Seller cannot dissect Settlement Commission Order to avail Preferred Provisions Only: Delhi HC upholds ₹1.15 Crore Penalty [Read Order]

The Delhi High Court recently upheld the imposition of ₹1.15 Crore Penalty against a trader, averring that Order passed by the Settlement Commission in regards to adjudication of a specific issue cannot be chosen in parts, and that the concerned trader is required to follow the provisions of the order in full.

The verdict was delivered in a Writ Petition filed by KBS Industries Ltd. & Anr., a manufacturer of high quality semi finished copper and copper alloy products (rods, bus bars, strips, plates, wires, sheet and circles) for a wide range of engineering industries.

The Petitioner utilizes the provisions of two Advance Authorisations (DGFT Licences) granted to KBS to import Continuous Cast Copper Rod 8mm valued at ₹10,85,60,299/- against Advance Authorisation dated 31.07.2015 and Copper Scrap valued at ₹5,43,06,644.30/- against Advance Authorisation dated 17.08.2016, all free of duty. It was observed that KBS failed to discharge their allied export obligations and instead proceeded to sell the goods in the local market.

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Following investigation, the Commissioner of Customs ascribed onto the Petitioner, a penalty liability of ₹2,35,24,597/- along with ₹20,00,000/- towards interest liability. Subsequently, the Settlement Commission also passed an Order settling the duty liability of KBS at ₹2,35,24,597/- along with interest and penalty.

Advocates Tuhina and Deep Shah, appearing for the Petitioner contested the interest levied by the Settlement Commission, averring the same to be done without authority of law, while Senior Standing Counsel Harpreet Singh appeared for the Respondents along with Suhani Mathur.

The Delhi High Court Bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed that an Applicant before the Settlement Commission does not have the liberty to dissect or seek merit review of such order passed under Section 127C of the Customs Act, 1962 which has to be accepted in its entirety.

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Observing that the Petitioners had availed a scheme to import material against advance authorization without payment of customs duty, special additional duty, safeguard duty and anti-dumping duty, which mandated the levy of 15% interest from the date of clearance if the goods had not been repurposed and exported within the time frame.

The Impugned Settlement Commission order explicitly provides that the order would be void, vitiating all granted immunities if the Petitioners fail to comply with the provisions of the Order. In light of the observations made, the Delhi High Court upheld the Petitioner’s liabilities to pay requisite duties from the date of clearance of the imported goods.

To Read the full text of the Order CLICK HERE

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