Madras High Court
M.Vijay Anand vs The Customs on 15 April, 2013
Author: V.Dhanapalan
Bench: V.Dhanapalan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 15.4.2013
CORAM:
THE HONOURABLE MR.JUSTICE V.DHANAPALAN
W.P.No.2375 of 2013 & M.P.No.1 of 2013
M.Vijay Anand .. Petitioner
Vs.
1. The Customs, Excise and
Service Tax Appellate Tribunal,
South Zonal Bench,
Shastri Bhawan Annexe I Floor,
26 Haddows Road, Chennai-600 006.
2. The Commissioner of Customs,
Custom House, Tuticorin. .. Respondents
Writ Petition filed under Article 226 of the Constitution of India, praying for issuance of a Writ of Certiorarified Mandamus to call for the records of the first respondent in File C/S/202/2012 in C/258/2012 C/Misc./658/2012 & C/S/207/2012 in C/264/2012 and Misc. Order No.905/12 and Stay Order No.832-833, dated 11.12.2012 and quash the same and consequently direct the first respondent to hear the main appeal of the petitioner without the insistence of pre-deposit as ordered.
For petitioner : Mr.Srikrishnan
For respondents: R-1 Tribunal
Mr.Rajnish Pathiyil, SCGSC for R-2
ORDER
Heard Mr.Srikrishnan, learned counsel for the petitioner and Mr.Rajnish Pathiyil, learned Senior Central Government Standing Counsel appearing for the second respondent.
2. The petitioner calls in question the order passed by the first respondent-Customs, Excise and Service Tax Appellate Tribunal (for short, 'the CESTAT') in File C/S/202/2012 in C/258/2012 C/Misc./658/2012 & C/S/207/2012 in C/264/2012 and Misc. Order No.905/12 and Stay Order No.832-833, dated 11.12.2012, seeking to quash the same and for consequential direction to the first respondent-CESTAT to hear the main appeal of the petitioner without insistence of pre-deposit as ordered.
3. The facts pleaded by the petitioner in a nut-shell, are as follows:
(a) The petitioner was a small time broker engaged in the business of providing logistic support to the authorised Customs Clearing and Forwarding Agents of the Custom House at Tuticorin and charged commission from CHAs and others for his services. He was running his business in the name and style of M/s.Meenakshi Agency, Tuticorin and acted as a logistic support service provider for many Authorised Custom House Agents including one M/s.V.N.M.S.Ayyachamy Nadar, Tuticorin, who was an authorised Custom House Agent in the live rolls of the CHAs of the Tuticorin Custom House. The petitioner's services include providing logistic services like arranging the transport for movement of export and import cargo from in and out of the Custom House, Tuticorin, including all the container freight stations attached to it and he provides transport, men and materials for loading and unloading of cargo in and out of Tuticorin Port and its attached CFSs.
(b) The DRI Officers of the Tuticorin Unit intercepted a container CRXU 3313429/20 pertaining to 10 shipping bills filed by M/s.Perfect Impex, Tuticorin and M/s.Vinnarasi International, Tuticorin on 6.4.2010 filed by CHA M/s.V.N.M.S.Ayyachamy Nadar & Bros and brought the container from Port area to SEC CFS. The main allegation against the exporters in the said shipping bills was that the goods did not possess the basic shape of the shoe upper and more than 50% of the consignment was unusable/used waste and the actual value in respect of the abovesaid 10 shipping bills was only Rs.1 lakh as against the declared FOB value of Rs.97,63,256/- with a drawback involvement of Rs.9,27,511/-. The petitioner provided logistic support for the above consignments. Further investigation was conducted by the DRI and statements were recorded from several persons including the petitioner.
