M/S. SANGHVI RECONDITIONERS PVT. LTD.versusUNION OF INDIA AND ORS.

                      [201 O] 2 S.C.R. 352


A          M/S. SANGHVI RECONDITIONERS PVT. LTD.
                                   v.
                    UNION OF !NOIA AND ORS.
                   (Givil Appeal No.1435 of 2003)
                        FEBRUARY 05, 2010
B
                [D.K. JAIN AND T.S. THAKUR, JJ.]

       Customs Act, 1962 - ss. 1278 and 127C "'- Settlement -
  Duty exemption notification - Appellant-importer suppressed
C facts to clandestinely avail benefit of the notification - Demand
  of duty by Commissioner of Customs besides;Penalty and
  interest - AppeJJ.ant filed application for settlement -
  Settlement Commission confirmed the order of adjudication
  by Commissioner, but waived penalty and interest and also
o granted total immunity to appellant from prosecution-- Still
  aggrieved, appellant filed writ petition and sought to urge
  additional ground relating to applicability of ss. 54 and 69 -
  High Court did not permit appellant to urge the additional
  ground and confirmed the order of Settlement Commission
E - Justification of - Held: On facts, justified - The order of
  Settlement Commission did not suffer from any error, legal
  or factual - Having opted to get their customs duty liability
  settled by the Settlement Commission, appellant cannot be
  permitted to dissect the Settlement Commission's order with
F a view to accept what is favourable to it and reject what is not
  - Additional ground sought to be raised before the High Court
  was not only an afterthought, adjudication thereon involved .
  investigation into facts and, therefore, the decision of High
  Court in not entertaining the additional ground did not suffer
G from any infirmity - Customs Tariff Act, 1975 - Exemption
  Notification No. 211183-Cus dated 23rd July, 1983, as
  amended - Constitution of India, 1950 - Art. 226.

         Circulars/ Government Orders/ Notifications - Exemption
    Notification - Interpretation of - Held: Exemption Notifications
H                                  352
  SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 353
                INDIA AND ORS.

  have to be strictly construed - A person claiming benefit of A
  exemption notification, must show that he satisfies the
  eligibility criteria.

      It was alleged that the appellant-importer, a registered
  ship repair unit, clandestinely availed the benefit of import
                                                                8
  duty Exemption Notification No.211183-Cus dated 23rd
  July, 1983, as amended, on import of multiple
  consignments of engineering cargo as "ship spares".

        The Commissioner of Customs demanded customs
   duty of Rs.68.78 lakhs besides penalty, as also interest C
   under Section 28AB of the Customs Act, 1962. Appellant
   filed appeal before the Tribunal, but later withdrew the
   same and thereafter filed an application under Section
   1278 with the Settlement Commission, disclosing and
   admitting a duty liability of Rs.20.98 lakhs. The Settlement D
   Commission called for the statutory report from the
·. Jurisdictional Commissioner in terms of Section 127C of
   the Act. Upon consideration of the information furnished
   by the Commissioner, particularly the fact that the
   appellant had given details of the "consignee" as the ship E
   owners, without disclosing the sale of imported "spare
   parts" to one Mis Elektronik Lab, the Settlement
   Commission was satisfied'.that there was suppression of
   facts on the part of the appellant so as to avail the benefit
   of duty exemption fraudulently.                               F

      Finally, concluding that the Revenue had been able
 to produce documentary evidence showing sale of
 imported "spare parts" by the appellant to Mis Elektronik
 Lab, who in turn sold the same items to ship owRers, the
 appellant could not claim any benefit under exemption G
 Notification No.211/83, the Settlement Commission
 sustained the demand of duty of Rs.68.78 lakhs. Howeve.r,
 inter alia, observing that though the appellant had not

                                                                H
    354      SUPREME COURT REPORTS               [201 O] 2 S.C.R.

A   made a full and true disclosure of their duty liability but
    had cooperated with the Settlement Commission, the
    Settlement Commission waived penalty in excess of
    Rs.18 lakhs and granted total immunity to the appellant
    from prosecution. The Settlement Commission also held
B   that since the case of the appellant pertained to a period
    prior to April, 1995, when Section 28AB of the Act was
    inserted by the Finance Act, 1996, interest on delayed
    payment of duty could not be levied on the appellant.

         The appellant filed writ petition before the High Court,
C   and later filed an application for amendment of the writ
    petition, seeking to urge an additional ground to the
    effect that some of the consignments of "spare parts"
    having been imported under the procedure to be
    followed for "transhipment" or for "warehoused goods
D   for exportation", hence, no customs duty was payable
    by virtue of the provisions contained in Sections 54 and
    69 of the Act. Although, the amendmen          as allowed by
    the High Court in order to examine hether the initial
    stand, based on the exemption n ification, could go
E   hand in hand with the case now s , ght to be pleaded in
    the amended petition, but, ultimately, the High Court did
    not permit the appellant to urge the additional ground
    relating to the applicability of Sections 54 and 69 of the
    Act and dismissed the writ petition. Hence the present
F   appeal.

          Dismissing the appeal, the Court

         HELD:1. In the pres'ent case, the order of the
    Settlement Commission did not suffer from any error,
G   legal or factual, and, therefore, the High Court was fully
    justified in dismissing the writ petition. [Para 23] [379-E]

        Tarini Kamal Pandit & Ors. v. Prafulla Kumar Chatterjee
    (Dead) by Legal Representatives (1979) 3 SCC 280; Ajaib
H
SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 355
             INDIA AND ORS.
Singh v. State of Punjab (2000) 4. SCC 51 O; Municipal A
Corporation of the City of Jabalpur v. State of Madhya
Pradesh & Anr., (1963) 2 SCR 135; Collector of Central
Excise; Ahmedabad v. Pioma Industries and Imperial Soda
Factory (1997) 10 SCC 400; Jyotendrasinhji v. S./. Tripathi
& Ors. 1993 Supp (3) SCC 389; Paul Industries (India) v. B
Union of India & Ors. (2004) 13 SCC 340; Commissioner of
C. Ex., Visakhapatnam v. True Woods Pvt. Ltd. (2006) 199
E.L.T. 388 (Delhi); Union of India v. Anil Chanana (2008) 222
E.L.T. 481 (S.C.) and C.I. T. Mumbai City XIV, Mumbai v. The
Income Tax Settlement Commission, Mumbai & Ors. (2000)     c
246 ITR 63 Born, referred to.

