Bombay High Court
Jayant Chawla, New Delhi vs Union Of India Through The Joint ... on 17 September, 2024
Author: M. S. Karnik
Bench: M. S. Karnik
2024:BHC-GOA:1727-DB
2024:BHC-GOA:1727-DB
902-WP 335-2006.doc
Amrut
IN THE HIGH COURT OF BOMBAY AT GOA
WRIT PETITION NO. 335 OF 2006
Jayant Chawla
of Delhi, Indian Inhabitant,
Residing at E-11, Masjid Moth, New Delhi ... Petitioner
Versus
1 Union of India,
Through the Joint Secretary
Ministry of Law Justice and Company
Affairs, Aayakar Bhawan,
M. K. Road, Churchgate,
MUMBAI - 400 020
2 Commissioner of Customs &
Central Excise, Goa, having his
Office at Pato, Panjim,
3 The Additional Director General,
DRI (Headquarters), having his
Office at B-lock, I. P. Bhavan,
7th Floor, I. P. Estate, New Delhi
4 The Customs & Central Excise Settlement
Commission (Principal Bench),
having its office at 3rd Floor, Samrat Hotel,
Kautilya Marg, Chanakyapuri, New Delhi
110 001 ... Respondents
Mr S. M. Singbal with Mr Vishal Agarwal (Through V.C.) and Ms
Neelam Kukalekar, Advocates for the petitioner.
Ms Asha Desai, Central Government Standing Counsel for the
respondents.
CORAM: M. S. KARNIK &
VALMIKI MENEZES, JJ.
DATED: 17th September 2024/
4th October 2024
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902-WP 335-2006.doc
JUDGMENT (Per M. S. Karnik, J.)
1. By this petition under Article 226 of the Constitution of India,
the petitioner prays for quashing of the impugned order dated
09.05.2006 passed by Customs and Central Excise Settlement
Commission.
2. The brief facts of the case are as follows:-
3. An intelligence was received that M/s. Laxmi Enterprises and
M/s. Pepsi Trading Company, are engaged in the import of electronic
items, by misdeclaring and understating their values causing huge
Government revenue loss by evading customs duty and selling the
imported goods through the petitioner - Jayant Chawla of New Delhi.
On the basis of the said information, a search was conducted at the
office premises of the petitioner on 25.02.2004. The statement of the
petitioner was recorded on 25.02.2004 and 28.06.2004 under
Section 108 of the Customs Act, 1962 (the Customs Act for short).
4. In his statement, the petitioner stated that he was engaged in the
business of import and trading of electronic components i.e. VCD
Compact, Tape Deck Mechanism, VCD, PCB etc., in the name of two
firms namely M/s. Pepsi Trading Company and M/s. Laxmi
Enterprises, Gaziabad. Mr Dharmender was the proprietor of M/s
Pepsi Trading Company and Mr Ramprakash was the proprietor of
M/s. Laxmi Enterprises. Both Mr Dharmender and Mr Ramprakash
were proprietors only on paper and actually, the petitioner - Jayant
Chawla operated all the business activities of these firms which
included all financial, administrative, and policy matters. The
petitioner used to give some commission to these proprietors on each
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consignment imported in the name of respective firms. The petitioner
admitted that he had imported MPEG Card -Mounted PCB for VCD
wrongly declaring the same as PCB for VCD unbranded and declared
the price of these imported MPEG Cards between Rs.25/- to Rs.30/-
per piece before the Custom whereas the market price of these items in
local market was ranging from Rs.325/- to Rs.350/- per piece. The
petitioner also stated that he used to give Rs.4000/- to Rs.5000/- per
month to the proprietors of these firms and both these proprietors were
never concerned with the import of electronic goods and sale of the
same in the local market. The petitioner in his statement on
25.02.2004 admitted that goods shown in the bills of entry were MPEG
Cards and the same had been undervalued to evade customs duty and
the bill of entry No.632569 dated 06.02.2004 filed by M/s. Super
Cassettes India Ltd., Noida, an importer for the clearance of electronic
items having the description as VISBA-3 Card, whose price was
declared as 5.9 US $ per piece was imported from Hong Kong. The
petitioner has confirmed that his firms had also imported an identical
item VISBA-3 Card as shown in the bills of entry and also admitted that
this item had been wrongly declared as components for VCD populated
PCB (unbranded) and the price of the same had been declared as 3.50
Hong Kong $ per piece which was grossly undervalued. The petitioner
admitted that the amount shown in the import documents had been
remitted through banks and the amount of undervaluation made had
been paid to foreign suppliers through hawala transactions in cash.
