Customs Act, 1962 Section 127c — Procedure on receipt of an application under Section 127B
Customs Act, 1962 · Procedure on receipt of an application under Section 127B
Plain-English Explanation
Overview
Section 127C of the Customs Act, 1962 outlines the procedure the Settlement Commission must follow upon receiving an application under Section 127B for settling customs disputes. It details the timelines, actions required by the Commission and Customs officers, and the applicant's involvement in the process. This section is crucial for ensuring a structured and time-bound settlement process.
Who Does This Apply To?
This section applies to:
- Applicants: Importers or exporters who have filed an application with the Settlement Commission under Section 127B to settle their customs disputes.
- The Settlement Commission: The body responsible for processing settlement applications.
- Principal Commissioner/Commissioner of Customs: The jurisdictional customs officer who provides reports and information to the Settlement Commission.
- Commissioner (Investigation): If required, this officer conducts further investigations on the Settlement Commission's direction.
How It Works
Here’s a step-by-step breakdown:
- Initial Review (7 days): Within 7 days of receiving the application under Section 127B, the Settlement Commission issues a notice to the applicant. The notice asks the applicant to explain why their application should be considered further.
- Decision to Proceed (14 days): After reviewing the applicant’s explanation, the Commission has 14 days from the date of the notice to decide whether to allow the application to proceed. They can either:
- Allow the Application: Proceed with the settlement process.
- Reject the Application: The proceedings before the Settlement Commission are immediately terminated (abate) upon rejection. If no notice is issued or no order is passed within the 14-day window, the application is deemed to have been allowed.
- Communication of the Order: A copy of the Commission's order (allowing or rejecting the application) is sent to both the applicant and the jurisdictional Principal Commissioner/Commissioner of Customs.
- Report from Customs Officer (30 days): If the application is allowed (or deemed allowed), the Settlement Commission requests a report and relevant records from the jurisdictional Principal Commissioner/Commissioner of Customs within 7 days of the order. The Customs officer must furnish this report within 30 days of receiving the request. If the report is not submitted within 30 days, the Settlement Commission can proceed without it.
- Further Investigation (90 days): If, after examining the Customs officer's report, the Commission believes further inquiry is needed, it can direct the Commissioner (Investigation) to conduct a further inquiry and submit a report within 90 days. Again, if the Commissioner (Investigation) fails to submit the report within the stipulated 90 days, the Settlement Commission can proceed without it.
- Final Order: After reviewing all records and reports (Customs officer's report and, if applicable, the Commissioner (Investigation)'s report), and after giving both the applicant and the jurisdictional Principal Commissioner/Commissioner of Customs an opportunity to be heard, the Settlement Commission passes a final order. The order addresses the matters in the application, as well as any other related issues raised in the reports from the Customs officer or Commissioner (Investigation).
- Rectification of Mistakes (3 months): Within 3 months from the date of the final order, the Settlement Commission may amend the order to rectify any errors apparent on the face of record, either suo moto or if brought to its notice by the jurisdictional Principal Commissioner/Commissioner of Customs or the applicant. However, no amendment increasing the applicant's liability is allowed without providing notice and a hearing.
- Time Limit for Final Order (9 months): The final order must be passed within 9 months from the last day of the month in which the application under Section 127B is made. Failure to pass an order within this timeframe causes the settlement proceedings to abate.
Important Conditions & Exceptions
- Duty liability admission: The amount of settlement ordered by the Commission must not be less than the duty liability admitted by the applicant in their Section 127B application.
- Fraud or misrepresentation: The settlement is void if the Settlement Commission later discovers it was obtained through fraud or misrepresentation of facts.
Practical Example
An importer, "ABC Ltd.," files an application with the Settlement Commission on January 15th, 2024, admitting to a duty liability of ₹50 lakhs. The Commission must issue a notice asking ABC Ltd. to justify their application within 7 days of receiving it. Assuming the Commission sends the notice on January 20th, ABC Ltd. must respond. The Commission then has 14 days from January 20th to decide whether to proceed. If they allow the application, they must request a report from the jurisdictional Customs officer within 7 days of their decision. The Customs officer then has 30 days to furnish the report. The final order must be passed by October 31st, 2024 (9 months from the end of January), and the settlement amount cannot be less than ₹50 lakhs.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What is the procedure followed by the Customs Settlement Commission upon receiving an application under Section 127B of the Customs Act, 1962?
