ORDER
D. Murugesan, J.
1. The petitioner is the Commissioner of Customs (Air), Customs House, Chennai. He has filed this writ petition, challenging the Admission Order No. 3 of 2001 (Cus.), dated 15-2-2001 of the first respondent. By the said order, the application filed under Section 127B of the Customs Act, 1962 (hereinafter referred to as 'the Act') by Respondents 2 to 4 was entertained by the first respondent and the proceedings were allowed to be proceeded with under Section 127C(1) of the Act. The writ petition has been filed on the ground that the Customs and Central Excise Settlement Commission/first respondent has no jurisdiction to entertain the application under Section 127B of the Act.
2. The brief facts, leading to the riling of the writ petition are as follows :-
One M/s. Goutham Enterprises, 32-A Strotten Muthiah Mudali St., Chennai submitted a letter to the petitioner herein stating that they have received cargo arrival-cum-invoice notice from M/s. Emery World Wide, asking them to take delivery of 300 numbers of Acer CD ROM Drives arrived under HAWB No. 5500717618, dated 17-7-2000. In the said letter, they had also stated that they had not placed any such order for import purposes and they had further stated that they had not made any import, so far. On a scrutiny of Bill of Entry, it was noticed that the Bill of Entry No. 235337, dated 19-7-2000 was filed in the name of M/s. Goutham Enterprises for clearance of 300 numbers of Acer CD ROM Drive, 50 X, by CHA, M/s. Sanjay Forwarders Pvt. Ltd. The Bill was assessed accepting the declaration made by the importer and was pending for payment of duty. On 20-7-2000, one Shri P. R, Sivaramakrishnan, Regional Manager (South India) of M/s. Emery World Wide (1) Pvt. Ltd., appeared before the department in person and in his voluntary statement, has stated that one Shri S. Janakiraman, the fourth respondent herein who normally comes for collecting the delivery order of M/s. Moon Star Automation Pvt. Ltd., the third respondent herein, had collected the delivery order pertaining to M/s. Goutham Enterprises stating that he will submit the authorisation letter to the Department. He also submitted that two persons representing M/s. Goutham Enterprises have approached their office along with the copy of the cargo arrival notice sent to them and have stated that the consignment did not belong to them. Therefore, they have taken back the delivery order given to Shri S. Janakiraman and have submitted the same to the Department.
3. In the meanwhile, intelligence department gathered informationto the effect that the consignment consisted of Cellular Mobile Phones andefforts were made to locate the CHA, M/s. Sanjay Forwarders P. Ltd., andShri S. Janakiraman to identify the actual importer. Even though summonseswere issued to Shri S. Janakiraman to appear before the Department on 24-7-2000, he did not appear. The officers also visited the premises of the CHAand M/s. Sanjay Forwarders P. Ltd., and found locked. On 24-7-2000, thesecond respondent, the Managing Director of M/s. Moon Star Automation P.Ltd., appeared before the department and claimed the goods imported in thename of M/s. Goutham Enterprises and the goods were examined in hispresence and two independent witnesses and the following items were foundin the consignment As the goods did not confirm to the declaration made in the Bill of Entry, the same were seized under a mahazar on the reasonable belief that the goods are liable for confiscation under Sections 111(d) and (m) of the Customs Act, 1962 (hereinafter referred to as 'the Act').
