In the case of M/s M.C. Punjwani vs. Commissioner of Custom, Mumbai Export I, the Custom, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai held that the purpose of compounding of offence against the payment of compounding amount is to prevent litigation and encourage early settlement of the dispute.
The appellant has committed the offence pertaining to the importation of Stainless Steel Plates, which was utilized for the purpose of manufacturing thread protectors for the pipes to be supplied to O.N.G.C. and the benefit of exemption was claimed. Further later on, on the basis of the investigation undergone it was discovered that as required by the license, the threads protectors were not made of stainless steel. Further, it was discovered that the applicant was engaged in the smuggling of the S.S. Plates, and also produced false consumption certificates. The appellant wants to compound the offence against payment of compounding amount.
The issue raised in this case was whether the compounding of offenses against the payment of compounding amount can be done or not?
The Custom, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai comprising of Hon’ble Mr. Ajay Sharma, a Judicial Member in the light of the guidelines issued by Circular dated 2009 held that compounding of offence against the payment of compounding amount is to prevent litigation and encourage early settlement of a dispute. Further, it was held that the application which was filed by the applicant i.e. M/s M.C. Punjwani for compounding falls within the four corners of the circular dated 2009 and as a consequence, the application was allowed by the tribunal. Therefore, the impugned order of the commissioner was set aside.