Upon receiving an application under Section 127B, the Settlement Commission must, within seven days, issue a notice to the applicant requesting a written explanation as to why the application should be admitted. Following the explanation, the Commission has fourteen days from the notice date to either allow or reject the application by order; rejection results in abatement of proceedings (Section 127C(1)).
What happens if the Customs Settlement Commission fails to issue a notice or pass an order within the stipulated timeframe after receiving a Section 127B application?
If the Settlement Commission does not issue a notice or pass an order within the 14-day period, the application is *deemed* to have been allowed to be proceeded with (Section 127C(1) proviso). This accelerates the process, moving the application forward even without express action by the Commission within the initial timeframe.
What is the role of the Principal Commissioner/Commissioner of Customs after the Settlement Commission allows an application under Section 127B?
Once the Settlement Commission allows (or deems allowed) an application, it calls for a report and relevant records from the Principal Commissioner/Commissioner of Customs having jurisdiction within seven days of the order. The Commissioner then has thirty days to furnish this report to the Settlement Commission (Section 127C(3)).
What happens if the Principal Commissioner/Commissioner of Customs fails to submit the report within 30 days as required under Section 127C(3)?
If the Principal Commissioner/Commissioner of Customs fails to furnish the report within the 30-day period, the Settlement Commission is empowered to proceed further with the matter without waiting for the report (Section 127C(3) proviso). This provision ensures that the settlement process is not unduly delayed due to administrative lapses.
Under what circumstances can the Settlement Commission direct further inquiry or investigation after receiving the Commissioner's report under Section 127C(3)?
If, after examining the Commissioner's report, the Settlement Commission believes further inquiry or investigation is necessary, it can direct the Commissioner (Investigation) to conduct such inquiry. This direction, with reasons recorded in writing, must be issued within fifteen days of receiving the initial report (Section 127C(4)).
What opportunities are provided to the applicant and the Principal Commissioner/Commissioner of Customs during the settlement proceedings?
The Settlement Commission must provide both the applicant and the Principal Commissioner/Commissioner of Customs an opportunity to be heard, either in person or through an authorized representative. This allows both parties to present their case and offer further evidence before the Commission passes its final order (Section 127C(5)).
Can the Settlement Commission modify its own order passed under Section 127C(5)?
Yes, the Settlement Commission has the authority to amend its order within three months from the date of passing the order to rectify any errors apparent on the face of the record (Section 127C(5A)). This ensures accuracy and fairness in the settlement process.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Initial application review timeframe | Settlement Commission must issue a notice to the applicant within 7 days of application receipt, seeking explanation on why the application should proceed. |
| Application acceptance/rejection deadline | Settlement Commission must either allow or reject the application within 14 days from the date of the initial notice. Rejection leads to abatement of proceedings. |
| Deemed acceptance of application | If no notice is issued or no order is passed within the 14-day period, the application is considered to have been allowed to proceed. |
| Commissioner's report requirement after acceptance | If application is allowed, the Settlement Commission calls for a report from the jurisdictional Principal Commissioner/Commissioner of Customs within seven days of acceptance, who must furnish it within 30 days. |
| Commissioner report deadline exception | If the Commissioner's report is not provided within 30 days, the Settlement Commission can proceed without it. |
| Further inquiry/investigation by Commissioner (Investigation) | The Settlement Commission may direct the Commissioner (Investigation) to conduct further inquiry and submit a report within 90 days if deemed necessary after examining the Commissioner's report. |
| Order amendment timeframe | Settlement Commission may amend its order within 3 months from the date of passing the order to rectify errors apparent on the record. |
| Restrictions on amendment enhancing applicant liability | Amendments enhancing the applicant's liability are prohibited unless the Settlement Commission notifies the applicant and the jurisdictional Commissioner, providing them an opportunity to be heard. |
Amendment History