(c) The appropriate authority issued show cause notice, dated 6.10.2010 to the petitioner, for imposition of penalty under Sections 114 and 114-AA of the Customs Act, by demanding Rs.1,37,60,127/- in respect of 154 shipping bills. The petitioner claims that there was no mis-declaration of the goods under the impugned shipping bills. Despite being aware of the facts fully and that the petitioner fully co-operated during investigation, by furnishing all valid and vital information to the investigating agency, without filing any retraction statement, the second respondent, vide Order-in-Original No.8 of 2012, dated 29.6.2012, imposed a sum of Rs.50 lakhs as penalty, in addition to the recovery of Rs.1.37 crores, jointly and severally from the petitioner.
(d) Challenging the said order dated 29.6.2012 passed by the original authority, the petitioner moved CESTAT along with stay application and the CESTAT, by the impugned order, dated 11.12.2012, held as follows:
"8. ..... The penalty imposed on him is to the extent of Rs.50 lakhs. The learned Consultant has submitted inter alia that his client received an amount of Rs.3,000/- per transaction totalling to Rs.6 lakhs. This itself would prima facie indicate a deliberate involvement of Shri Vijay Anand in the fraudulent transactions. In the facts and circumstances of this case, we are inclined to direct Shri Vijay Anand to predeposit an amount of Rs.20 lakhs towards the penalty imposed on him. In respect of the "joint and several liability" fastened on him, there shall be waiver and stay. In the result, Shri Vijay Anand shall deposit Rs.20,00,000/- (Rupees twenty lakhs only) within four weeks and report compliance to DR/AR on 16.1.2013. DR/AR to report to the Bench on 30.1.2013. In the event of due compliance, there will be waiver and stay in respect of the balance amount of penalty as well as the balance amount of the drawback amount."
Challenging the said order of the CESTAT, the petitioner has filed this Writ Petition for the above relief.
4. The Assistant Commissioner of Customs (Legal) in the Office of the Commissioner of Customs, Custom House, Tuticorin, has filed counter affidavit on behalf of the second respondent, inter-alia stating as follows:
(a) Nowhere in the impugned stay order of the CESTAT, it is stated that the petitioner is not the beneficiary of the irregular drawback. The recovery of the drawback amount of Rs.1.37 crores, which is ordered to be paid jointly and severally, is stayed by the CESTAT in respect of the petitioner, and the relief is granted after considering the petitioner's plea of waiver with humane consideration. The CESTAT does not grant waiver of any pre-deposit of drawback amount merely on the ground that the beneficiary of the entire drawback amount is one Sri.Kalandar Seeni Ahmed, a co-applicant along with the petitioner before the CESTAT.
(b) As per the statement dated 7.4.2010 given by the petitioner as seen from the Order-in-Original, as his father did not have Rule 9 licence, he used to get signature from Sri.Durairaj, Rule 9 licence-holder of M/s.V.N.M.S.Ayyachamy Nadar & Bros, Tuticorin, that Shri.Joseph John Britto gave him 11 Importer Exporter Codes and the petitioner offered him a Commission of RS.5,000/- per Importer Exporter Code for every consignment and those eleven Importer Exporter Codes have been used in the export of Leather Shoe Upper in about seven 20 containers in the last seven months for the Chennai based shippers, that Gibri (Zipreel) offered him a Commission of Rs.3,000/- per shipping bill, in addition to customs clearance charges levied by the petitioner for each shipment, which would be around Rs.10,0000/- to Rs.20,000/-, which includes freight charges. It is clear from these statements of the petitioner that he acted as the Custom House Agent for getting the impugned consignments cleared through the customs formalities.
(c) The penalty imposed is commensurate with the gravity of the offence committed by the petitioner. Given the gravity of the offence committed by the petitioner in association with Sri Kalandar Seeni Ahmed, the CESTAT has taken a lenient view towards the petitioner. As no amount is ordered to be paid as pre-deposit towards recovery of drawback, it cannot be construed that the CESTAT has exonerated the petitioner from recovery of ineligible drawback which was held as a joint responsibility by the original adjudicating authority.
(d) From the observations made by the CESTAT in the impugned order, it is clear that the CESTAT has considered the prima-facie case and the balance of convenience of the petitioner. The impugned order is in consonance with the statutory provisions of law and is a reasoned and speaking order.