4. Shri V.C. Mohan, the second respondent herein, in his voluntary statement before the department dated 24-7-2000 has stated that he is the Director of M/s. Moon Star Automation P. Ltd., that the company is engaged in the import and trading of computer parts and accessories, that he is a regular importer at ACC, Meenambakkam, Chennai, that he wanted to make some quick money, that he approached one Shri Shekar of Singapore, that he was told by him that import of Mobile Phones into India was having good profit margin, that if the same were brought into India without declaring them they would be making greater profit, that they did not want to import the same in their own name so that they cannot be held responsible if detected by the customs authorities that he approached one by name Shri Janakiraman, a clearing clerk and that he has been advised to book the consignment in the name of M/s. Goutham Enterprises, that the clearing clerk has promised to help him in clearing the consignment, that the clerk has filed the Bill in the name of M/s. Goutham Enterprises and in the CHA name, M/s. Sanjay Forwarders P. Ltd., that he came to know that the consignment was detained by Customs, that he appeared voluntarily before the department and presented himself for examination of the cargo that the examination has revealed the contents of 736 numbers of various models of Mobile Phones with Chargers, 246 CD ROM Drives, 35 Ear Phones, 6 pieces of 8.4. GB Hard Disc Drives and 80 pieces of Plastic Fliptop covers as against the declaration of 300 Nos. of CD ROMs, that the consignment was seized by the customs officers under a duly drawn mahazar in the presence of independent witnesses, that he had done the act of mis-declaration for monetary gains that he would appear before the Department on 25-7-2000 for further enquiry. On 25-7-2000, the second respondent again appeared before the enquiry and in continuation of his earlier statement, requested to take a lenient view and decide the matter accordingly. The second respondent was arrested on 25-7-2000 and remanded to judicial custody. On 26-7-2000, one C. Gunasekaran, Managing Director of M/s. Sanjay Forwards P. Ltd., who has filed the Bill in the name of M/s. Goutham Enterprises appeared before the department and in his voluntary statement he has stated that Shri S. Janakiraman who was known to him for the past 10 years has approached him for clearance of goods, that he was not aware of the identify of the importer, that he filed the documents given by Shri S. Janakiraman in good faith and he handed over the documents pertaining to the Bill of Entry dated 19-7-2000 to the Department. Shri Goutham Chand Jain appeared before the department on 28-7-2000 under summons and stated in his voluntary statement that they are engaged in the trading of electrical goods, and they have not made any imports so far and the cargo arrival notice from M/s. Emery Worldwide does not belong to them and on receipt of the said notice, they sent a letter stating that the cargo does not belong to them and they have not filed any Bill of Entry for clearance of any cargo. Shri. S. Janakiraman, the fourth respondent appeared before the department on 28-7-2000 and in his voluntary statement, he has confirmed what the Managing Director of M/s. Sanjay Forwarders P. Ltd., and Goutham Chand Jain of M/s. Goutham Enterprises had already stated. Further investigation was carried on and statements of other individuals were also obtained. Based upon the above said investigation, a notice dated 19-9-2000 under Section 124 of the Act was issued to respondents 2 to 4 and M/s. Goutham Enterprises.
5. A proposal for detention of the second respondent under COFEPOSA Act, 1974 was also sent to the Government and accordingly a detention order was issued .to the second respondent. It is at this stage, respondents 2 to 4 filed application before the Customs and Central Excise Settlement Commission (hereinafter referred to as 'the Commission') under Section 127B of the Customs Act, 1962. The said application was filed on the ground that the import was made by M/s. Moonstar Automation P. Ltd., in the name of M/s. Goutham Enterprises and the second respondent claimed the goods before Customs due to some mis-understanding between them, that on examination of the goods, huge discrepancy in the description and value of the goods were found and therefore, they filed the application as the issue to be decided is a case as defined under Section 127A(b) of the Act. The said application was opposed by the writ petitioner as to the admissibility since the issue involved cannot be considered as a 'case' as defined under Section 127A(b) of the Act and it is a case of smuggling and fraud committed by the second respondent on the department and such a dispute therefore cannot be 'a case' for settlement by the Commission. Rejecting the plea raised by the writ petitioner, the Commission allowed the application. Hence, the present writ petition.
6. Mr. V.T. Gopalan, learned Additional Solicitor General appearing on behalf of the petitioner would submit that the Commission is empowered to entertain and decide an application in respect of 'a case' as defined under Section 127A(b) of the Act. As per the said Act, 'Case' means any proceeding under the Act or any other Act for the levy, assessment and collection of customs duty. The case on hand cannot be considered as 'a case' within the meaning of Section 127A of the Act as it does not relate to levy, assessment or collection of customs duty and in respect of short-levy on account of mis-classification or otherwise of goods. Learned Counsel also submitted that when it was found that the goods other than declared in the Bill of Entry were imported and the application for settlement has been made after the mis-declaration was detected, it would be a case of smuggling, and the Commission would have no jurisdiction to entertain the application for settlement of case as such issue would fall outside the ambit of the powers of the Commission under Section 127B of the Act. Learned Additional Solicitor General would further submit that the application has been filed only after a show cause notice for confiscation was issued under Section 111(i) and (m) of the Act and in view of the said notice, it could be seen that the issue does not relate to any levy, assessment or collection of customs duty to sustain an application under Section 127B of the Act.
