The main legal point established in the judgment is that the court's jurisdiction in such cases is limited to examining the legality of the procedure followed by the Settlement Commission, not the validity of its order.

JUDGMENT :

K.R. Shriram, J.

1. Respondent No.1 had filed various bills of entries for clearance of goods with declared description “Secondary Defective High Speed Drills/Rods”. Intelligence report was received that there has been gross misdeclaration in the description, quantity and value in order to evade payment of appropriate duty of customs. Therefore, Special Investigation and Intelligence Branch (SIIB) of the customs department took up the investigation and found lot of discrepancies. Accordingly, show cause notices were issued. Upon receiving show cause notice Respondent No.1 approach the Settlement Commission under Section 127B of the Customs Act, 1962 (the Act) by filing two applications. The duty demanded in two show cause notices was Rs.2,13,72,356/- whereas petitioner admitted additional duty of Rs.72,64,064/-. The application that was filed on 21st September 2010 came to be disposed by an order dated 25th February 2011. The Union of India through Commissioner of Customs (Import) has approached this court impugning the said order dated 25th February 2011 passed by Respondent No.2 – Settlement Commission.

2. Mr. Jetly urged that Section 127B(1) of the Act mandates that any importer in respect of a case relating to him may 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. The application shall contain full and true disclosure of its duty liability which has not been disclosed before the proper officer, the manner in which such liability has 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.

3. Mr. Jetly submitted that from the reading of impugned order it is evident that disclosure made by Respondent No.1 was neither full nor true. In such circumstances, Respondent No.2, i.e., the Settlement Commission ought to have summarily rejected the application for settlement.

4. To elaborate, Mr. Jetly submitted that application filed by Respondent No.1 on 21st September 2010 accepted duty liability of Rs.16,03,948/- as against demand of Rs.36,32,032/- set out in the show cause notice. This liability was revised upward from Rs.16,03,948/- to Rs.22,11,856/- during the course of hearing by way of submissions dated 16th January 2011. This liability was further revised upward from Rs.16,03,948/- to Rs.22,11,856/- and to Rs.32,08,337/-. According to Mr.Jetly, it was thus evident that Respondent No.1 failed to comply with the mandatory conditions of Section 127B of the said Act. Respondent No.1, it was submitted that at no point of time made a disclosure of the correct transaction value at which he had procured the goods.

5. Mr. Jetly also submitted that Respondent No.1 continued with his dishonesty even before the Settlement Commission by making references to other cases that could not have been made and therefore failed to comply with the condition precedent for making application to Settlement Commission. Therefore, the order requires to be quashed and set aside.

6. Mr. Jetly also referred to the order dated 25th February 2011 passed by Respondent No.2 regarding the proceedings that was held on 3rd February 2011. Mr. Jetly pointed out that even in the said order it is recorded that Respondent No.2 had asked Respondent No.1 to make true disclosure regarding the price actually paid for the goods rather than taking shelter under other appeal orders to make piecemeal admissions of duty liability. Mr. Jetly stated that in the order Respondent No.2 has noted that applicant was also reminded of its obligation to make a true disclosure and to pay the admitted duty liability with interest before the case was taken up for further disposal. Mr.Jetly submitted that this itself wa