     2.1. It is manifest from a bare reading of the provision
that in the application filed under Section 1278 of the
Customs Act, 1962, an applicant is required to make a full
and true disclosure of his duty liability, which he had D
failed to disclose before the proper officer. He is also
required to exhaustively explain to the Settlement
Commission the manner in which such liability has been
incurred; the additional amount of customs duty
accepted to be payable by him as also the price of such E
dutiaJ>le goods in respect of which he admits short levy
on account of misclassification or otherwise of goods. In
other words, the applicant is supposed to make a clean
breast of his affairs in regard to short levy or non payment
of customs duty admitted to be payable by him. [Para 13] F
[370-G-H; 371-A-B]

    2.2. Section 127C of the Act prescribes the procedure
to be followed by the Settlement Commission on receipt
of an application under Section 1278. The section G
mandates that on receipt of an application under Section
1278, 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
                                                           H
    356     SUPREME COURT REPORTS              [2010] 2 S.C.R.


A   case or the complexity of the investigation involved
    therein, the Settlement Commission may allow the
    application to be proceeded with or reject the
    application. [Para 14] [371-C-E]

         2.3. Section 127H of the Act empowers the
8
    Settlement Commission to grant immunity from penalty
    and prosecution, with or without conditions, in cases
    where it is satisfied that the assessee has made a full and
    true disclosure of his duty liability. Sectiqn 127J declares
    that every order of settlement passed under sub-Section
C   (7) of Section 127C shall be conclusive as to the matters
    stated therein and no matter covered by such order shall,
    save as otherwise provided in Chapter XIVA, be
    reopened in any proceeding under the Act or under any
    other law for the time being in force. [Para 15] (371-F-H;
D   372-A]

         3.1. Exemption Notifications have to be strictly
    construed. A person claiming the benefit of exemption
    notification, must show that he satisfies the eligibility
E   criteria. [Para 17] [37 4-A]

       3.2. It is clear from the language of the Exemption
  Notification No.211/83 dated 23rd July, 1983 (which
  provided exemption to capital goods, raw materials and
  consumables for repairs of ocean going vessels) that in
F order to avail of the benefit of exemption from whole of
  the duty of customs leviable under the Customs Tariff Act,
  1975, twin conditions, viz., (1) capital goods,
  components, etc. are required for repairs of ocean going
  vessels, and (2) the ship repair unit should be registered
G with the Director General of Shipping, Government of
  India, are to be fulfilled. Both the conditions are
  cumulative and admit of no exception. Being the
  foundation for availing the benefits under ttie notification,
  both the conditions have to be strictly complied with.
H
SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 357
             INDIA AND ORS.
Besides, under the Notification, an importer is also            A
required to maintain a proper account of import, use and
consumption of the capital goods, components, etc.
imported for the aforesaid purpose in a prescribed form
and failure to satisfy the Collector about their installation
or consumption for the said purpose makes the importer          B
liable to pay an amount equal to the duty payable on such
goods. [Para 17] [373-E-H; 374-A]

     Kartar Rolling Mills v. Commissioner of Central Excise,
New Delhi (2006) 4 SCC 772; Eagle Flask Industries Ltd. v.
Commissioner of Central Excise, Pune 2004 (171) E.L.T. 296      C
(S.C.) AND Msco. Pvt. Ltd. v. Union of India and Ors. 1985
(19) E.L.T. 15, relied on.

     4. In the present case, taking into consideration the
documents on record and the sale pattern of the goods D
and not the value addition, the Settlement Commission
came to the conclusion that in the first instance, the
goods in quest~on were sold by the appellant to M/s ..
Elektronik Lab and then by the latter to the ship owners
under the cover of their own sales invoices and, therefore, E
the appellant was not entitled tb duty exemption under
the said Notification. Similarly, Mis Elektronik Lab were
also not eligible for duty exemption under the said
Notification because they were not registered with the
Director General of Shipping, Government of India, as F
required under the Exemption Notification. Before the
High Court an unsuccessful attempt was made to lay
more emphasis on exemption from payment of customs
duty on the consignments in terms of Sections 54 and 69
of the Act and not under the Exemption Notification G
No.211/83-CUS dated 23rd July, 1983. Thus, there was a
shift in the stand of the appellant before the High Court
when sale of the imported components by them to a third
party stood proved on the basis of overwhelming
documentary evidence on record, disentitling them to the H ~
    358    SUPREME COURT REPORTS.              [201 O] 2 S.C.R.