7. On the other hand, Mr. M. Krishnappan, learned Counsel appearing for the second respondent would contend that the writ petition at the instance of the Commissioner of Customs (Air) itself is not maintainable as he is not the person aggrieved by the orders of the Commission/the first respondent and the writ petitioner is not the authority functioning under the Customs Act and none of the legally protected right has been infringed nor he has sustained any injury. Secondly, learned Counsel submitted that the goods imported are not prohibited goods and these goods can be released on payment of redemption fine and therefore, the goods are not automatically liable for confiscation. In such circumstances, even if the goods were not declared in the Bill of Entry, the import cannot be considered as smuggling goods. Thirdly, learned Counsel submitted that the application filed before the Commission is with reference to 'a case' as defined under Section 127A(b) of the Act. The second respondent is also entitled to make an application in terms of second proviso to Section 127B of the Act, which prohibits an application only in case of the goods to which Section 123 applies or to the goods in relation to which any offence under the Narcotic Drugs and Psycho-tropic Substances Act, 1985 (61 of 1985) has been committed. In this case, the goods are not covered under Section 123 of the Act. Since the Cellular Mobile Phones are not the prohibited goods, they can very well be imported. In the absence of any prohibition for the second respondent to approach the Commission in respect of the goods not covered under the proviso, the application filed by the second respondent before the Commission is maintainable and as the same would be ''a case' as defined under Section 127A(b) of the Act. Fourthly, learned Counsel submitted that even in the show cause notice dated 19-9-2000, the second respondent has been asked to show cause within a period of 30 days from the date of receipt of the notice as to why the value of the goods should not be revised to Rs. 43,56,189/- (CIF) and Rs. 57,87,200/- (MV) from Rs. 4,71,450/- (CIF). The said notice would indicate that the entire issue relates to levy, assessment and collection of customs duty and therefore, the application before the Commission is maintainable. Learned Counsel further submitted that in any event, the petitioner is estopped from filing the writ petition since the payment of conditional liability of customs duty of Rs. 11,56,805/- as directed by the Commission was accepted by the Department.
8. In view of the above submissions, the following points emerge for consideration:
'1. Whether the Commissioner of Customs (Air) is 'a person aggrieved' as against the order of the Commission/first respondent and as to whether he has locus standi to file the present writ petition.
2. Whether the writ petition could be filed after the conditional order of the Commission in entertaining the application to deposit the admitted additional liability of customs duty amounting to Rs. 11,56,805/- complied with by the second respondent and the payment of the said amount was accepted by the Department ?
3. Whether the case on hand would fall within the meaning of 'Case' as defined under Section 127A(b) of the Act? and
4. Whether the case on hand is smuggling or fraud committed on the department ?'
9. Insofar as the preliminary objections raised by the learned Counsel for the second respondent as to the locus standi of the writ petitioner to maintain the writ petition and as to whether the writ petition can be entertained in view of the compliance of the conditional order of the Commission/first respondent by the second respondent and such payment of additional liability of customs duty was accepted by the writ petitioner, it is to be noted that at the instance of the writ petitioner, namely the Commissioner of Customs (Air), Special Intelligence and Investigation Branch, Air Cargo Complex, Chennai had investigated into the case of outright smuggling of Cellular Mobile phones in quise of the import of the Acer CD ROM Drives. On the basis of the Investigation and the statements recorded from respondents 2 and 4 and Goutham Chand Jain of M/s. Goutham Enterprises and others, a show cause notice under Section 124 of the Act was issued on 19-9-2000 by the Deputy Commissioner, SIIB, who is subordinate officer to the writ petitioner herein. A recommendation has also been made to the State Government for initiating action against the second respondent for detention under COFEPOSA. Prior to the above, the second respondent was arrested on 25-7-2000 under the supervision of the petitioner and was remanded to judicial custody. Paragraph 21.0 of the show cause notice dated 19-9-2000 reads as under:
'21.0 In view of the above, Shri V.C. Mohan, Shri S. Janaktraman are hereby called upon to show cause the Commissioner of Customs (Airport), Chennai within 30 days from the date of receipt of this notice as to why:
I. the value of the goods should not be revised to Rs. 43,56,189/-(CIF) and Rs. 57,87,2007- (MV) from Rs. 4,71,450/- (GIF);