(e) The petitioner is neither an employee working under the control of another person, nor a labourer working under a master. As per his own statement, he is the Managing Director of the firm M/s.Meenakshi Agency and he has been in the Custom House Agent business for years together.
(f) To keep a check on fraudulent operations which resulted in the Government exchequer getting drained of Crores of Rupees, severe and deterrent penal action is warranted. If left unchecked, more persons may follow the same kind of modus-operandi to defraud the Government. Hence, imposition of penalty is just and legal in respect of persons involved in such kind of nefarious activities. The position that the Government Treasury getting filled by genuine tax payers on the one hand, and getting drained by way of such fraudulent activities on the other hand, does not augur well with the system.
(g) As per the decision of the Supreme Court in a catena of judgments, the undue hardship is to be established by the petitioner and mere assertion of hardship is not a sufficient ground. There is no finding by the CESTAT on the financial position of the petitioner, because he has not pleaded any such hardship before the CESTAT and he stated so only in the Writ Petition, which is an after-thought, in order to seek the waiver of pre-deposit. The CESTAT observed that there is a prima-facie indication of a deliberate involvement of the petitioner in the fraudulent transactions.
(h) Since the petitioner failed to pay the penalty imposed on him as per the order of the CESTAT, dated 11.12.2012, a detention notice, dated 24.1.2013 was issued by the Assistant Commissioner of Customs under Section 142 of the Customs Act, which empowers the authority to issue the said notice for the detention of the goods in lieu of recovery of the Revenue dues, and the said detention notice is issued as per the CBEC's Circular No.967/01/2013-CX, dated 1.1.2013. The second respondent prayed for dismissal of the above Writ Petition.
5. On the above background of pleading, I have heard the learned counsel appearing for the parties and perused the material documents available on record.
6. The main focus of the submissions made by the learned counsel for the petitioner is that the impugned order of pre-deposit being the condition imposed for entertaining the appeal, is too harsh on the petitioner, as the same is passed without considering the undue hardship and the financial burden of the petitioner, and hence, it has be interfered with by this Court.
7. Per contra, the learned SCGSC appearing for the second respondent contended that the first respondent-CESTAT adopted lenient and sympathetic approach and there was a prima-facie case before the CESTAT to arrive at such a conclusion of ordering pre-deposit. The CESTAT also adopted a balancing approach in respect of waiver of payment of drawback amount and grant of stay, which cannot be questioned by the petitioner, as there is no warranting circumstance to interfere with the impugned order of the first respondent-CESTAT.
8. It is not in dispute that the petitioner was a small time broker engaged in the business of providing logistic support to the authorised Customs Clearing and Forwarding Agents of the Custom House at Tuticorin and he charged commission from CHAs and others for his services. He was running his business in the name and style of M/s.Meenakshi Agency, Tuticorin and he acted as a logistic support service provider for many Authorised Custom House Agents including one M/s.V.N.M.S.Ayyachamy Nadar, Tuticorin, who was an authorised Custom House Agent in the live rolls of the CHAs of the Tuticorin Custom House. The petitioner's services include providing logistic services like arranging the transport for movement of export and import cargo from in and out of the Custom House, Tuticorin, including all the container freight stations attached to it and he provided transport, men and materials for loading and unloading of cargo in and out of Tuticorin Port and its attached CFSs. The DRI Officers of the Tuticorin Unit intercepted a container of the petitioner and ultimately, the authorities proceeded against the petitioner by issuing show cause notice, dated 6.10.2010 on the allegation against the exporters in the shipping bills that the goods did not possess the basic shape of the shoe upper and more than 50% of the consignment was unusable/used waster and the actual value of the goods was declared wrongly by the petitioner. The said show cause notice was adjudicated by the petitioner and the original authority passed the Order-in-Original in No.8 of 2012, dated 29.6.2012, imposing penalty of Rs.50 lakhs under Sections 114 and 114-A of the Customs Act, in addition to recovery of Rs.1,37,60,127/- being the drawback amount jointly and severally, as against which, the petitioner filed appeal before the first respondent-CESTAT, along with stay petition and on a consideration of the entire material documents available on record, the CESTAT came to the conclusion to entertain the appeal on condition of pre-deposit to be made by the petitioner, as extracted above.