A benefit of the exemption notification. In the final analysis,
  the High court rightly came to the conclusion, that in the
  light of the material available on record, the order of the
  Settlement Commission did not suffer from any error
  warranting its interference. [Para 20] [376-A-F]
8
       5.1. In· so far as the issue with regard to the
  applicability of Sections 54 and 69 of the Customs Act,
  1962 is concerned, it was too late in the day for the
  appellant to raise such a plea. In the first instance, if the
c appellant felt that 8 consignments were intended for
  transhipment and were cleared from the warehouse for
  exportation and, therefore, no import duty was payable,
  there was no occasion for them to withdraw their appeal
  before the Tribunal and prefer an application before the
  Settlement Commission, moreso when in respect of the
0
  remaining consignment, they. t)ad accepted and paid the
  customs duty. When according to the appellant, no
  customs duty was payable in respect of the 8
  consignments, then on the plain language of Section
  1278, the appellant's application before the Settlement
E Commission was not maintainable. An application under
  Section 1278 of the Act would be maintainable only if it
  discloses duty .liability, which had not been disclosed to
  the proper officer. A disclosure contemplated by the said
  Section is in the nature of voluntary disclosure of the
F concealed additional customs duty. Secondly, such a plea
  was neither raised before the adjudicating authority in
  response to the show cause notices issued to the
  appellant nor before the Tribunal as also before the.
  Settlement Commission. [Para 21] [376-F-H; 377-A.:.C]
G
       5.2. Even before the High Court, in. the original writ
  petition, such a plea was not raised and it was only by
  way of an amendment application, that an additional
  ground was sought to be raised. Though it is true that
H there is no bar in the High Court and for that matter this
  SANGHVI RECONDITIONERS PVT. LTD. v. UNION              359
             OF INDIA AND ORS.
Court entertaining an additional ground, involving a pure       A
question of law, but on facts at hand, in the light of the
findings of the Settlement Commission, based on
documentary evidence that the goods in question
imported by the appellant were actually sold by them to
M/s Elektronik Lab, before these were used for repair of        B
ocean going ships, it cannot be held that the additional
ground did not involve any investigation into facts.
Documents on record show that the bills of transhipment
as also bills of export were filed by the appellant before
the proper officer after the property in the said goods had     c
passed to Mis Elektronik Lab. It is clear that since Mis
Elektronik Lab. was not registered with the Director
General of Shipping, they were not eligible to avail of duty
exemption under the said notification, they entered into
an arrangement with the appellant, a registered ship
                                                                D
repairing unit, to import the goods for repair of ocean
going vessels without payment of import duty under the
Exemption Notification. Thus, the sole object of the
transactions was to avail of duty exemption under the
said notification. [Para 21] [377-C-H]
                                                                E
      5.3. Additionally, in order to claim the benefit of the
 Exemption Notification, the components, consumables
 etc. had to be used by the importer himself for repair of
the vessels and not through someone else, who
 incidentally was not even named in the shipping bills.         F
Moreover, proper accounts of imports, use and
consumption of such goods was to be maintained by the
importer, and in the event of failure to render the account
for such consumption, the importer was liable to pay the
customs duty as may be demanded by the                          G
Commissioner of Customs. However, once the imported
goods were sold to a third party, the appellant was
incapacitated from maintaining and rendering the account
to the Commissioner in terms of the notification. All these
                                                                H
   360     SUPREME COURT REPORTS              [2010] 2 S.C.R.


A factors go to show that the additional ground sought to
  be raised before the High Court was not only an
  afterthought, adjudication thereon did involve
  investigation into facts and, therefore, the decision of the
  High court in not entertaining the additional ground did
B not suffer from· any infirmity. [Para 21] [377-H; 378-A-D]

       6. Since the ~ppellant had not made a full and true
  disclosure, their application should have been rejected
  by the Settlement Commission on that count itself and no
c relief should have been granted to the appellant. However,
  in view of the fact that order passed by the Settlement
  Commission allowing the application of the appellant to
  be proceeded was not challenged by the Commissioner
  nor such a plea was urged by the Revenue before the
  High Court or in their reply to the present appeal, if is
0
  difficult to reject the application at this stage, though,
  having perused some of the documents available on
  record, it is clear that the appellant had not made a full
  and true disclosure of its affairs before the Settlement
  Commission. Be that as it- m~y, having opted to get their
E customs duty liability settled by the Settlement
  Commissiori,: under Chapter X1VA of the Act, 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. [Para 22] [378-
F D-H; 379-A]

        7. It is manifest from the procedure laid dowri in
  ·Section 127C of the Act that interim order under sub-
   section (1) of Section 127C as also the final order un~er
G sub-Section (7) of the said Section are to be made by the
   Settlement Commission after examination of the reports
   of the Commissioner of Customs or its Commissioner
   (Investigation). These repor.ts are submitted on the
   disclosures made in the application under Section 1278
H of the Act and, therefore, the applicant cannot be
  SANGHVI RECONDITIONERS PVT. LTD. v. UNION              361
             OF INDIA AND ORS.
permitted to resile from his pleadings in the application A
at any stage of proceedings before ·the Settlement
Commission or set up a new case before the higher Fora.
[Para 22] [379-8-0]

       CIT v. B.N. Bhattacharjee (1979) 4 SCC 121, referred
                                                                B
to.
                       Case Law Reference:
      (1979) 3 sec 280                referred to   Para 10
      (2000) 4 sec 51 o               referred to   Para 10     c
      (1963) 2 SCR 135                referred to   Para 10
      (1997) 10 sec 400               referred to   Para 10
      1993 Supp (3) sec 389           referred to   Para 10     D
      (2004) 13 sec 340               referred to   Para 10
      (2006) 199 E.L.T. 388 (Delhi)   referred to   Para 11
      (2008) 222 E.L.T. 481 (S.C.)    referred to   Para 11
                                                                E
      (2000) 246 ITR 63 Bom.          referred to   Para 11
      (2006) 4 sec 112                relied on     Para 17
      2004 (171) E.L.T. 296 (S.C.)    relied on     Para 17
                                                                F
      1985 (19) E.L.T. 15             relied on     Para 17
      (1979) 4 sec 121                referred to   Para 22
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
1435 of 2003.
                                                                G
    From the Judgment & Order dated 23.4.2002 of the High
Court of Bombay in Writ Petition No. 633 of 2002.

    S.K. Bagaria, Tarun Gulati, Rony John, Ankur Saigal, Bina
Gupta, Gaurav Singh, Kishore Kunal for the Appellant.           H
    362      SUPREME COURT REPORTS                [2010] 2 S.C.R.


A         H.P. Rawal, ASG, T.V. Ratnam, B.K. Prasad, Anil Katiyar
    for the Respondent.

          The Judgment of the Court was delivered by

      D.K. JAIN, J. 1. This appeal, by special leave, is directed
B 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,
C Mumb. ai (hereinafter referred to as, "the Settlement.
  Commission").

