Once The Importers/Exporters Are Granted Immunity From Prosecution, Fine, Penalty It Is Unfair To Continue The Proceedings: CESTAT

The Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that once the importers and exporters have been granted immunity from prosecution, fines, and penalties, and proceedings against them have come to an end, it is discriminatory and unfair to continue the proceedings against the co-notices.

The bench of Anil Choudhary (Judicial Member) has observed that a settlement order ends the dispute not only with respect to the applicant before the Commission but also with respect to other co-noticees.

The issue raised was whether the penalty under Section 114 (iii) of the Customs Act, 1962, and Rs. 4,50,000/- under Section 114 AA have been rightly imposed by the department.

A common show cause notice was issued to the exporter, M/s. AKS Apparels, proposing to hold the goods liable to confiscation in respect of 321 shipping bills as per the show cause notice, with a further proposal to deny the benefit under the "Focus Market Scheme" to recover the amount already disbursed. It was also proposed to recover the amount of duty drawback with the proposal to impose a penalty.

The appellant was made a co-notice along with three others. As per the order, the main noticee, M/s.AKS Apparels, and Shri Nitin Gupta approached the Settlement Commission, New Delhi.

The Settlement Commission settled the dispute, finally giving immunity from prosecution, etc. This fact has been taken notice of by the court. However, the Adjudicating Authority considered that the dispute is settled vide the order of the Settlement Commission only in respect of M/s. AKS Apparels and Shri Nitin Gupta and is not settled with respect to other co-notices, including the appellant in the show cause notice. The penalty was imposed on appeal.

The appellant contended that a settlement order ends the dispute not only with respect to the applicant before the Commission but also with respect to other co-noticees. Hence, the order is bad and fit to be set aside.

The tribunal, while setting aside the order, held that once an order of settlement is passed by the Settlement Commission, the entire dispute comes to an end, and thereafter, the case cannot be adjudicated against the other co-noticees.

Case Title: M/s.Evergreen Shipping Agency India Pvt. Ltd. Versus Commissioner of Customs

Case No.: Customs Appeal No.51119 of 2022 (SM)

Date: 10.05.2023

Counsel For Appellant: G.K. Sarkar and Prashant Srivastava

Counsel For Respondent: Divey Sethi

Click Here To Read The Order