Full and true disclosure of duty liability is mandatory for settlement applications under the Customs Act, and the Settlement Commission's jurisdiction is limited to cases with voluntary disclosure and no deliberate evasion of duty.

1. The prayer in the writ petition is to quash the order dated 9.12.2005 passed by the first respondent Settlement Commission and direct the first respondent to take settlement application on its file and settle the issue at the rate of admitted duty liability of Rs.17,53,447/-.

2. The brief facts necessary for disposal of the writ petition are as follows:

(a)The petitioner imported capital goods valued at Rs.80,33,368/-under EPCG licence issued on 17.8.2009 through seven bills of entry. The EPCG licence was issued by the Joint Director General of Foreign Trade, Chennai for the import of capital goods worth Rs.1,17,21,770/- and the original obligation was Rs.5,86,08,850/-within six years as per the Customs notification No.29/97 dated 1.4.1997.

(b)The petitioner imported goods worth Rs.81 lakhs as he could export readymade garments worth Rs.2.80 crores. Petitioner executed bank guarantee for an amount of Rs.30 lakhs. Though the petitioner faced shortage of working capital and approached the bank and financiers, he could not arrange for the additional working capital.

(c)Petitioner started a private limited Company under the name and style of M/s. Perfect Stitch Garments Private Ltd in September, 2001 along with one P. Elango to take over the petitioners business. Even after taking over, the business could not be continued to fulfil the export obligation. The EPCG licence period was also extended upto 19.8.2005. The petitioner resigned from the Board of Directors and allowed one Raj Guru to join in his place to run the Company. Petitioner continued as a holder of 50% share in the new company.

(d)The third respondent investigated the performance of the Company in September, 2004 and issued a show cause notice on 31.12.2004 to the petitioner in his capacity as proprietor of M/s. Muthuraman Exports and M/s. Perfect Stitch Garments Private Limited. The show cause notice alleged violation of the conditions of EPCG licence for having deployed one machine in the premises of M/s. Muthuraman Exports for carrying out some job work for some other exporters. The said show cause notice proposed denial of benefit to zero duty exemption availed to the imported capital goods valued at Rs.80,34,368/- and proposed to recover customs duty amount of Rs.29,32,363/-. The amount of Rs.30 lakhs furnished by way of bank guarantee was sought to be adjusted against the said duty liability interest and other adjudication proceedings. The notice further proposed to confiscate the imported capital goods valued at Rs.51,69,628/-and the embroidery machine with accessories valued at Rs.28,27,200/-. There was a proposal to impose penalty along with M/s. Perfect Stitch Garments Private Limited.

(d)According to the petitioner, he could not fulfil the export obligation and he desired for settling the matter with the first respondent under Section 127B of the Customs Act, 1962, and accordingly filed an application by admitting the liability of Rs.8,11,471/-as against the customs duty demanded to the tune of Rs.29,32,362/- through the show cause notice issued by the third respondent. The petitioner stated the details about how the said Rs.8,11,471/- was arrived at.

(e)The first respondent fixed the hearing of the settlement application on 10.5.2005. Petitioners consultant appeared and argued the matter. The first respondent directed the petitioners consultant to file an application stating the amount of additional duty liability accepted and detailed submission was filed before the first respondent on 16.5.2005 with prayer that the additional duty liability may be settled at Rs.17,53,447/-and also stated that due to calculation error correct amount was not stated in the settlement application. The representative of the petitioner also claimed to have cited the judgment rendered by the Customs, Excise and Service Tax Appellate Tribunal for its consideration. The first respondent fixed the date of personal hearing for admission of the case on 1.12.2005.