REXNORD ELECTRONICS AND CONTROL LTD. versus UNION OF INDIA & ORS.

Citation: [2008] 3 S.C.R. 856 · Decided: 04-03-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

[2008] 3 S.C.R. 856 
~ 
A 
REXNORD ELECTRONICS AND CONTROL LTD. 
r 
II. 
UNION OF INDIA & ORS. 
(Civil Appeal No.1730 of 2008) . 
B 
MARCH 4, 2008 
(S.B. SINHA AND V.S. SIRPURKAR, JJ.) 
~ 
Customs Act, 1962; Ss. 28, 28AA & S. 127 r!w S.127H 
' 
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and Notification dated April 20, 1992 issued thereunder: 
c 
Export of goods - Licence under Export Promotion 
Capital Goods Scheme for exporting goods up to certain CIF 
values - Grant of immunity from prosecution and penalty in 
terms of Notification subject to payment of interest in case 
licenser failed to meet its export obligation - Demand Notice 
D for payment of certain duty amount with interest - Application 
for settlement of cases - Reducing the duty amount, Settlement 
I 
f 
Commission directed to pay the reduced duty amount with 
interest - Jurisdiction of Settlement Commission in issuing 
directions for payment of interest - Challenge to - Dismissed 
E by High Court - Correctness of - Held: Correct - Since 
licensee could not meet its obligation in terms of the Licence, 
he is liable to pay the duty - On failure to make payment of 
the duly, interest payable in terms of s.28AA of the Act, for 
which proceedings has to be initiated under the provisions of 
/:: 
F the Act - Settlement Commission empowered to grant 
immunity from payment of interest - Since the licensee in 
question having evaded from payment of the duty, he was 
bound to pay the same and also interest - Hence, Settlement 
Commission did not commit any jurisdictional error in directing 
G payment of interest which is otherwise payable - Settlement 
Commission - Jurisdiction of 
Two licences have been issued to appellant-exporter 
by the authority under Export Promotion Capital Goods 
1.1 ~
(EPCG) Scheme for certain CIF value. Pursuant to the said 
H. 
856 
/ 
"' 
.,. 
REXNORD ELECTRONICS AND CONTROL LTD. v. 
857 
UNION OF INDIA & ORS. 
licences, the ap'pellant was required to export goods of A 
certain stipulated amount within a period of five years from 
the date of issuance thereof. In order to avail certain benefit 
under Notification dated April 20, 1992 issued by the 
authority, the appellant was required to furnish a bond 
and undertaking before an authority created under the B 
Foreign Trade (Development and Regulation) Act, 1992. 
Appellant had· furnished the bond. However, since it failed 
to meet its export obligations in terms of the licences as 
also the Scheme, the authorities issued a demand notice 
for payment of certain amount as duty alongwith interest c 
@ 15% per annum. Aggrieved, the appellant filed 
applications before the Settlement Commission for 
settlement of cases. Reducing the duty amount, the 
Settlement Commission directed to pay the reduced duty 
amount together with interest@ 15% per annum by giving 0 
benefits of the Notification by granting immunity from 
r prosecution and penalty to the appellant. Questioning the 
direction of the Settlement Commission to the extent of 
payment of interest, the appellant filed writ petitions which 
were dismissed by the High ·court. Hence the present 
appeal. 
E 
Appellant-licensee contended that the order of the 
Settlement .Commission 
was 
inconsistent/self-
contradictory in so far as on the one hand payment of 
interest under the bond could not have been held to be 
F 
contractual in nature, and on the other, it will be subjected 
• 
to any direction by the Court and that since interest 
payable under the bond has a direct nexus with the 
payment of excise duty, the Settlement Commission had 
the requisite jurisdiction to waive the whole or a part of G 
interest payable under the bond also. 
Respondent submitted that the Settlement 
-
--• Commission had absolutely no jurisdiction in the matter. 
Dismissing the appeal, the Court 
H 
858 . 
SUPR~ME COURT REPORTS 
[2008] 3 S.C.R 
A 
HELD: 1.1 The Customs Act,' 1962 was enacted to 
fl 
consolidate and amend the law relating to customs. On 
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import of goods, customs duty is payable. The Central 
Government, however, issued a Notification bearing 
No.160/92-Cus. Dated 20th April, 1992 in terms whereof 
B an undertaking was required to be furnished before the 
Directorate General of Foreign Trade to claim benefit under 
the Notification. (Para - 10) [861-C, DJ 
( ,' 
1.2 The appellant could not meet its obligations in ' 
terms of the undertaking. The customs duty, therefore, 
c became payable. If customs duty is not paid, interest is 
payable in terms of Section 28AA of the Act

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