II. the goods should not be confiscated under Section 111(i) and (m) of the Customs Act, 1962;
III. penalty should not be imposed on Shri V.C. Mohan under Section 112(a) of the Customs Act, 1962;
IV. penalty should not be imposed on Shri S. Janakiraman under Section 112(a) of Customs Act, 1962.'
When once the immediate subordinate officer of the petitioner issued the notice, the application filed by the second respondent before the Commission under Section 127B of the Act could be resisted by the Commissioner of Customs (Airport) at whose instance the confiscation proceedings were initiated. In a similar circumstances, the question of locus standi came up for consideration before a Division Bench of this Court in the judgment reported in the Central Board of Film Certification v. Yadavalaya and Another 1994 W.L.R. 835. In that case, the locus standi of the Central Board of Film Certification (Ministry of Information and Broadcasting, Government of India) was questioned while a writ petition, challenging the validity of the order of the Film Certification Appellate Tribunal was filed. After detailed discussions, the Division Bench held that-
e Court cannot overlook the concepts of 'locus standi' and 'person aggrieved' which should be given the widest possible meaning'.
While considering Section 5C of the Cinematograph Act, which defined the person aggrieved, only with respect of a person applying for certificate, the Court interpreted the words 'person aggrieved' as having wider spectrum of significance as the same is clear from Section 5D(11) of the Act, which reads as under:
'The Tribunal may, after making such inquiry into the matter as it considers necessary, and after giving the appellant and the Board an opportunity of being heard, in the matter, make such order in relation to a film as it thinks fit.....,'
The Court also found that in an appeal by an aggrieved person, who, under Section 5C of the Act is the person applying for certification, the Board has a right to be heard and the Tribunal has a duty cast on it to provide the Board with an opportunity of being heard. Hence, the Division Bench concluded that the Central Board of Film Certification is a person aggrieved as against the order of the appellate Tribunal.
10. In the scheme of settlement of cases under the Customs Act, any importer or exporter or any other person, in respect of case relating to him may make an application to the Commission under Section 127B of the Act. Under Section 127C of the Act, on receipt of an application under Section 127B of the Act, the Settlement Commission shall call for, report of the Commissioner of Customs having jurisdiction and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission, may, by order, allow the application to be proceeded with or reject the application. As per second proviso to Section 127C of the Act, when a report was called for from the Commissioner, he shall furnish such a report within a period of one month on the receipt of the communication from the Settlement Commission, failing which it shall be presumed that the Commissioner of Customs has no objection to such application; but he may raise objections at the time of hearing fixed by the Settlement Commission for admission of the application and the date of such hearing shall be communicated by the Settlement Commission to the applicant and the Commissioner of Customs within a period not exceeding two months from the date of receipt of such application. As per Section 127C(2) of the Act, a copy of every order under Sub-section (1) shall be sent to the applicant and to the Commissioner of Customs having jurisdiction. A conjoint reading of the above said provisions makes it clear that in the application filed by any importer or exporter or any other person under Section 127B of the Act shall beheard as to the admission of the application after giving due notice to the Commissioner of Customs and any orders passed under Section 127C(1) of the Act shall be communicated to the Commissioner of Customs under Section 127C(2) of the Act, necessarily meaning thereby that in the event, the Commission, allows the application to be proceeded with, it could be challenged by the Commissioner of Customs, equally when the application is rejected, it could be challenged by the applicant. Therefore, I do not find any merits in the submissions of the learned Counsel for the second respondent that the writ petitioner is not a person aggrieved and he has no locus standi to file the writ petition and the writ petitioner is not the authority functioning under the Customs Act and none of the legally protected right has been infringed nor he has sustained any injury and therefore, the writ petition itself is not maintainable. Accordingly, I reject the submissions of the learned Counsel for the second respondent. The above submissions of the learned Counsel for the second respondent is liable to be also rejected for the reasons that the entire proceedings against the second respondent were only at the instance of the writ petitioner and in the event of application filed by the second respondent is allowed to be proceeded with by the Commission, other proceedings initiated by the writ petitioner and other authorities against the second respondent under the various provisions of the Acts would be frustrated.
11. The next contention of the learned Counsel for the second respondent is that when the second respondent has complied with the conditional order of the Commission in directing to pay the additional liability of customs duty of Rs. 11,56,805/- and the same has been accepted by the Department, the petitioner is estopped from filing the writ petition. In this regard, it is to be noted that mere payment of the additional liability of customs duty as directed by the Commission will not entitle the second respondent to file the application and the same is proceeded with and disposed of by the Commission when the very power of the Commission to entertain the application is questioned by the writ petitioner. The issue estoppel as pleaded by . the second respondent cannot be applied to the facts of the present case as the mere payment of the additional liability of customs duty by the second respondent will not disentitle the petitioner from questioning the jurisdiction of Commission under the provisions of the Act. Hence, I do not find any merit in the submission of the learned Counsel for the second respondent.
