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2025 Supreme(Del) 855
2025:DHC:140
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, ACJ, SWARANA KANTA SHARMA, J.
KBS Industries Ltd. and Another – Appellants
Versus
The Customs Central Excise and Service Tax Settlement Commission, New Delhi – Respondent
W.P. (C) No. 10505 of 2024, C.M. APPL. No. 43170 of 2024
Decided On : 13-01-2025
Advocates Appeared :
For the Appellants : Tuhina, Deep Shah
For the Respondents : Harpreet Singh, Suhani Mathur
For the Appellants/Petitioners: [Not provided]
For the Respondents: [Not provided]
Important Points
Subject
Tax Law - Customs Law
Act Referred
Customs Tariff Act, 1975: S.3, S.3A
Headnote
(B) Legal principles: The court upheld that orders of the Settlement Commission are conclusive regarding matters stated, and cannot be dissected for favorable outcomes while rejecting unfavorable. (Paras 33, 46)
(C) The court emphasized that failure to meet conditions of the importation scheme necessitates duty and interest payments. (Paras 44, 49)
Facts of the case:
The petitioners, a company and its director, contested a Settlement Commission order imposing ₹1,15,13,067/- interest for customs duty on imported goods, highlighting their failure to meet export obligations. (Paras 1, 5, 30)
Findings of Court:
The Settlement Commission's order settled duty at ₹2,35,24,597/- with interest of ₹1,15,13,067/- and imposed penalties. (Paras 24, 14)
Issues: The main issues were the validity of the interest imposed and constitutional vires of the Notification. (Paras 2, 25)
Ratio Decidendi: The court affirmed that the imposition of interest was lawful, aligning with the requirements of the Notification regarding duties on non-compliance with export obligations. (Paras 46, 49)
Result: Petition dismissed.
| Table of Content |
|---|
| 1. petitioners challenge settlement commission's order. (Para 1 , 2 , 3) |
| 2. detailing of applicants and their claims. (Para 4 , 5 , 6) |
| 3. factual details surrounding the import and sale of goods. (Para 9 , 10 , 11) |
| 4. demand-cum-show cause notice issued. (Para 14 , 15 , 16) |
| 5. petitioners' admission and compliance status. (Para 17 , 18) |
| 6. hearing and report submission by commissioner. (Para 19 , 20 , 21 , 22) |
| 7. hearing and submissions by petitioners. (Para 23) |
| 8. arguments based on prior judicial decisions. (Para 24 , 25) |
| 9. challenge to imposition of interest. (Para 26) |
| 10. legislative context for settlement. (Para 27 , 28 , 29) |
| 11. provisions regarding settlement of cases. (Para 30 , 31 , 32 , 33) |
| 12. conditions under which interest is levied. (Para 34 , 39 , 40) |
| 13. individuals cannot dissect settlement orders. (Para 35 , 36) |
| 14. contextual understanding of the settlement. (Para 37 , 38) |
| 15. conditions for exemption and compliance. (Para 41 , 42) |
| 16. dismissal of the petition based on merit. (Para 46 , 47 , 48) |
JUDGMENT :
VIBHU BAKHRU, ACJ
1. The petitioners have filed the present petition, inter alia, impugning an order dated 28.03.2024 (hereafter the impugned order) issued by the Customs, Central Excise and Service Tax Settlement Commission (hereafter the Settlement Commission) under Section 127C (5) of the Customs Act, 1962 (hereafter the Act), whereby the petitioners’ applications for settlement of a case under Section 127B of the Act, were disposed of.
2. The petitioners also impugn the constitutional validity of the Notification No. 18/2015-Cus dated 01.04.2015 (hereafter the Notification) as being discriminatory and arbitrary. The petitioners claim that the said notification is beyond the statutory mandate of the Act read with the Customs Tariff Act, 1975 (hereafter the CT Act).
3. Additionally, the petitioners impugn the recovery proceedings initiated by the respondents for recovery of dues as determined.
4. Petitioner no.1 is a company named M/s. KBS Industries Limited (hereafter KBS) and petitioner no.2 is a director of KBS. The petitioners filed an application under Section 154 of the Act seeking rectification of the impugned order to the extent that it imposed the interest of Rs. 1,15,13,067/- (Rupees One Crore Fifteen Lacs Thirteen Thousand and Sixty-Seven only), which was rejected. The Settlement Commission held that the rectification of errors under Section 154 of the Act is confined to arithmetical or clerical errors and the petitioners’ application was beyond the scope of the Section 154 of the Act. The Settlement Commission found that there was no clerical or arithmetical error which would warrant any rectification of the impugned order. The same was communicated to the petitioners by a letter dated 26.06.2024, which is also impugned in the present petition.
5. The petitioners assail the impugned order to the limited extent that the Settlement Commission has imposed interest computed at Rs. 1,15,13,067/- on the delayed payment of duty. The Settlement Commission had accepted the report of the Commissioner dated 10.01.2024 filed under Section 127C (4) of the Act, whereby the interest payable by the petitioners was computed at Rs. 1,15,13,067/-.
6. The petitioners are, essentially, aggrieved by the computation of the interest. According to the petitioners, the same also includes the interest of Countervailing Duty (CVD) imposed under Section 3 of the CT Act as well as the Special Additional Duty (SAD) under Section 3 A of the CT Act, which is contrary to the law.
7. The learned counsel appearing for the petitioners advanced the submissions in support of the petitioners claim that the interest levied by the Settlement Commission was without authority of law.
8. The sole question to be addressed is whether the impugned order to the extent that it imposed the interest amounting to Rs. 1,15,13,067/- warrants any interference in these proceedings.
FACTUAL CONTEXT
9. As noted above, KBS is an incorporated company and petiti