       2. The facts, giving rise to the present appeal, m~y be
    summarised thus:
D      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
E 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
F 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
G 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").
H



                                       --- - - -- ----
  SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 363
           INDIA AND ORS. [D.K. JAIN, J.]

       3. Aggrieved, the appellant preferred an appeal to the             A
  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               B
  their case settled under Chapter XIVA of the Act. Th&-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/-.                           C

         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        D
   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 o.f
   investigation, documents, viz., sales bills, account registers, etc.   E
   retrieved from the appellant, revealed the sale of these goods
   to one Mis 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             F
   stand of the Commissioner was that or:ie Mis 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               G
  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.                                                 H
    364     SUPREME COURT REPORTS                  [2010] 2 S.C.R.


A      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 the Act. The amount of
B additional duty determined to be payable under sub-Section (3)
  of said Section was duly paid by the appellant.

           6. At the next hearing before the Settlement Commission,
    it was asserted on behalf of the appellant that they had fulfilled
C   all the conditions as stipulated in Notification No.211/83 dated
    23rd July, 1983 and that no spare parts, so imported, were sold
    by them to M/s Elektronik Lab. The stand of the appellant was
    that they had installed the imported equipment on the ocean
    going vessels with the assistance of M/s Elektronik Lab, who
    were the authorised agents of the foreign supplier, M/s Kelvin
D   Hughes, in India from whom the appellant had imported the
    goods. It was argued that the said Notification did not prohibit
    an importer from taking assistance of a third party in the repair
    of the ships. It was reiterated that all the "ship spares" imported
    by the appellant were fitted in the ocean going vessels directly ·
E   by them with the assistance of M/s Elektronik Lab and,
    therefore, all the conditions, stipulated in the Notification, were
    fulfilled. Apparently, the Settlement Commission was not
    convinced with the explanation offered by the appellant. On the
    contrary, the Settlement Commission felt that the appellant had
F   transferred/sold the imported goods to M/s Elektronik Lab; as
    pleaded by the Commissioner. Accordingly, vide order dated
    24th September, 2001, the Settlement Commission directed
    the Commissioner to submit his final report along with the
    relevant material to establish that the goods imported by the
G   appellant were actually sold to M/s Elektronik Lab.

        7. In his final report dated 27th September, 2001, the
    Commissioner submitted that the appellant had imported
    navigational equipments, such as, Radar System, SART,

H
  SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 365
           INDIA AND ORS. [D.K. JAIN, J.]
  NATEX and EPIRB in pursuance of the Purchase Orders                  A
  placed by M/s Elektronik Lab on them; delivered the cargo on
  board the ships of M/s Dredging Corporation, Mis Chowgule
  Steamships Ltd. and M/s Essar Coastal Ltd. and the purchaser,
  M/s Elektronik Lab, subsequently carried out installation of the
  said equipments on board the ships owned by the above three          B
  shipping companies. The stand of the Commissioner was that
  since Mis Elektronik Lab, who had purchased the imported
  spare parts from the appellant for the purpose of fitting on board
  the ships of the said three shipping companies, was not
  registered with the Director General of Shipping, they were not      c
  eligible to claim benefit of exemption Notification, and,
  therefore, they routed the imports through the appellant and
  further, since the "spare parts" imported for carrying out repairs
  of the ships were not actually used by the appellant and had
  been sold to Mis Elektronik Lab; prior to its usage on ships,        D
  the appellant was also not entitled to the benefit of duty
• exemption under the said Notification. It was also pointed out
  that the rates of the spare parts charged by Mis Elektronik Lab
  to the ship owners for the same items were higher than those
  charged by the appellant from them, which undisputedly showed
                                                                       E
  the value addition.

       8. Upon consideration of the information furnished by the
  Commissioner; particularly the fact that the appellant had given
  details of the "consignee" as the ship owners, without disclosing
  the sale of imported "spare parts" to M/s Elektronik Lab, the        F
  Settlement Commission was satisfied that there was
  suppression of facts on the part of the appellant so as to avail
  of the benefit of duty exemption fraudulently. According to the
  Settlement Commission, the sale of ship spares/navigational
 equipments by the appellant to Mis Elektronik Lab was an              G
  independent transaction, distinct from the subsequent sale by
 the latter to the ship owners, which was in the nature of home
 consumption. Finally, concluding that the Revenue had been
 _able to produce documentary evidence showing sale of
                                                                       H
    366     SUPREME COURT REPORTS                  [2010].2 S.C.R.


A imported "spare parts" by the appellant to M/s Elektronik lab,
      who in turn sold the same items to ship owners, the appellant
      could not claim any benefit under exemption Notification
      No.211/83, the Settlement Commission sustained the demand
      of duty of Rs.47,79,320/- in respect of 8 consignments sold by
B the appellant to Mis Elektronik Lab. The Settlement.
      Commission, thus, confirmed the additional customs duty oft:
      Rs.68,78, 106/- demanded from the appellant under the order
      of adjudication by the Commissioner. Inter a/ia, observing that
 · ·.,though the appellant had not made a full and true disclosure of
c their duty liability but had cooperated with the Settlement
      Commission, the Settlement Commission waived penalty in
      excess of Rs.18 lakhs and granted total immunity to the
      appellant from prosecution. The Settlement Commission also
      held that since the case of the appellant pertained to a period
0 prior to April, 1995, when Section 28AB of the Act was inserted
      by the Finance Act, 1996, interest on delayed payment of duty
      could not be levied on the appellant.

