Judgment :-

D.K. JAIN, J.

1. This appeal, by special leave, is directed against the final judgment and order dated 23rd April, 2002 rendered by the High Court of Judicature at Bombay in Writ Petition No.633 of 2002, whereby the High Court has dismissed the writ petition, affirming the decision of the Settlement Commission, Customs and Central Excise, Mumbai (hereinafter referred to as, "the Settlement Commission").

2. The facts, giving rise to the present appeal, may be summarised thus:

The appellant is an importer and ship repair unit registered with the Director General of Shipping, Government of India. On the basis of the intelligence gathered, premises of the appellant were searched by the officers of the Customs Commissionerate, Mumbai in December, 1997, resulting in the recovery of incriminating documents. The investigations revealed that the appellant had clandestinely availed of benefit of import duty Exemption Notification No.211/83-Cus dated 23rd July, 1983, as amended, on the import of multiple consignments of engineering cargo as "Ship Spares". Based on the material collected in the course of investigations, two show cause notices dated 29th December, 1997 and 17th June, 1998, were issued to the appellant, demanding customs duty of Rs.3,12,030/- and Rs.65,66,076/- respectively (totalling Rs.68,78,106/-). Upon consideration of the reply furnished by the appellant, the Commissioner of Customs (Preventive), Mumbai by his order dated 26th February, 1999 confirmed the demand of customs duty of Rs.68,78,106/-, besides penalty and interest under Section 28AB of the Customs Act, 1962 (for short "the Act").

3. Aggrieved, the appellant preferred an appeal to the erstwhile Customs, Excise and Gold (Control) Appellate Tribunal. However, the said appeal was withdrawn by the appellant on the ground that they proposed to prefer an application in terms of Section 127MA of the Act before the Settlement Commission, constituted under the Act and have their case settled under Chapter XIVA of the Act. The appeal was permitted to be withdrawn. The appellant, thereafter, on 17th October, 2000, filed an application under Section 127B of the Act with the Settlement Commission, disclosing and admitting a duty liability of Rs.20,98,786/-.

4. On receiving the application, the Settlement Commission called for the statutory report from the Jurisdictional Commissioner in terms of Section 127C of the Act. In his report, it was submitted by the Commissioner that out of 18 consignments, in respect of 10 imports, the appellant had imported spare parts of Caterpillars and while clearing the cargo, they submitted transhipment permit/shipping bills to the Customs Authorities declaring the cargo as `ship spares meant for repairs of ocean going vessels. However, in the course of investigation, documents, viz., sales bills, account registers, etc. retrieved from the appellant, revealed the sale of these goods to one M/s Mehta Earthmovers. In fact, diversion of these goods was admitted by the appellant during investigation and they voluntarily deposited Rs.15 lakhs towards duty liability against these 10 imports. As regards the 2nd show cause notice, the stand of the Commissioner was that one M/s Elektronik Lab, a partnership firm dealing in sales and servicing/maintenance of ship spares and navigation equipment, had placed purchase orders on the appellant for import of spare parts to be fitted on ocean going vessels, as they were not registered with the Director General of Shipping as a ship repair unit and were not eligible for duty free imports under the aforementioned Notification. The appellant imported the spare parts and sold the same to M/s Elektronik Lab; in contravention of the exemption notification.

5. Taking into consideration the report of the Commissioner and the case records, the Settlement Commission, vide order dated 8th February, 2001, allowed the application of the appellant to be proceeded with under sub-Section (1) of Section 127C of t