12. In view of the above findings as to the maintainability of the writ petition, let me consider the issues 1 and 2. The establishment of Settlement Commission has some background. Serial No. 83 of the List I (Union List) of the Seventh Schedule to the Constitution of India, refers to 'duties of customs including export duties'. Under the said List, number of statutes for levy of duties and collection of customs depending on mode of import were enacted and one such enactment was the Customs Act, 1962 (No. 52 of 1962). The said law provides for levy and collection of duty of customs on goods imported into and exported from India. For this purpose, the Act read with Rules and Regulations framed thereunder provided, in addition to the provisions, method of levy, assessment and collection of duties of customs, searches, seizure, arrest of persons, contravening the provisions of law, confiscation of goods, conveyances, adjudication and imposition of penalties,offences and prosecutions, appeals and revision and settlement of cases. Prior to the establishment of Settlement Commission under Customs Act, such a Commission was established to resolve the disputes arose under the provisions of the Income-tax Act on the basis of recommendations of a Committee headed by the former Chief Justice of the Supreme Court of India. The relevant portion of the recommendation of the Direct Taxes Inquiry Committee is extracted hereunder :
'This, however, does not mean that the door for compromise with an errant tax payer should for ever remain closed. In the administration of fiscal laws, whose primary objective is to raise revenue, there has to be room for compromise and settlement. A rigid attitude would not only inhibit a one time tax evader or an unintending defaulter from making a clean breast of his affairs, but would also unnecessarily strain the investigational resources of the Department in cases of doubtful benefit to revenue, while needlessly proliferating litigation and holding up collections'
Even though such Settlement Commission was established under the Income-tax Act as early as in the year 1976, such a Commission was established by the Finance Bill of 1998 by introducing Chapter XIVA in the Customs Act, containing Section 127A to Section 127N of the Act. The object of Settlement Commission is to create a machinery to ensure effective and quick disposal of important cases involving far reaching financial and revenue implications particularly where complicated issues are involved and the evaders of duty may be unintending evaders and should have a chance to come clean from their mess and the department should not waste its energy and manpower in protractive investigation, adjudication and prosecution. With these objects in mind only, the Settlement Commission has been established to enable a bona fide importer who mis-classified the goods for the purpose of payment of customs duty to approach the Settlement Commission to settle the issue. On this background, it is to be now seen the relevant provisions relating to Settlement of cases :
'Section 127A(b): 'Case' means any proceedings under this Act or any other Act for the levy, assessment and collection of customs duty, or any proceeding by way of appeal or revision in connection with such levy, assessment or collection, which may be pending before a proper officer or the Central Government on the date on which an application under Sub-section (1) of Section 127B is made:
Provided that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause.
Section 127B : Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, at any stage of a case relating to him make an application in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer, the manner in which such liability has been incurred, the additional amount of customs duty accepted to be payable by him and such other particulars as may be specified by rules including the particulars of such dutiable goods in respect of which he admits short-levy on account of mis-classification or otherwise of goods, to the Settlement Commission to have the case settled and such application shall be disposed of in the manner hereinafter provided :
(a) the application has filed a bill of entry, or a shipping bill, in respect of import or export of goods, as the case may be, or a show cause notice has
been issued to him by the proper officer;
(b) the additional amount of duty accepted by the applicant in his application exceeds two lakh rupees:
Provided further that no application shall be entertained by the Settlement Commission under this sub-section in cases which are pending in the Appellate Tribunal or any Court;
Provided also that no application under this sub-section shall be made in relation to goods to which Section 123 applies or to goods in relation to which any offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985) has been committed:
Section 127C(1) On receipt of an application under Section 127B, the Settlement Commission shall call for a report from the Commissioner of Customs having jurisdiction and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application :
Provided that an application shall not be rejected under this sub-section, unless an opportunity has been given to the applicant of being heard:
Provided further that the Commissioner of Customs shall furnish such report within a period of one month of the receipt of the communication from the Settlement Commission, failing which it shall be presumed that the Commissioner of Customs has no objection to such application; but he may raise objections at the time of hearing fixed by the Settlement Commission for admission of the application and the date of such hearing shall be communicated by the Settlement Commission to the applicant and the Commissioner of Customs within a period not exceeding two months from the date of receipt of such application, unless the Presiding Officer of the Bench extends the said period of two months, after recording the reasons in writing.