       9. Being dissatisfied with the order passed by the
  Settlement Commission, the appellant took the matter to the
E High Court by preferring the aforementioned writ petition. Before
  the High Court, an application was moved by the appellant for
  amendment of the writ petition, seeking to urge an additional
  ground to the effect that some of the consignments of "spare
  parts" having been imported under the procedure to be followed
F for "Transhipment" or for "warehoused goods for exportation",
  no customs duty was payable by virtue of th~ provisions
  contained in Sections 54 and 69 of the Act. Although, the
  amendment was allowed by the High Court in order to examine
  whether the initial stand, based on the exemption notification,
G could go hand in hand with the case now sought to be pleaded
  in the amended petition, but, ultimately, the High Court did not
  permit the appellant to urge the additional ground relating to
  the applicability of Sections 54 and 69 of the Act. The High
  Court was of the view that since the ground now sought to be
H
SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 367
         INDIA AND ORS. [D.K. JAIN, J.]
raised was in fact contradictory to tha earlier stand, at this      A
belated stage, a fresh ground could not be entertained. As
stated above, the High Court has dismissed the writ petition.
Aggrieved by the said decision, the appellant is before us in
this appeal.
                                                                    B
      10. Assailing the decisions of the Settlement Commission
as also of the High Court, Mr. S.K. Bagaria, learned senior
counsel appearing on bE.half of the appellant, strenuously urged
that the High Court committed a serious illegality in declining
to entertain the additional ground regarding applicability of       C
Sections 54 and 69 of the Act in respect of 8 consignments in
question, particularly when the point raised was a pure question
of law going to the root of the matter and did not involve any
investigation of facts. In support of the contention that a pure
question of law can be raised for the first tim~ even before this
Court, reliance was placed on the decisions 'of this Court in       D
 Tarini Kamal Pandit & Ors. Vs. Prafulla Kumar Chatterjee
(Dead) by Legal Representatives 1 , Ajaib Singh Vs. State of
Punjab 2 , Municipal Corporation of the City of Jabalpur Vs.
State of Madhya Pradesh & Anr. 3 , Collector of Central Excise,
Ahmedabad Vs. Pioma Industries and Imperial Soda Factory4.          E
Relying on Jyotendrasinhji Vs. S. I. Tripathi & Ors. 5 and Paul
Industries (India) Vs. Union of India & Ors. 6 , it was contended
that the finality clause contained in Section 127J of the Act did
not bar the jurisdiction of the High Court under Article 226 of
the Constitution to interfere with the order· passed by the         F
Settlement Commission when it was contrary to the provisions
of the Act. It was urged that instead of outrightly declining to
go into the merits of the additional ground raised, at best, the

1.   (1979) 3 sec 280.                                              G
2.   (2000) 4 sec 510.
3.   (1963) 2 SCR 135.
4.   (1997) 10 sec 400.
5.   1993 Supp (3) sec 389.
6.   (2004) 13 sec 340.                                             H
     368      SUPREME COURT REPORTS                [201 O] 2 S.C.R.

 A High Court could have given an opportunity to the Revenue to
   meet the stand of the appellant. It was also contended that the
   expression "clearance of the goods for home consumption"
   under Section 47 of the Act has a definite connotation and
   meaning under the Act and the imported goods can be cleared
 B for home consumption only when a bill of entry for home
   consumption is filed; it is assessed; duties assessed are paid
   and an order is passed by the proper officer for clearance of
   the goods-for home consumption, which is not the case here,
   as no bill of entry for home consumption was filed. Learned
 c counsel was at pains to explain that the said consignments were
   correctly released for transhipment and re-export and the
   conelftions as stipulated in Sections 54 and 69 of the Act having
   been complied with, no customs duty was leviable on the said
   8 consignments. It was, thus, pleaded that the matter deserved
   to be remitted back to the High Court for reconsideration on
 0
   merits.

           11. Mr. H.P. Rawal, learned Additional Solicitor General,
    appearing on behalf of the Revenue, on the other hand,
    supporting the decision of the Settlement Commission as also
  E of the High Court strenuously urged that having specifically
    pleaded before the Commissioner of Customs in adjudication
    proceedings and also in the application before the Settlement
    Commission that there was no sale of the imported equipment
    to M/s Elektronik Lab and that they were brought into the picture
  F for the purpose of installation and regular maintenance of the
    said equipment and, therefore, there was no impediment in their
    availing of benefit under the Exemption Notification, th.e
    subsequent change in their stance that even sale of these parts
    to M/s Elektronik Lab for the purpose of installation on ocean
~ G going vessels was not prohibited under the said Notification
    or that 8 consignments were otherwise exempt from payment
    of customs duty under Sections 54 and 69 of the Act, clearly
    shows that even before the Settlement Commission, the
    appellant had not made a full and true disclosure of the duty
 H
 SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF369
          INDIA AND ORS. [D.K. JAIN, J.]
   liability under the Act. It was argued that the Settlement               A
   Commission having itself recorded a finding that the appellant
   had not made a full and true disclosure of their duty liability, their
   application ought to have been rejected by the Settlement
   Commission on this ground alone. Referring to the invoices
   raised by the appellant on Mis Elektronik Lab, learned counsel           B
   submitted that the documents on record clearly establish that
   the transactions between the appellant and M/s Elektronik Lab
   were purely trading transactions, which not only show the
· untruthfulness of the appellant's initial stance but also prove the
   violation of the. order passed in favour of the appellant                c
l~"~rmittirig re-export of the consignments in question. As
  regards the plea 'Of the appellant that these consignments were
   not exigible to any duty in terms of Sections 54 and .69 of the
  Act, learned counsel submitted that apart from th&'fact that it
  involved determination of disputed questions of fact, an                  D
  application under Section 1278 of the Act for determination of
  question whether an item is dutiable or not, was not
  maintainable before the Settlement Commission. In support of
 ·the proposition, learned counsel relied on the decision of the
  Delhi High Court in Commissioner of C. Ex., Visakhapatnam                 E
   Vs. True Woods Pvt. Ltd'. Relying heavily on the decision of
  this Court in Union of India Vs. Anil Chanana 6 and a decision
  of the Bombay High Court in C.I. T. Mumbai City XIV, Mumbai
   Vs. The Income Tax Settlement Commission, Mumbai &
  Ors., 9 wherein while explaining the concept of compounding in
  terms of Rule 6 of the Customs (Compounding of Offences)                  F
  Rules, 2005, which confers power on the compounding
  authority to grant immunity from prosecution to a person who
  has made full and true disclosure of facts relating to the case
  and has cooperated in the proceedings before him, it was held
  that applications for compounding ought to be disallowed if               G

 -  -
 7. 2006 (199) E.L.T. 388 (Delhi).
 8.   2008 (222) E.L.T. 481 (S.C.).
 9.   2000 (246) ITR 63 (Born).
                                                                            H
    370       SUPREME COURT REPORTS                  [201 O] 2 S.C.R.


