordance with law; the Court only prima facie agreed with the Agarwal Trading Co. rationale and did not itself conclusively settle maintainability.

Facts

M/s. Usha International Ltd. filed an application under Section 127B of the Customs Act, 1962 before the Customs & Central Excise Settlement Commission for settlement of a case arising from a show cause notice (the goods involved are not identified in the extract). The Commission issued notice on 07.02.2013 under Section 127C(1), prior to admission/hearing, raising queries including whether any case was pending before the Appellate Tribunal or a Court, which would attract the bar of the second proviso to Section 127B. The petitioner replied on 15.02.2013 asserting maintainability and specifically stating at para-11 that no case on the show cause notice was pending before CESTAT or any Court, while para-20 of the settlement application disclosed the CBI prosecution launched against it in the Special CBI Court. Notwithstanding the reply, the Settlement Commission passed order No.1/2013-Cus dated 20.02.2013 rejecting the application as non-maintainable under the second proviso to Section 127B without hearing the petitioner, prompting this writ petition for a writ of certiorarified mandamus.

Key provisions

• Section 127B, Customs Act, 1962 — Application for settlement of cases
• Section 127A(b), Customs Act, 1962 — Definitions