M.M. Kumar, J. - (1.) A short question raised in this petition filed under Article 226 of the Constitution is "whether 'proceedings for prosecution for any such offence' within the meaning of Section 127H of the Customs Act, 1962 (for brevity, 'the Act'), are deemed to have commenced on the date of registration of FIR or when challan is presented before the Magistrate". The question emerges from order dated 14.9.2006 (P -5), passed by the Settlement Commission, Customs and Central Excise, Mumbai -respondent No. 3 (for brevity, 'the Settlement Commission'), on an application filed by the petitioner along with others under Section 127B of the Act. The Settlement Commission has declined the prayer of the petitioner for grant of immunity from prosecution by concluding that proceedings for prosecution have already commenced when FIR against the petitioner were registered.
(2.) FACTS in brief which emerge from the order of the Settlement Commission and from the averments made in the petition are that the petitioner obtained advance licences on 16.12.2002 under DEEC Scheme in the name of M/s Bhoday International, 94, Ahluwalia Street, Miller Ganj, Ludhiana. The import licence for duty free import of 174.260 MT CRCA Sheet/Coil (Second/Defective 828 -G) for a CIF value of US$ 41,823 (Rs. 20,49,300/ -) with an export obligation to export the products for a FOB value of export worth US$ 53,350 (Rs. 26,14,150/ -). The petitioner is the proprietor of the firm. The firm imported goods and sold them in the domestic market illegally. The petitioner submitted a bill dated 19.12.2002 alongwith original bank certificate of realization, invoice, packing list and statement of export claiming to have discharged his export obligation. He requested for waiver of condition concerning bank guarantee. Accordingly, condition concerning bank guarantee was waived on the basis of the documents submitted and the petitioner's firm was allowed to import goods worth US$ 41,160 (Rs. 20,16,869/ -). Accordingly it imported the goods and availed custom duty exemption of Rs. 11,68,538/ -. When the case was referred to Custom Authorities, Mumbai, to confirm the genuineness of shipping bill dated 19.12.2002, it was found that the bill was bogus. The petitioner's firm, in fact, imported goods and sold them in the domestic market illegally. It was alleged that the petitioner's firm violated the stipulated provisions of the Act and notifications dated 1.4.1997, 27.4.2000 and 19.4.2002. The total duty saved on the imports stood at Rs. 52,55,137/ -. After investigation a common show cause notice dated 28.11.2004 was issued to the petitioner alongwith others by the Additional Director General, DRI, Regional Unit, Ludhiana, inter alia, demanding duty of Rs. 52,55,137/ -from the petitioner besides proposing confiscation, invoking interest and penal provisions of the Act. The show cause notice is pending adjudication. It is appropriate to mention that two FIRs bearing Nos. 88, dated 12.7.2004 and 22, dated 3.4.2005 were registered at Police Station Division No. 2, Ludhiana, under Sections 420, 467, 468, 471 and 120B IPC on the complaint made by the Joint Director General of Foreign Trade, Ludhiana -respondent No. 1. The petitioner was arrested on 4.3.2005. It was during the pendency of the adjudication of the show cause notice that the petitioner filed an application under Section 127B of the Act before the Settlement Commission -respondent No. 3, admitting full duty liability and prayed for immunity from prosecution, fine, interest and penalty. The charge sheets after completion of investigation in the aforementioned FIRs were submitted on 6.2.2006 and 27.3.2006. The Settlement Commission partly accepted the application filed by the petitioner vide his order dated 14.9.2006 (P -5) and refused to grant immunity from prosecution under proviso to Section 127H of the Act. The order of the Settlement Commission as reflected in para 9 in so far it is relevant is extracted below, which reads as under: ...this case is not fit for granting immunity from prosecution since in terms of proviso (1) of Section 127H of the Act proceedings for the prosecution was instituted right before the date (31.01.2006) of receipt of the application for settlement, as concerned FIRs were filed before JMIC/Ludhiana on May 2004 and 24.08.04. The wordings in the Finance Act and decisions relied upon by the ld. Advocate relate to an expression, "...where prosecution for any offence...has been instituted..." whereas on the other hand, the proviso (1) of Section 127H of the Act stipulates that "...no such immunity shall be granted...where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application under Section 127B". Thus the wordings are entirely different in the Finance Act, 1998 and emphasis is on institution of prosecution whereas in the said Customs Act, emphasis is on institution of proceeding for prosecution. We further observe that the applicant has admitted entire duty liability as demanded vide the impugned Show Cause Notice and the applicant has made full and true disclosure of its duty liability and has co -operated in the proceedings before the Bench. Accordingly, the Bench passes the following order under Section 127C(7) of the Act for settlement of this case: Customs duty: xxx xxx xxx xxx Interest: xxx xxx xxx xxx Fine and Penalty: xxx xxx xxx xxx Prosecution: In this case, FIRs were filed on 24.08.2004 and in May, 2004 and these dates should be taken as the dates on which proceeding for prosecution has been instituted. In view of the same, no immunity from prosecution is granted to the applicant under proviso (1) of Section 127H of the Act.
(3.) IT is further appropriate to mention that the Settlement Commission did not agree with the contention raised by the petitioner that the expression "institution of proceedings for prosecution" would necessarily mean presentation of challan and if the application has been filed by the petitioner under Section 127B of the Act before the date of presentation of challan then there is no bar to grant immunity in terms of Section 127H of the Act. The argument has been rejected in para 7.3, which reads as under: 7.3 He further submitted that proceeding for the prosecution can be said to have been instituted unless the complaint has been taken cognisance by the court. In this case, an application before the Commission was filed before the cognisance of the complaint has been taken by the court. At this juncture the Bench pointed out that the wordings in the Finance Act and decisions relied upon by the ld. Advocate relate to an expression, "...where prosecution for any offence...has been instituted..." whereas on the other hand, the proviso (1) of Section 127H of the Act stipulates that "...no such immunity shall be granted...where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of the application under Section 127B". Thus the wordings are entirely different in the Finance Act, 1998 and emphasis is on institution of prosecution whereas in the said Customs Act, emphasis is on institution of proceeding for prosecution. In the given case, the proceedings for the prosecution have been instituted before the date of filing application for settlement before the Commission.;