A   there are demonstrable contradictions or inconsistencies or
    incompleteness in the case of the applicant, learned counsel
    asserted that in the light of the facts found by the Settlement
    Commission and affirmed by the High Court, the appellant does
    not deserve any further relief.
B
         12. Before adverting to the merits of the issues raised on
    behalf of the parties, it would be appropriate to briefly notice
    the scheme of Chapter XIVA of the Act. The said Chapter was
    inserted in the Act by the Finance Act, 1998 (Act 21 of 1998)
    with effect from 1st August, 1998, for setting up of Customs and
C   Central Excise Settlement Commission on lines of similar
    Commission already functioning under the Income Tax Act,
    1961 since its incarnation on the recommendation of Justice
    Wanchoo Committee. The proceeqings under the Chapter
    commence by an application being made under Section 1278,
D   relevant part whereof reads thus:

          "1278. Application for settlement of cases.- (1) Any
          importer, exporter or any other person (hereinafter in this
          Chapter referred to as the applicant) may, at any stage of
E         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 iri ·which such liability has been incurred, the
F         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 o'n account of
          misclassification or otherwise of goods, to the Settlement
          Commission to have the case settled and such application
G
          shall be disposed of in the manner hereinafter
          provided: ......... "

         13. It is manifest from a bare reading of the provision that
    in the application filed under Section 1278, an applicant is
H
SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 371
         INDIA AND ORS. [D.K. JAIN, J.]
required to make a full and true disclosure of his duty liability, A
which he had failed to disclose before the proper officer. He is
also required to exhaustively explain to the Settlement
Commission the manner in which such liability has been
incurred; the additional amount of customs duty accepted to be
payable by him as also the price of such dutiable goods in 8
respect of which he admits short levy on account of
misclassification or otherwise of goods. In other words, the
applicant is supposed to make a clean breast of his affairs in
regard to short levy or non payment of customs duty admitted
to be payable by him.                                              c
     14. Section 127C of the Act prescribes the procedure to
be followed by the Settlement Commission on receipt of an
application under Section 1278 of the Act. The section
mandates that on receipt of an application under Section 1278,
the Settlement Commission shall call for a report from the D
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 allow the application to be proceeded with or reject the E
application.

       15. Section 127E empowers the Settlement Commission
 to reopen the completed proceedings in appropriate cases,
 while Section 127F confers all the powers upon the Settlement F
 Commission, which are vested in an officer of the Customs
 under the Act. Section 127H empowers the Settlement
 Commission to grant immunity from penalty and prosecution,
with or without conditions, in cases where it is satisfied that the
 assessee has made a full and true disclosure of his duty G
liability. Under Section 127-1, the Settlement Commission can
send back the matter to the proper officer where it finds that
the applicant is not cooperating with it. Section 127J declares
that every order of settlement passed under sub-Section (7) of

                                                                  H
    372      SUPREME COURT REPORTS                  [20101 2 s.c:;.R.


A   Section 127C shall be conclusive as to the matters stated
    therein and no matter covered by such order shall, save as
    otherwise provided in Chapter XIVA, be reopened in any
    proceeding under the Act or under any other law for the time
    being in force.
B
         16. To appreciate the rival submissions in this behalf, it
    would be appropriate at this juncture to refer to Exemption
    Notification No.211/83 dated 23rd July, 1983. In so far as it is
    relevant for this appeal, the Notification reads as follows:

c         "Exemption to capital goods, raw materials and
          consumables for repairs of ocean-going vessels - In
          exercise of the powers conferred by sub-Section (1) of
          Section 25 of the Customs Act, 1962 (52 of 1962), the
          Central Government, being satisfied that it is necessary in
D         the public interest so to do, hereby .exempts capital goods,
          components, raw materials and consumables, when
          imported into India for repairs of Ocean-going vessels by
          the ship repair unit registered with the Director General of
          Shipping, Government of India, from the whole of the duty
E         of customs leviable thereon under the First Schedule to the
          Customs Tariff Act, 1975 (51 of 1975), and from the whole
          of the additional duty leviable thereon under Section 3 of
          the said Customs Tariff Act, subject to the following
          conditi~ns, namely:-

F          (1)   the importer shall maintain   a proper account of
                 import, use and consumption of the capital goods,
                 components, raw materials and consumables
                 imported into India for the aforesaid purpose and
                 shall submit such .account periodically to the
G                Collector of Customs in .such form and in such
                 manner as may be specified by the said Collector;

           (2)   the importer, by the execution of a bond in such form
                 and for such sum as may be specified by the
H
   SANGHVI RECONDITIONERS PVT. LTD. v. UNION                    373
        OF INDIA AND ORS. [D.K. JAIN, J.]
             Collector of Customs, binds himself to pay on             A
             demand an amount equal to the duty leviable:-

       (a)   on goods which are capital goods, as are not
             proved to the satisfaction of the Collector of
             Customs to have been installed or otherwise used          B
             for the aforesaid purpose:

       (b)   on goods whic.h are components, raw material and
             consumables, as are not proved to the satisfaction
             of the Collector of Customs to have been used or
             consumed for the aforesaid purpose; within a              C
             period of three months from the date of importation
             thereof or within such extended period as 'the
             Collector of Customs, on being_ satisfied that there
             is sufficient cause for not installing, using or
             consuming them, as the case may be, for the               D
             aforesaid purpose within the said pmiod, allow.