9. The impugned order of the first respondent-CESTAT is questioned by the petitioner on the ground that there is undue hardship and financial burden for the petitioner to pay the pre-deposit amount, which has not been taken into account by the CESTAT before passing the impugned order. Besides that, the contentions raised before the CESTAT were also urged before this Court.
10. It is to be noted that when once an appeal is filed by an aggrieved person against the original order, it is mandatory requirement under the provisions of the Customs Act to pay the amount ordered by the original authority, as a condition precedent for taking up the appeal.
11. Law is well settled that the capacity of a party to pay the pre-deposit amount had to be noticed and the financial burden and undue hardship for the party to resort to claim waiver of the pre-deposit, have also to be considered. In this regard, it is worthwhile to notice a decision of a Division Bench of this Court reported in 2009 (235) ELT 231 (Trendy Moods Vs. Customs, Excise and Gold (Control) Appellate Tribunal, Chennai), wherein, the Division Bench, after taking into account the various decisions of the Supreme Court, for and against, ultimately came to the conclusion that the capacity of the appellant therein to pay the amount having been noticed and in the absence of any financial burden, it cannot be construed that there is an undue hardship for the appellant therein to resort to claim waiver of pre-deposit.
12. The cardinal principle of consideration of the waiver of pre-deposit is based on undue hardship, prima-facie case, balance of convenience, financial burden and other difficulties expressed by the party before taking the matter on appeal and these factors have to be weighed in relevant circumstances, taking into account all the material factors, which alone can come to the wisdom of the authority to give certain waiver of pre-deposit to the party who is on appeal.
13. In this case, the CESTAT took into account all the above legal principles and was lenient in ordering only Rs.20 lakhs as pre-deposit as against Rs.50 lakhs, by waiving the balance penalty and the drawback amount. Hence, it is not proper for the petitioner to approach this Court and challenge the impugned order of the CESTAT and the attitude of the petitioner in filing this Writ Petition cannot be appreciated and the same is not sustainable.
14. Considering the facts and circumstances of the case and bearing in mind the legal principles laid down by the Supreme Court and this Court, as noted above and in the absence of any undue hardship/financial burden as alleged by the petitioner, the impugned order of the CESTAT cannot be interfered with, which is accordingly confirmed.
15. At this stage, the learned counsel for the petitioner made a plea that the time given by the first respondent-CESTAT to pay the pre-deposit amount expired on 16.1.2013 itself, and therefore, he requested that the petitioner may be given some time to pay the pre-deposit amount as ordered by the CESTAT to entertain the appeal. In this regard, he also relied on an order of the Madurai Bench of this Court in MP(MD).No.1 of 2013 in W.P.No.2938 of 2013, dated 25.2.2013, passed in the connected case, wherein, an order of interim stay was granted, and hence, he submitted that the CESTAT has not proceeded further till date and the matter stood thus.
16. Considering the above submissions of the learned counsel for the petitioner, the petitioner shall go before the first respondent-CESTAT and comply with the impugned order of the CESTAT, dated 11.12.2012, within a period of two weeks from the date of receipt of a copy of this order. On such compliance by paying the amount, the first respondent-CESTAT shall take up the appeal, give an opportunity of hearing to the petitioner and dispose of the appeal, on merits and in accordance with law, as expeditiously as possible.
17. With the above observations and directions, the Writ Petition is disposed of. No costs. The Miscellaneous Petition is closed.
15.4.2013 Index: Yes Internet: Yes cs To
1. The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Shastri Bhawan Annexe I Floor, 26 Haddows Road, Chennai-600 006.
2. The Commissioner of Customs, Custom House, Tuticorin.
W.P.No.2375 of 201315.4.2013