(2) A copy of every order under Sub-section (1) shall be sent to the applicant and to the Commissioner of Customs having jurisdiction.'
There cannot be a dispute that the powers of the Settlement Commission shall be restricted only to some of those areas enumerated under Chapter XIVA of the Customs Act and not beyond that. Under Section 127A(b) of the Act, 'Case' means any proceeding under this Act or any other Act for the levy, assessment and collection of customs duty. Under Section 127B of the Act, any importer, exporter or any other person may, at any stage of a case relating to him make an application to the Settlement Commission in such form and in such manner as may be specified by rules, and containing a full and true disclosure of his duty liability which has not been disclosed before the proper officer in respect of which he admits short-levy on account of mis-classification or otherwise of goods. In order to avail the benefit of filing of an application under Section 127A of the Act, an importer, exporter or any other person should first establish that the case pleaded before the Commission is in respect of levy, assessment and collection of customs duty, which may on account of mis-classification or otherwise of goods.
13. Coming to the facts of this case, a notice was served on M/s. Goutham Enterprises, informing them to clear the consignment. M/s. Goutham Enterprises, in their letter dated 19-7-2000 have specifically pleaded that they have not imported any consignment, as they are not importers. It was their specific case that one Janakiraman, the fourth respondent had collected delivery orders of M/s. Goutham Enterprises stating that he would submit the authorization letter to the Department. When the customs department came to know about the disclaim by the M/s. Goutham Enterprises, through its Special Intelligence and Investigation Branch, Chennai, the department found that as against 300 Acer CD ROM Drive as declared in the Bill of Entry, the consignment consisted of 736 pieces of various models of mobile phones with chargers also. A voluntary statement was given by the second respondent before the officers of the Department that the consignment was intended to the third respondent wherein the second respondent was the Managing Director. Only after the above fact was detected and found out, the second respondent filed the application before the Commission on the ground that there was some mis-classification of the goods. Further it is seen that the second respondent had imported the goods in the name of M/s. Goutham Enterprises without their knowledge and consent. He did not also disclose the goods in the consignment till the same was found out by the department. From the facts as se.en above, I am of the view that it is not the case of mis-classification and it is the case of mis-declaration and the case of smuggling. The Supreme Court in the case of Collector of Customs, New Delhi v. Shaila Kapoor held that where the Bill of Entry showing value of the machinery without including therein the value of accessories and without even disclosing that any parts or accessories in addition to the machines were being imported it was a case of smuggling. In such circumstances, the accessories found in the consignment, held, were sought to be smuggled and were rightly confiscated. Applying the said ratio, it is to be held that what is not declared in the Bill of Entry could be called as goods smuggled and the issue cannot be called as a mis-classification as contended by the learned Counsel for the second respondent to bring the 'Case' under the definition of Section 127A(b) of the Act and to sustain the application under Section 127B of the Act.
14. The Supreme Court had an occasion to consider a similar provision of Section 245A(b) of the Customs Act in Commissioner of Income Tax, Madras v. Express Newspapers Ltd. . While considering the power of the Settlement Commission to entertain the application under the relevant provisions of the Income-tax Act, the Supreme Court held -
'If the Assessing Officer (or the income-tax authority) has already discovered it and has either gathered the material to establish the particulars of such income or fraud fully or is at a stage of investigation/enquiries where the material gathered by him is likely to establish the particulars of such income or fraud, the assessee cannot be allowed to defeat or forestall, as the case may be, the entire exercise of the income-tax authorities just by approaching the Commission. In such a case, it cannot be said that he is acting voluntarily or in good faith and he should not be allowed to take advantage of the comparatively easy course of settlement.'
15. The Supreme Court also had an occasion to consider the powers of the Settlement Commission under Section 245D of the Income-tax Act in Kuldeep Industrial Corporation v. Income Tax Officer AIR. 1991 S.C. 3631 and observed as follows :
'The dissenting member is right in emphasizing the fact that the as-sessee itself did not make a distinction between the assessment year 1977-78, on one hand and the assessment years 1978-79 and 1979-80, on the other. A perusal of the application filed by the assessee before the Commission shows that it has set out facts and figures relating to stocks received from M.M.T.C., their sale to different parties, the expenses and brokerage paid in that connection, the profits made from such sales and all other relevant particulars. Neither the application nor the particulars stated therein are confined to one assessment year (1977-78) but extend to all the three assessment years. In short, whatever Was stated or disclosed in the said application related to all the three years; no distinction was made pr suggested as between assessment year 1977-78 and other two assessment years.