                                                      ,,

       17. It is clear from the language of the Notification that in   E
 order to avail of the benefit of exemption from whole of the duty
 of customs leviable under the Customs Tariff Act, 1975, twin
 conditions, viz., (1) capital goods, components, etc. are
 required for repairs of ocean going vessels, and (2) the ship
 repair unit should be registered with the Director General of         F
 Shipping, Government of India, are to be fulfilled. Both the
 conditions are cumulative and admit of no exception. Being the
 foundation for availing the benefits under the notification, both
 the conditions have to be strictly complied with. Besides, under
 the Notification, an importer is also required to maintain a          G
proper account of import, use and consumption of the capital
goods, components, etc. imported for the afore!said purpose
in a prescribed form and failure to satisfy the Colleetor about
their installation or consumption for the said purpose makes the
                                                                       H
    374       SUPREME COURT REPORTS                    [2010] 2 S.C.R.


A importer liable to pay an amount equal to the duty payable on
  such goods. It is a settled position in law that Exemption
  Notifications have to be strictly construed. A person claiming
  the benefit of exemption notification, must show that he satisfies
  the eligibility criteria. (See: Kartar Rolling Mills Vs.
B Commissioner of Central Excise, New Delhi1°, Eagle Flask
  Industries Ltd. Vs. Commissioner of Central Excise, Pune 11
  and Msco. Pvt. Ltd. Vs. Union of India and Ors. 12 )

       18. With this background, we may now advert to the facts
C at hand to examine if the findings recorded by the Settlement
  Commission and the view taken by the High court in the
  judgment in appeal, holding that the appellant could not be
  permitted to urge additional ground was justified or hit by the
  contentions to the contrary raised on behalf of the appellant.

D        19. In so far as the first issue is concerned, we feel that it
    would be expedient to extract the stand of the appellant before
    the Settlement Commission, which is as follows:

          "During the hearing the learned Advocate of the applicant
          gave his written submission. He argued that the applicant
E
          has fulfilled the conditions of Notification No.211/83. All the
          end use bonds have been finalised. The Commission
          asked the applicant whether he has sold the material to
          M/s Elektronik Lab. The applicant submitted that he has
          not sold the goods to M/s Elektronik Lab. He is the
F         importer and he installed the equipment on the vessel with
          the assistance of M/s Elektronik Lab. M/s Elektronik Lab
          is the authorised agent in India of the foreign supplier M/s
          Kelvin Hughes from whom the applicant imported the
          goods. He argued that the Notification does not say that
G         the imported cannot get the assistance from a third party.
          The Commission asked him about his argument on the

    10. (2006) 4 sec 112.
    11. 2004 (171) E.L.T. 296 (S.C.)
H 12. 1985 (19) E.L.T. 15.
    SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 375
             INDIA AND ORS. [D,K. JAIN, J.]
        statement of Shri K.D. Motta, Manager of Mis Sanghvi             A
        Reconditione~s that the signature of representatives of M/
        s Shipping Corpn. of India were forged by him. The
        applicant submitted that he is admitting it and he is guilty
        of that. The Commission further asked him on not admitting
        the duty of Rs.47,79,320/-. The applicant submitted that the     B
        ship spares were imported and fitted in the ocean going
        vessels directly by him with the assistance of M/s
        Elektronik Lab. and, therefore, he fulfilled the conditions of
        Notification No.211/83. The Commission drew his attention
        to some of the invoices issued by Mis Sanghvi                    c
        Reconditioners to M/s Elektronik Lab which showed that
        the goods were cleared from Customs and dE3livered to
        M/s Elektronik Lab. If it is so, it appears that the applicant
        has transferred/sold the goods to Mis Elektronik Lab. To
        this query of the Commission, the applicant submitted that
                                                                         0
        it is only a language mistake and all the bills do not show
        this and these invoices are issued only for collecting the
        money."

          20. It is evident from the afore-extracted paragraph that the
    unequivocal stand of the appellant was that the material E
    imported by them was installed/used for repairs of ocean going -
    vessels directly by them with the assistance of M/s Elektronik
    Lab, an authorised agent in India of the foreign supplier from
    whom the appellant had imported the goods. It was pleaded
    that the Exemption Notification did not bar the importer getting F
    assistance from a third party for installation of the equipment
    on the vessels. The appellant stood its ground even when they
    were confronted by the Settlement Commission with some
    invoices, showing that the goods imported were got cleared
    from Customs and delivered to M/s Elektronik Lab. When the G
    Settlement Commission asked the Revenue to submit further
·   report to establish their case that the goods imported by the
    appellant were actually sold by them to Mis Elektronik Lab, the
    Revenue produced sale invoices and delivery challans, showing
    sale of imported cargo by the appellant to M/s Elektronik Lab, H
    316     SUPREME COURJ REPORTS                   [2010] 2 S.C.R.


A who in turn, sold these goods to the ship owners for which
    necessary documents, such as, bills were raised. Taking into
  · consideration the documents on record and the sale pattern of
    the goods and not the value addition, the Settlement
    Commission came to the conclusion that in the first instance,
s the goods in question were sold by the appellant to M/s
    Elektronik Lab and then by the latter to the ship owners under
    the cover of their own sales invoices and, therefore, the
    appellant was not entitled to duty exemption under the said
    Notification. Similarly, Mis Elektronik Lab were also not eligible
c for duty exemption under the said Notification because they
    were not registered with the Director General of Shipping,.
    Government of India, as required under the Exemption
    Notification. As stated e1bove, before the High Court an
    unsuccessful attempt was made to lay more emphasis on
    exemption from payment of customs duty on eight
0
    consignments in terms of Sections 54 and 69 of the Act and
    not under the Exemption Notification No.211/83-CUS dated
    23rd July, 1983. Thus, there was a shift in the stand of the
    appellant before the High Court when sale of the imported
    components by them to a third party stood proved on the basis
E of overwhelming documentary evidence on record, disentitling
    them to the benefit of the exemption notification. In the final
    analysis, the High court came to the conclusion, and in our
    opinion correctly, that in the light of the material available on
    record, the order of the Settlement Commission did not suffer
F from any error warranting its interference.