5. The statement of Ram Prakash, proprietor of M/s. Laxmi
Enterprises was recorded on 28.06.2004 under Section 108 of the
Customs Act. Chapter XIV-A of the Customs Act deals with settlement
of cases. Section 127-A contains the definitions. Section 127-B provides
for making an application for the settlement of cases and its disposal in
terms of the procedure provided under Section 127-C of the Customs
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Act. Section 127-C prescribes the procedure on receipt of an
application under Section 127-B of the Customs Act.
6. Section 127-B of the Customs Act which is relevant in the context
reads thus:-
"127-B. Application for settlement of cases.-(1)
Any importer, exporter or any other person
(hereinafter referred to as the applicant in this
Chapter) may, in respect of a case, relating to him
make an application, before adjudication to the
Settlement Commission to have the case settled, in
such form and in such manner as may be specified by
rules, and containing a full and true disclosure of his
duty liability which has not been disclosed before the
proper officer, the manner in which such liability has
been incurred, the additional amount of customs
duty accepted to be payable by him and such other
particulars as may be specified by rules including the
particulars of such dutiable goods in respect of which
he admits short levy on account of misclassification,
under-valuation or inapplicability of exemption
notification [ or otherwise] and such application
shall be disposed of in the manner hereinafter
provided:
Provided that no such application shall be made
unless, -
[(a) the applicant has filed a bill of entry, or a
shipping bill, or a bill of export, or made a baggage
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declaration, or a label or declaration accompanying
the goods imported or exported through post or
courier, as the case may be, and in relation to such
document or documents, a show cause notice has
been issued to him by the proper officer;]
(b) the additional amount of duty accepted by the
applicant in his application exceeds three lakh
rupees; and
(c) the applicant has paid the additional amount of
customs duty accepted by him along with interest
due under [Section 28-AA]:
Provided further that no application shall be
entertained by the Settlement Commission under this
sub-section in cases which are pending in the
Appellate Tribunal or any Court:
Provided also that no application under this sub-
section shall be made in relation to goods to which
section 123 applies or to goods in relation to which
any offence under the Narcotic Drugs and
Psychotropic Substances Act, 1985 (61 of 1985) has
been committed:
Provided also that no application under this sub-
section shall be made for the interpretation of the
classification of the goods under the Customs Tariff
Act, 1975 (51 of 1975).
[***]]
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[***]
(3) Every application made under sub-section (1)
shall be accompanied by such fees as may be
specified by rules.
(4) An application made under sub-section (1) shall
not be allowed to be withdrawn by the applicant.
[(5) Any person, other than an applicant referred to
in sub-section (1), may also make an application to
the Settlement Commission in respect of a show
cause notice issued to him in a case relating to the
applicant which has been settled or is pending before
the Settlement Commission and such notice is
pending before an adjudicating authority, in such
manner and subject to such conditions, as may be
specified by rules.]"
7. We straightaway refer to the final order dated 09.05.2006
of the Settlement Commission which is under challenge. Para 8
of the impugned order which is relevant reads thus: -
"8. The Bench has carefully examined the applications
along with relevant records and has considered the rival
pleas of the two sides. It is observed that the fraudulent
imports along with serious irregularities as alleged in
the SCN are admitted and under-valuation of the
imported goods is also accepted by the applicant. They
are only pleading a lower extent of under-valuation.
SCN is supported by the detailed evidence discussed
therein including statements dated 25.2.04, 28.6.04 and
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26.8.04 of Shri Jayant Chawla, statements dated 26.2.04
and 27.2.04 of Shri Mohan Banavaliker CHA at Goa and
statement dated 28.6.04 of Shri Ram Prakash,
Proprietor, M/s Laxmi Enterprises. The main applicant's
plea that the assessable value should be taken as HK$17
in view of the 17 cases of contemporaneous imports of
identical goods as submitted at page 12 of their paper
book, is not sound because this chart merely states the
unit price as declared in the Bills of Entry. Revenue has
pointed out with relevant particulars that these declared
prices are not accepted and in some of the cases, SCNs
have already been issued and in others SCNs are
expected to be issued shortly and in some cases,
differential amounts of duty have been accepted and
deposited by the importers. Such declared prices are
presently under question and subject matter of suitable
proceedings and they can hardly be regarded as
definitive evidence in support of the assessable value
claimed by the main applicant. No concrete evidence has
been adduced to controvert the contemporaneous value
of US$ 5.9 as relied upon in the SCN."
(emphasis supplied)
8. From the impugned order it is thus seen that in some
cases of contemporaneous imports of identical goods, the
declared prices are not accepted and in some of the cases the
show cause notices have already been issued, and in others,
show cause notices are expected to be issued shortly. In some
cases, differential amounts of duty is accepted and deposited by
the importers. The impugned order records that such declared
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prices are presently under question and subject matter of
suitable proceedings and they can hardly be regarded as
definitive evidence in support of the assessable value claimed by
the applicant. The impugned order records that no concrete
evidence has been adduced to controvert the contemporaneous
value of US$ 5.9 as relied upon in the show cause notices.