As a matter of fact, the 'computation of income' (Annexure C) at the end of the application gave the figures of 'Total sale of stainless steel sheets', 'gross sale value', 'cost of purchase', 'transport charges' and 'brokerage' for all the three years combined. The total profit from the sale of stainless steel sheets for all the three years was worked out at Rs. 1,28,698.10/-. It was one package and indivisible. We are, therefore, inclined to agree with the opinion of the dissenting member that by making such a distinction, the Commission laid itself open to the charge of inconsistency. Indeed it must be said that the majority of the members of the Commission have tried to make out a new case for the assessee not put forward by it in its application. We are also of the opinion that the facts found proved and stated in the draft assessment order aforesaid and the facts admitted by the assessee in its application before the Commission and during the course of hearing before the Commission do clearly show that the 'concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable ..... under this Act has been established'. Now,
so far as the assessment year 1977-78, is concerned, the draft order does bear out the aforesaid facts and since the assessee's case and all the material facts are one and the same for all the three assessment years (as set out in its own application filed under Section 245C) it-must be said that the very same facts also establish the said factors even with respect to the two latter assessment years. In the circumstances, it must be said that the main limb of Sub-section (1A) was fully satisfied in this case. No valid or relevant reasons have been assigned by the Commission, within the meaning of the proviso to subsection (1A) to admit the application for the two latter assessment years. It was a gross case where the assessee brazenly and deliberately perpetrated fraud upon the Revenue with a view to evade the taxes legitimately and lawfully payable by him. The fraud played by him, which was discovered by the Income-tax Officer even by the date of submission of report by the Commissioner, disentitles the assessee from claiming that this case should be admitted for settlement by the Commissioner. There is neither law in its favour nor equity. The fact that it has admitted its fraud in its application is of no consequences since its fraud was already discovered by the Income-tax Officer by her own extensive and elaborate inquiries'.
16. What was held by the Supreme Court in the above judgments is existence of the power of the Settlement Commission to entertain an application from a person who in act of bona fide mis-classified the goods imported and had disclosed the same before the Department even before the Department would investigate and detect the concealment. However, in a case where the concealment itself has not been disclosed, till such time, it was detected by the authorities through a detailed investigation after putting theirefforts to find out as to who is the cause for such concealment or smuggling or the fraud played on the department, the importer cannot be considered as a person bona fidely mis-classified the goods and thereby resorting to the remedy of settlement by applying to the Settlement Commission. In this case, factually the second respondent did not disclose the mobile phones before the exercise made by the Special Intelligence Investigation Team. The team on investigation found that it was a case of mis-declaration and as an act of smuggling. Further, the scope of application under Section 127B of the Act should be with reference to either levy, assessment or collection of customs duty and short-levy of mis-classification or otherwise of the goods. Since I have found on the facts and circumstances of the case that it is not 'a case' on account of mis-classification, but on the ground of mis-declaration and as it does not relate to levy, assessment or collection of customs duty, the application would fall outside the powers of Settlement Commission to entertain the same under Section 127B and Section 127C of the Act. For the same reason, the submission of the Counsel that the goods are not restricted from being imported and they are liable to be released on redemption fine has also no relevance as the goods found in the consignment were smuggled and the second respondent is liable to be prosecuted under COFEPOSA.
17. The Settlement Commission, in order to entertain the application filed by the Respondents 2 to 4 relied upon the judgment of the Supreme Court in the case of Narsingh Das Tapadia reported in 2000 S.C.C. (CRI) 1326. That was a case arose under the Negotiable Instruments Act, 1881 and the Supreme Court held,
'If a compliant is found to be premature, it can await maturity or be returned to the complainant for filing later and its mere presentation at an earlier date need not necessarily render the complaint liable to be dismissed'.