       21. In so far as the second issue with regard to the
  applicability of Sections 54 and 69 of the Act is concerned, in
  our view, it was too late in the day for the appellant to raise such
G a plea. In the first instance, if the appellant felt that these 8
  consignments were intended for transhipment and were
  cleared from the warehouse for exportation and, therefore, no
  import duty was payable, there was no occasion for them to
  withdraw their appeal before the Tribunal and prefer an
H application before the Settlement Commission, more so when
SANGHVI RECONDITIONERS PVT. LTD. v. UNION OF 377
         INDIA AND ORS. [D.K. JAIN, J.]
 in respect of the remaining consignment, they had accepted             A
 and paid the customs duty. We feel that when according to the
 appellant, no customs duty was payable in respect of the 8
 consignments, then on the plain language of Section 1278 of
 the Act, appellant's application before the Settlement
 Commission was not maintainable. In our view, an application           8
 under Section 1278 of the Act would be maintainable only if it
 discloses duty liability, which had not been disclosed to the
 proper officer. Obviously, a disclosure contemplated by the said
 Section is in the nature of voluntary disclosure of the concealed
.additional customs duty. Secondly, indubitably, such a plea was        C
 neither raised before the adjudicating authority in response to
 the show cause notices issued to the appellant nor before the
 Tribunal as also before the Settlement Commission. Even
 before the High Court, in the ociginal writ petition, such a plea
 was not raised and it was only by way of an amendment
 application, that an additional ground was sought to be raised.        D
 Though it is true that there is no bar in the High court and for
 that matter this Court entertaining an additional ground,
 involving a pure question of law, but on facts at hand, in the light
 of the findings of the Settlement Commission, based on
 documentary evidence that the goods in question imported by            E
 the appellant were actually sold by them to M/s Elektronik Lab,
 before these were used for repair of ocean going ships, it
 cannot be held that the additional ground did not involve any
 investigation into facts. Documents on record show that the bills
 of transhipment as also bills of export were filed by the appellant    F
 before the proper officer after the property in the said goods
 had passed to M/s Elektronik Lab. It is clear that since M/s
 Elektronik Lab. was not registered with the Director General
 of Shipping, they were not eligible to avail of duty exemption
 under the said notification, they entered into an arrangement          G
with the appellant, a registered ship repairing unit, to import the
goods for repair of ocean going vessels without payment of
import duty under the Exemption Notification. Thus, the sole
object of the transactions was to avail of duty exemption under
the said notification. Additionally, in order to claim the benefit      H
     378       SUPREME COURT REPORTS                  [2010) 2 S.C.R.


A   of the Exemption Notification, .the components, consumables
    etc. had to be used by the importer himself for repair of the
    vessels and not through someone else, who incidentally was
    not even named in the shipping bills. Moreover, proper
           I

    accounts of imports, use and consumption of such goods was
, 8 to be maintained by the importer, and in the event of failure to
    render the account for such consumption, the importer was
    liable to pay the customs duty as may be demanded by the
    Commissioner of Customs. However, once the imported goods
    were sold to a third party, the appellant was incapacitated from
  C maintaining and rendering the account to the Commissioner in
    terms of the notification. All these factors go to show that the
    additional ground sought to be raised before the High Court
    was not only an after thought, adjudication thereon did involve
    investigation into facts and, ~herefore, the decision of the High
    court in not entertaining the additional ground did not suffer from
  0 any infirmity.

         22. We also find substance in the contention of learned
   counsel for the Revenue that having observed that the appellant
   had not made a full and true disclosure, their application should
E have been rejected by the Settlement Commission on that count
   itself and no relief should have been granted to the appellant.
   However, in view of the fact that order dated 8th February, 2001
   passed by the Settlement Commission allowing the application
   of the appellant to be proceeded was not challenged by the
F Commissioner nor such a plea was urged by the Revenue
   before the High Court or in their reply to the present appeal,
   we find it difficult to reject the application at this stage, though,
   having perused some of the documents available on record,
   we are convinced that the appellant had not made a full and
G true disclosure of its affairs before the Settlement Commission.
   Be that as it may, we are of the opinion that having opted to
   get their customs duty liability settled by the Settlement
  ·commission, under Chapter XIVA of the Act, the appellant
   cannot be permitted to dissect the Settlement Commission's
H order with a view to accept what is favourable to them and
   SANGHVI RECONDITIONERS PVT. LTD. v. UNION                379
        OF INDIA AND ORS. [D.K. JAIN, J.]
reject what is not. As observed by Krishna Iyer, J. in CIT Vs.      A
B.N. Bhattacharjee 13 , the recommendation of Wanchoo
Committee was a compromise measure of a statutory
settlement machinery, where a big evader could make a
disclosure, disgorge what the Commission fixes and thus buy
quittance for himself and accelerate recovery of taxes in arrears   8
by the State, although less than what may be fixed after long
protracted litigation and recovery proceedings. It is manifest
from the procedure laid down in Section 127C of the Act that
interim order under sub-Section (1) of Section 127C as also
the final order under sub-Section (7) of the said Section are to    C:
be made by the Settlement Commission after examination of
the reports of the Commissioner of Customs or its
Commissioner (Investigation). Obviously, these reports are
submitted on the disclosures made in the application under
Section 1278 of the Act and, therefore, the applicant cannot be     D
permitted to resile from his pleadings in the application at any
stage of proceedings before the Settlement Commission or set
up a new case before the higher Fora.

     23. Having considered the rival submissions with reference
to the pleadings, the provisions of Section 1278 of the Act and E
exemption notification No.211/83 dated 23rd July, 1983, we are
of the opinion that the order of the Settlement Commission did
not suffer from any error, legal or factual, and, therefore, the High
Court was fully justified in dismissing the writ petition.

     24. In view of the foregoing discussion, we see no merit in
this appeal. The appeal is dismissed accordingly with costs,
quantified at Rs.50,000/-.

8.8.8.                                      Appeal dismissed.




13. (1979) 4 sec 121.