“Discharge of liability of one of the noticees either by making a payment without contest or by settlement before the Settlement Commissioner would not absolve other noticees from their liability.” –Division bench of Delhi HC observed in M/s Seville Products Ltd. Vs. Commissioner of Customs & Exports.
Based on the above mentioned precedent, the Delhi High Court, while allowing Customs Commissioner’s appeal, sets aside the decision of Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) extending settlement immunity to the noticee who didn’t approach before the settlement commissioner.
The Petitioner, Commissioner of Customs challenged the order of the CESTAT dated May 10, 2023. The order favoured the respondent, M/s Evergreen Shipping Agency India Pvt Ltd, who appealed against a penalty imposed on them.
The CESTAT recognized a joint Show Cause Notice issued on August 14, 2017, to the respondent and others, including M/s. A.K.S. Apparels, Mr. Nitin Gupta, Mr. Imran Mirza, and M/s. A.P.L. India Pvt. Ltd.
M/s. A.K.S. Apparels and Mr. Nitin Gupta sought help from the Settlement Commission, which granted them immunity from prosecution in its final order dated April 20, 2018. However, the Tribunal’s order, granted the respondent the same immunity as a co-noticee with M/s. A.K.S. Apparels and Mr. Nitin Gupta, leading to the Commissioner’s appeal.
Referring to a judgment on May 18, 2023, in M/s Seville Products Ltd. vs Commissioner of Customs & Exports, wherein, the Division Bench of the Delhi HC clarified that relieving one noticee’s liability, whether through payment or settlement before the Settlement Commissioner, doesn’t excuse other noticees from their obligations. A subsequent Special Leave Petition challenging the judgment was dismissed by the Supreme Court on January 12, 2024.
Considering this precedent, the bench of Justices Sanjeev Sachdeva and Ravinder Dudeja, overturned the CESTAT’s decision to grant immunity to the respondent, similar to the co-noticees, was found unsustainable. As a result, the order granting immunity to the respondent on May 10, 2023, has been revoked.
The respondent’s appeal is reinstated in the tribunal’s records. The tribunal was directed to review the respondent’s appeal on its merits and in accordance with the law.
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