On the facts of the case as discussed above, I do not find that the said judgment referred to by the Commission is applicable to the present case as the issue in entertaining the application does not fall on the category of premature but, it relates to the power of the Settlement Commission to entertain the very application under Section 127B of the Act. I do not also accept the conclusion arrived by the Commission to entertain the application on the ground that even though the Bill of Entry has been filed in respect of certain goods, the second respondent has complied with proviso (a) to Section 127B(1) of the Act, in view of my findings above in regard to the jurisdiction of the Commission to entertain the application under the said Act. It is also to be noted that even though the Commission has found that there were some inconsistence stand taken by the second respondent, it held that those do not make the application liable for rejection. The Commission failed to note that by the inconsistence stand of the second respondent, it resulted in the case of mis-declaration and not a case of mis-classification of goods and that too after the concealment was detected by the officials of the Department. The Commission, therefore ought to have relied upon the inconsistence stand in support of the case of the Department rather in favour of the 2nd respondent. The above reasons adduced by the Commission will not in any way enable the Commission to entertain the application filed by the Respondents 2 to 4 since on facts, the issue does not relate the 'a case' as defined under Section 127A(b) of the Act.
18. The next submission of the learned Counsel for the second respondent is that in the show cause notice in Para 21.0, the second respondent was called upon to show cause within 30 days from the date of receipt of the , notice as to why the value of the goods should not be revised to Rs. 43,56,189/- (CIF) and Rs. 57,87,200/- (MV) from Rs. 4,71,450/-(CIF) and in view of the said revision of value of the goods, it shall fall within the meaning of case as defined under Section 127A(b) of the Act. In the said show cause notice, the second respondent was called upon to show cause as to why:
I. The value of the goods should not be revised to Rs. 43,56,189/- (CIF) and Rs. 57,87,200/- (MV) from Rs. 4,71,450/- (CIF);
II. The goods should not be confiscated under Section 111(i) and (m) of the Customs Act, 1962;
III. Penalty should not be imposed on Shri V.C. Mohan under Section 112(a) of the Customs Act, 1962;
IV. Penalty should not be imposed on Shri S. Janakiraman under Section 112(a) of Customs Act, 1962.'
In paragraph 24.0 of the said show cause notice, it is stated that the notice is issued without prejudice to any other action that may be taken either under Customs Act, 1962 or under any other law for the time being in force in India necessarily indicating that the show cause notice is without prejudice to the rights of the department to take any other action against the second respondent. Merely because the second respondent was called upon to show cause as to the revision of the customs duty, it cannot be contended that the show cause notice under Section 124 of the Customs Act in relation to the action taken under Section 111(i) and (m) of the Act, relating to confiscation of goods and imposition of penalty should be ignored. When a notice is considered, it should be considered as a whole. As per para 21.0 (ii) and (iii) of the show cause notice, it is clear that they do not relate to a case of levy, assessment and collection of customs duty, which would fall under the definition of 'case' under Section 127B of the Act to give cause of action for the second respondent to make an application before the Commission. Hence, for the above reasons, I do not agree with the submissions of the learned Counsel for the respondent that it is a case as defined under Section 127A(b) of the Act. When once this Court comes to a conclusion that the facts and circumstances of the case does not indicate a case of levy, assessment and collection of customs duty and short-levy on account of this classification or otherwise of goods, the application filed by the second respondent cannot be brought under Section 127B of the Act. When once the said conclusion is arrived, the submission of the learned Counsel for the second respondent as to the second proviso to Section 127B of the Act also cannot be accepted, more particularly the said proviso to Section 127B is subject to main proviso to Section 127B. Once the application filed by the second respondent cannot be brought under the substantial provision of Section 127B, the restriction imposed under the proviso on the application in relation to goods to which Section 127B applies or goods in relation which offence NDPS Act, 1985 has been committed would not applicable to the benefit of the petitioner. The said proviso shall be subject to the provisions of Section 127B of the Act to sustain an application before the Commission. Therefore, the above submissions of the learned Counsel for the second respondent also have no merits.
19. For the foregoing reasons, I find force in the rontention of the learned Additional Solicitor General, and hold that the application filed by the petitioner before the first respondent would not fall within the ambit of the power of the Commission under Section 127B of the Act and the im-pugned order in allowing the application under Section 127C of the Act cannot be sustained.
20. Accordingly, the writ petition is allowed and the impugned order of the first respondent dated 15-2-2001 is set aside. In view of the order in the main writ petition, no further orders are necessary in the connected W.M.Ps and the same are closed. No costs.
21. After the pronouncement of the order in this writ petition, learned Counsel for the second respondent submitted that appropriate directions may be given to the writ petitioner to refund a sum of Rs. 11,56,805/-already deposited, pursuant to the direction given by the Commission.
22. In view of the order passed in the writ petition, the second respondent is entitled to approach the Department for refund of the said amount by way of a representation. If any such representation is received, the Department shall consider the same and pass orders within three weeks from the date of receipt of copy of the representation.