Substituted by the Finance Act, 2007 (22 of 2007), section 102, for section 127C (w.e.f. 01.06.2007). Section 127C, before substitution, stood as under: " 127C. Procedure on receipt of an application under Section 127B. - (1) On receipt of an application under section 127B, 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 case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this sub-section, unless an opportunity has been given to the applicant of being heard: Provided further that the Commissioner of Customs shall furnish such report within a period of one month of the receipt of the communication from the Settlement Commission, failing which it shall be presumed that the Commissioner of Customs has no objection to such application; but he may raise objection at the time of hearing fixed by the Settlement Commission for admission of the application and the date of such hearing shall be communicated by the Settlement Commission to the applicant and the Commissioner of Customs within a period not exceeding two months from the date of receipt of such application, unless the presiding officer of the Bench extends the said period of two months, after recording the reasons in writing. (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Commissioner of Customs having jurisdiction. (3) Subject to the provisions of sub-section (4), the applicant shall, within thirty days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the amount of additional duty admitted by him as payable and shall furnish proof of such payment to the Settlement Commission. (4) If the Settlement Commission is satisfied, on an application made under sub-section (1) that the applicant is unable for good and sufficient reasons to pay the amount referred to in sub-section (3), within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments, if the applicant furnishes adequate security for the payment thereof. (5) Where the additional amount of customs duty referred to in sub-section (3) is not paid by the applicant within the time specified or extended period, as the case may be, the Settlement Commission may direct that the amount which remains unpaid, together with simple interest at the rate of eighteen per cent per annum or at the rate notified by the Board from time to time on the amount remaining unpaid, be recovered as the sum due to the Central Government by the proper officer having jurisdiction over the applicant in accordance with the provision of section 142. (6)Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner of Customs having jurisdiction and after examination such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner (Investigation) to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case. (7) After examination of the records and the report of the Commissioner of Customs received under sub-section (1), and the report, if any, of the Commissioner (Investigation) of the Settlement Commission under sub-section (6), and after giving an opportunity to applicant and to the Commissioner of Customs having jurisdiction to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner of Customs or the Commissioner (Investigation) under sub-section (1) or sub-section (6). (8) Subject to the provisions of section 32A of the Central Excise Act, 1944 (1 of 1944), the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench concerned before passing any order under sub-section (7) and, in relation to the passing of such order, the provisions of section 32D of the Central Excise Act, 1944 shall apply. (9) Every order passed under sub-section (7) shall provide for the terms of settlement including any demand by way of duty, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud, or misrepresentation of facts. (10) Where any duty payable in pursuance of an order under sub-section (7) is not paid by the applicant within thirty days of the receipt of a copy of the order by him, then, whether or not the Settlement Commission has extended the time for payment of such duty or has allowed payment thereof by instalments, the applicant shall be liable to pay simple interest at the rate of eighteen per cent per annum or at such other rate as notified by the Board on the amount remaining unpaid from the date of expiry of the period of thirty days aforesaid. (11) Where a settlement becomes void as provided under sub-section (9), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the proper officer may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the date of the receipt of communication that the settlement became void."
Substituted by the Finance (No.2) Act, 2014 (25 of 2014), section 78, for "Commissioner of Customs" (w.e.f. 06.08.2014)
Substituted by Finance (No.2) Act, 2014 (25 of 2014), section 78, for "Commissioner" (w.e.f. 06.08.2014)
Inserted (w.e.f. 31-3-2017) by the the Finance Act, 2017 (7 of 2017), section 107.
Sub-section (6) omitted by the Finance Act, 2015 (20 of 2015), section 87 (w.e.f. 14.05.2015). Earlier sub-section (6) was amended by the Act 14 of 2010, section 58 (w.e.f. 08.05.2010). Sub-section (6), before omission by Act 20 of 2015, stood as under: " (6) An order under sub-section (5) shall not be passed in respect of an application filed on or before the 31st day of May, 2007, later than 29th February, 2008 and in respect of an application made on or after the 1st day of June, 2007, after nine months from the last day of the month in which the application was made, failing which the settlement proceedings shall abate, and the adjudicating authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under 127B had been made: Provided that the period specified under this sub-section may, for reasons to be recorded in writing, be extended by the Settlement Commission for a further period not exceeding three months."
Inserted by Act No. 8 of 2023.(w.e.f to be notified)
Inserted by s. 98 of the Finance (No.7) Act, 2025.