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Dated: 05.03.2024

Settlement of Cases under the Indian Customs Act, 1962-The Legal Provisions

The legal/statutory provisions with regards to Settlement of cases under the Indian Customs Act, 1962 was introduced vide Chapter XIVA (containing sections 127 A to 127 N) inserted by the Finance (No.2) Act, 1998 (21 of 1998), section 102 (w.e.f. 01.08.1998).

A short overview of the same is reproduced below for a handy reference.

Section 127A:

(a)”Bench” means a Bench of the Settlement Commission;

(b) “case” means any proceeding under this Act or any other Act for the levy, assessment and collection of customs duty, pending before an adjudicating authority on the date on which an application under sub-section (1) of section-127B is made:

Provided that when any proceeding is referred back by any court, Appellate Tribunal or any other authority, to the adjudicating authority for a fresh adjudication or decision, as the case may be, then such proceeding shall not be deemed to be a proceeding pending within the meaning of this clause;

(c)”Chairman” means the Chairman of the Settlement Commission;

(d) “Commissioner (Investigation)” means an officer of the customs or a Central Excise Officer appointed as such Commissioner to conduct inquiry or investigation for the purposes of this Chapter- Appointment must confirm to Section-3, Section-4 & Section-6 of the Indian Customs Act, 1962.

(e)”Member” means a Member of the Settlement Commission and includes the Chairman and the Vice Chairman;

(f)”Settlement Commission” means the 3[Customs, Central Excise and Service Tax Settlement Commission] constituted under section 32 of the Central Excise Act, 1944 (1 of 1944); and

(g)”Vice-Chairman” means a Vice-Chairman of the Settlement Commission.

Section 127B. Application for settlement of cases:

(1) Any importer, exporter or any other person (hereinafter referred to as the applicant in this Chapter) may, in respect of a case, relating to him make an application, before adjudication to the Settlement Commission to have the case settled, 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 misclassification, under-valuation or inapplicability of exemption notification [or otherwise] and such application shall be disposed of in the manner hereinafter provided:

Provided that no such application shall be made unless–

(a) the applicant has filed a bill of entry, or a shipping bill, or a bill of export, or made a baggage declaration, or a label or declaration accompanying the goods imported or exported through post or courier, as the case may be, and in relation to such document or documents, 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 three lakh rupees; and

(c) the applicant has paid the additional amount of customs duty accepted by him along with interest due under [section 28AA]:

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:

Provided also that no application under this sub-section shall be made for the interpretation of the classification of the goods under the Customs Tariff Act, 1975 (51 of 1975).

[(1A)* * * *]

[(2)* * * *]

(3) Every application made under sub-section (1) shall be accompanied by such fees as may be specified by rules.

(4) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant.

(5) Any person, other than an applicant referred to in sub-section (1), may also make an application to the Settlement Commission in respect of a show cause notice issued to him in a case relating to the applicant which has been settled or is pending before the Settlement Commission and such notice is pending before an adjudicating authority, in such manner and subject to such conditions, as may be specified by rules.

Section 127C: Procedure on receipt of an application under Section 127B

Section 127D: Power of Settlement Commission to order provisional attachment to protect revenue

Section 127F: Power and procedure of Settlement Commission

Section 127G: Inspection, etc. of reports

Section 127H: Power of Settlement Commission to grant immunity from prosecution and penalty

Section 127-I: Power of Settlement Commission to send a case back to the proper officer

Section 127J: Order of settlement to be conclusive

Section 127K: Recovery of sums due under order of settlement

Section 127L: Bar on subsequent application for settlement in certain cases

Section 127M: Proceedings before Settlement Commission to be judicial proceedings

Section 127N: Applications of certain provisions of Central Excise Act.

Download the Application Forms below:

Form-SC( C)-1 read with sub-section (1) of Section 127B

Form-SC( C)-2 read with sub-section (5) of Section 127B

Source: CBIC, Deptt of Revenue, Min of Finance, Govt of India

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