The main legal point established in the judgment is the requirement of full and true disclosure of facts by the applicant for compounding of offence, the discretionary power of the Compounding Authority to grant immunity from prosecution, and the need for the Compounding Authority to provide reasons for its decision.

MADAN B. LOKUR, J.

( 1 ) THE Union of India has filed a writ petition under Articles 226 and 227 of the Constitution praying for an appropriate writ of certiorari for setting aside an order dated 25th May, 2006 passed by the Chief Commissioner of Customs (DZ) in Compounding Order No. 2/ccc (DZ)/scm/2006.

( 2 ) IT appears that Respondent No. 1 had gone to London on a business visit. On his return to India on 11th August, 2004, he carried two pairs of diamond earrings and the allegation is that he tried to smuggle them by walking through the green channel when he was intercepted. According to Respondent No. 1, the earrings were given to him as a gift in connection with the marriage of his younger son and in view of the long journey undertaken by him, he was somewhat confused and through an oversight, he entered the green channel area. This incident occurred on 11th August, 2004

( 3 ) THE Petitioner issued a show cause notice to Respondent No. 1 on 24th september, 2004 for violating the provisions of the Customs Act, 1962 (for short the Act) and the matter is pending adjudication. A prosecution was also launched against Respondent No. 1 under the provisions of the Act and a charge sheet was filed in the Court of the Additional Chief Metropolitan Magistrate, new Delhi on 30th September, 2004

( 4 ) ON his part, Respondent No. 1 made an application under Section 127-B of the Act for settlement of the case before the Customs and Central Excise settlement Commission, Delhi Bench. Respondent No. 1 also made an application under Section 137 (3) of the Act before the Chief Commissioner of Customs (DZ) on 18th January, 2006 stating that he does not wish to contest the case against him and he would like the Chief Commissioner as the Compounding Authority to settle the case and grant him immunity from prosecution. This application was made by him under the provisions of the Customs (Compounding of Offence) Rules, 2005 (for short the Rules) which have been framed in exercise of powers conferred by sections 156 and 137 of the Act.

( 5 ) WE have been told that the application filed by Respondent No. 1 before the Settlement Commission has been admitted and a final order has since been passed on 12th July, 2006. The Settlement Commission directed Respondent No. 1 to pay the duty liability which has been paid. The goods were directed to be released on payment of a redemption fine, which has also been paid and respondent No. 1 was granted immunity from payment of any interest and imposition of penalty, which would be withdrawn if it comes to the notice of the Settlement commission that Respondent No. 1 had concealed any particulars or material relevant to the settlement or had given false evidence to obtain the same.

( 6 ) IN so far as the application for compounding the offence is concerned, the Chief Commissioner accepted the application by the impugned order and allowed compounding on payment of a compounding fee which, we are told, has since been paid.

( 7 ) THE grievance of the Petitioner is threefold. It is firstly contended that Respondent No. 1 did not make a true and full disclosure of facts relating to the case and, therefore, under Rule 6 of the Rules, the Compounding Authority ought not to have granted him immunity from prosecution. Rule 6 of the Rules reads as follows:-"6. Power of Compounding Authority to grant immunity from prosecution. " The compounding authority, if he is satisfied that any person who has made the application for compounding of offence under these rules has co-operated in the proceedings before him and has made full and true disclosure of facts relating to the case, grant to such person, subject to such conditions as he may think fit to impose, immunity from prosecution for any offence under the Customs Act, 1962 with respect to the case covered by the compounding of offence. "

( 8 ) THE second grievance of the Petitioner is that no oral hearing was given before the application of Respondent No. 1 was allowed