Trader Cannot Accept Settlement Commission's Order U/S 127C Of Customs Act 'In Parts': Delhi High Court

The Delhi High Court has held that an order passed by the Settlement Commission under Section 127C of the Customs Act, 1962 is in the nature of a 'settlement' and cannot be accepted by a trader only in part.A division bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed, “Given the nature of the order passed under Section 127C of the Act – which is in the nature of a settlement – it would not be permissible to dissect the same and accept that parts of the order which are favourable to the applicant while rejecting the other directions which are not. The order of Settlement Commission must be accepted in entirety. ”In terms of Section 127B of the Act any importer, exporter or any other person may in respect of a case relating to him make an application before the Settlement Commission to have the case settled prior to its adjudication.Section 127C prescribes the procedure to be followed on receipt of an application under Section 127B and empowers the Settlement Commission to pass orders.In the case at hand, the Petitioner was aggrieved by the Settlement Commission's order to the extent it imposed interest of Countervailing Duty (CVD) as well as the Special Additional Duty. it claimed that there is no statutory provision for payment of interest on the said duties.The petitioner was booked for wrongly seeking exemption from duty on import of certain certain goods under Advance Authorisations but later selling the goods in the local market.Petitioner contended that although an order passed under Section 127C(5) cannot be challenged on merits, the same is untenable if it is not in accordance with the provisions of the Act. As per the Petitioner, At the outset, the High Court perused the Scheme of Chapter XIV-A of the Act which contains provisions regarding Settlement of Cases. It observed,“It is clear from the Scheme of Chapter XIV-A of the Act that the provisions contained therein are for settlement of cases and not for adjudication of disputes. In the circumstances, it is not open for an applicant to dissect the order passed by the Settlement Commission or to seek merit review of the such an order. Since the nature of the order passed under Section 127C of the Act is that of a settlement of a case, the applicant is required to accept the same in its entirety.”It relied on Sanghvi Reconditioners (P) Ltd. v. Union of India: (2010) where the Supreme Court had observed that having opted to get their customs duty liability settled by the Settlement Commission, the appellant cannot be permitted to dissect the Settlement Commission's order with a view to accept what is favourable to them and reject what is not.Accordingly, the petition was dismissed.Appearance: For the Petitioners : Ms. Tuhina and Mr. Deep Shah, Advocates; For the Respondents : Mr. Harpreet Singh, Senior Standing Counsel with Ms. Suhani Mathur, Advocate.Case title: KBS Industries Ltd & Anr. v. The Customs Central Excise And Service Tax Settlement Commission Principal Bench New Delhi & OrsCitation: 2025 LiveLaw (Del) 67Case no.: W.P.(C) 10505/2024Click here to read order

Trader Cannot Accept Settlement Commission's Order U/S 127C Of Customs Act 'In Parts': Delhi High Court

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