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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 2005 OF 2010

Union of India. … Petitioner.

V/s.
Pratibha Construction Engineers &
Contractors (India) Pvt.Ltd. and another. … Respondents.

Mr.Pradeep Jetly, Senior Advocate with Mr.Sham Walve and

Ms.Sangeeta Yadav for the Petitioner.

Mr.Vishal Khanavkar with Mr.Kedar Dighe for Respondent No.1.

SANJAY
KASHINATH
NANOSKAR
CORAM : NITIN JAMDAR AND
GAURI GODSE, JJ.
Digitally signed by
SANJAY KASHINATH
NANOSKAR
Date: 2022.12.13
12:15:38 +0530 DATE : 1 December 2022.

ORAL JUDGMENT: (Per Nitin Jamdar, J.)

Heard the learned counsel for the parties.

2. By this petition, the Union of India through

Commissioner of Customs (Import) has challenged the order dated
21 April 2009 passed by the Settlement Commission granting of
immunity to Respondent No.1 towards the interest liability.
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3. When the petition came up on board on the last

occasion, learned counsel for Respondent No.1 had stated that in
spite of repeated communications, no response is being received
from Respondent No.1. By way of indulgence, the matter was
adjourned and Respondent No.1 was put to notice that if none
appears on the next date, it would be presumed that Respondent
No.1 is not interested in sustaining the order of the Settlement
Commissioner and appropriate order would be passed. The orders of
this Court are uploaded on the website and are accessible to the
litigants. Today also the learned counsel for Respondent No.1
reiterates that has no instructions.

4. Respondent No.1 is a private limited company engaged

in business of civil engineering works. At the relevant time,
Respondent No.1 received a work order from Maharashtra State
Road Development Corporation for construction of a road.
Respondent No.1 filed a Bill of Entry in respect of imported
Electronic Control Speco Asphalt Hot Mixing Plant and claimed
benefit of exemption under notification dated 1 March 2002 read
with List 18 and Condition 40 appended to the notification.
Respondent No.1 at the time of importing the Hot Mixing Plant had
undertaken that the machine will be exclusively used for the work of
construction of national highways and will not be sold before the
expiry of five years of import. A show-cause-notice was issued to
Respondent No.1 under section 124 read with section 28 of the
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Customs Act, 1962- in respect of evasion of customs duty amounting

to Rs.83,75,069/- on the import of the Asphalt Hot Mixing Plant
stating that the Petitioner had unduly availed the exemption of
Notification No.21/2002 dated 1 March 2002 (as amended). The
show-cause-notice was pursuant to the intelligence gathered by the
department that Respondent No.1 had claimed certain duty
exemption benefits and diverted the same to some other company.
Also that the Respondent No.1 is that Respondent No.1 disposed of
the imported Hot Mixing Plant within five years from the
importation in violation of the undertaking given to Customs
Department at the time of import.

5. The Commissioner of Customs (Import) by order dated

26 March 2007 directed provisional release. The Respondent No.1
filed an application on 16 February 2009 under section 127-B of the
Customs Act, 1962 for settlement of duty of Rs.83,75,069/- arising
out of show-cause-notice dated 4 September 2008. Respondent
No.1, in the application for settlement, admitted the duty liability of
Rs.83,75,609 and paid the amount of Rs.54,58,709 towards interest
liability. Respondent No.1 stated that interest under section 28AB of
the Act was not due from Respondent No.1 and sought immunity in
respect of the same. The claim of Respondent No.1 in respect of
interest liability was opposed by the Petitioner- Department.

6. The Settlement Commission referred to its earlier

decision in the case of one Valecha Engineering Ltd., and by a
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cryptic order held that no interest appears to be leviable.

Accordingly, the Settlement Commission granted complete
immunity to Respondent No.1 from the liability of interest.

7. Mr. Jetly, learned Senior Advocate appearing for the

Petitioner states that Exh.D is erroneously annexed and the
Petitioner is not relying on this document as the impugned order
discloses all the relevant facts for challenge.

8. Mr. Jetly submitted that the order passed by the

Settlement Commission is without any jurisdiction or power as the
Settlement Commission has completely omitted the amendment to
section 127H(1) of the Act of 1962. Mr. Jetly submitted that the
amendment to relevant provision has taken away the power to grant
immunity in respect of interest.

9. Section 127H of the Act of 1962 confers power on the

Settlement Commission to grant immunity from prosecution and
penalty. Section 127H(1) as it read prior to 1 June 2007
empowered the Settlement Commission, upon satisfaction of the
conditions laid down in the provisions, to grant immunity either
wholly or in part from the imposition of any penalty, fine and
interest. The relevant provision before amendment read thus:
“127H. Power of Settlement Commission to grant immunity
from prosecution and penalty.
(1) The Settlement Commission may, if it is satisfied that
any person who made the application for settlement under
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section 127B has co-operated with the Settlement Commission

in the proceedings before it and has made a full and true
disclosure of his duty liability, grant to such person, subject to
such conditions as it may think fit to impose, immunity from
prosecution for any offence under this Actor under the Indian
Penal Code or under any other Central Act for the time being
in force and also either wholly or in part from the imposition
of any penalty, fine and interest under this Act, with respect to
the case covered by the settlement:
….. ….. ….. ….. ….. ….. ….. …..”
(emphasis supplied)

Thereafter section 127H(1) was amended by the Finance Act, 2007

brought into effect from 1 June 2007. By this amendment, the
phrase “interest” has been deleted from section 127H(1). The
amended provision reads thus:
“(1) The Settlement Commission may, if it is satisfied that
any person who made the application for settlement under
section 127B has co-operated with the Settlement Commission
in the proceedings before it and has made a full and true
disclosure of his duty liability, grant to such person, subject to
such conditions as it may think fit to impose, immunity from
prosecution for any offence under this Act and also either
wholly or in part from the imposition of any penalty and fine
under this Act, with respect to the case covered by the
settlement:
….. ….. ….. ….. ….. ….. ….. …..”
(emphasis supplied)

The show-cause-notice is dated 4 September 2008. The application

for settlement filed by Respondent No.1 is dated 16 December 2009.
The assertion in the petition that after the amendment and post 1
June 2007, the Settlement Commission would not have power in
respect of prosecution and penalty has gone uncontroverted.
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Neither the Respondent No.1 has filed reply controverting this

position nor has given any instruction to his advocate. Therefore,
we set aside the the complete immunity granted to Respondent No.1
in respect of interest.

10. Accordingly Rule is made absolute in terms of prayer

clause (b). The impugned order of the Settlement Commission to
the extent that it grants complete immunity to Respondent No.1 as
regards interest, is quashed and set aside. No order as to costs.

(GAURI GODSE, J.) (NITIN JAMDAR, J.)