9. Ms Desai, learned counsel for the respondents
vehemently opposed the petition. She submitted that the
findings in the impugned order are unassailable based on the
materials on record. It is therefore submitted that the petition
be dismissed.
10. The petitioner relied upon a list of importers having
imported identical goods during the contemporaneous period
through various ports at unit prices similar to those admitted by
the applicant. At page 161 of the paper book, the petitioner
relied on the import of identical goods made by N. K. Overseas
at unit prices similar to those admitted by the petitioner.
11. The revenue has taken a stand that in some cases the
show cause notices are expected to be issued shortly, however,
there is no material produced on record as to whether the show
cause notices have been issued in respect of N. K. Overseas
which had imported identical goods during the
contemporaneous period at unit prices similar to those
admitted by the petitioner. Further, there is nothing placed on
record to demonstrate what was the fate of the show cause
notices issued to the importers who had imported identical
goods at unit prices similar to those admitted by the applicant.
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12. So far as N. K. Overseas is concerned, they had imported
similar goods as that of the petitioner. At this stage, it would be
pertinent to refer to the decision in M/s Mahahar
Audiotronics Pvt. Ltd. Vs Union of India and others 1.
After considering various provisions of the Customs Act, it was
held that in settling the case of under-valuation, the Settlement
Commission is also required to determine the duty liability by
adopting the lowest value in terms of Rule 5 and Rule 6 of the
Valuation Rules. It was held that the Settlement Commission
cannot ignore and/or overlook the provisions of Rule 5 and Rule
6 of the Valuation Rules. This Court relied on the decision of the
Supreme Court in Jyotendrasinhji Vs S. I. Tripathi2, and
was of the view that the orders of the Settlement Commission
are amenable to the writ jurisdiction and the judicial review
thereof is permissible under Article 226 of the Constitution of
India. Learned counsel for the revenue submitted that the order
passed in M/s Mahahar Audiotronics Pvt. Ltd. (supra) is
pending challenge before the Hon'ble Supreme Court.
13. We are of the view that when the show cause notices have
already been issued to those entities where the revenue did not
accept the declared prices and other show cause notices are
expected to be issued shortly, much would depend on the
outcome of these show cause notices. Moreover, if the revenue
had not issued show cause notices to some entities who had
imported goods at prices similar to that of the petitioner, the
Settlement Commission ought to have considered the effect of
the revenue having accepted the unit prices declared in the bill,
WP No.266 of 2002 decided on 27.07.2010
1993 Supp (3) SCC 389
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as in the case of N. K. Overseas. The Settlement Commission
was in error in observing that no concrete evidence has been
adduced to controvert the contemporaneous value of US$ 5.9 as
relied upon in the show cause notices when the case of N. K.
Overseas depicts otherwise. In our opinion, the Settlement
Commission ought to have considered the case of the petitioner
also on the basis of the declaration of prices by the importers
during the contemporaneous period in respect of which no show
cause notices were issued.
14. In our opinion, the matter needs to be remitted back to
the Settlement Commission for fresh consideration and a
decision in accordance with law. The impugned order is
accordingly set aside.
15. Learned counsel for the revenue Ms Desai expressed an
apprehension that the petitioner may avoid appearing in the
proceedings before the Settlement Commission. An affidavit has
been filed by the Petitioner Jayant Chawla providing a detailed
address as a resident of E11, Masjid Moth, New Delhi 110048
along with his mobile number and email. Learned counsel for
the petitioner on instructions of the petitioner who is present
submits that the petitioner will remain personally present on
the date of the hearing and on such dates as the Settlement
Commission may direct. It is assured by the petitioner that he
will cooperate with the Settlement Commission and shall not
seek any unnecessary adjournments. The statements made are
accepted as undertakings to this Court. Hence, the following
order: -
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16. The writ petition is allowed in the following terms:
(i) The impugned order is quashed and set
aside.
(ii) The matter is remitted to the Settlement
Commission for a fresh decision in
accordance with law after hearing the
petitioner.
(iii) The petitioner to appear before the
Settlement Commission on 14.10.2024. It
is open for the petitioner to rely on
additional materials during the
contemporaneous period.
(iv) The Settlement Commission is requested
to expeditiously decide the settlement
application which is the subject matter of
the present petition preferably within a
period of 12 weeks from 14.10.2024 on its
own merits and in accordance with law.
(v) It is made clear that we have not
expressed any opinion on merits of the
respective contentions.
(vi) The petition is disposed of. No costs.
VALMIKI MENEZES, J. M. S. KARNIK, J.
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