Gujarat High Court
Mahesh Goyal S/O M L Goyal vs Commissioner Of
Author: Akil Kureshi
Bench: Akil Kureshi
MAHESH GOYAL S/O M L GOYAL....Appellant(s)V/SCOMMISSIONER OF CUSTOM....Opponent(s) O/TAXAP/140/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 140 of 2013 with CIVIL APPLICATION No. 102 of 2013 ================================================================ MAHESH GOYAL S/O M L GOYAL....Appellant(s) Versus COMMISSIONER OF CUSTOM....Opponent(s) ================================================================ Appearance: MR DIPEN DESAI, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI 20th February 2013 ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI) Assessee has challenged the judgment of the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad [hereinafter to be referred to as, the CESTAT ], raising following questions for our consideration :
[a] Whether the respondent had any jurisdiction to adjudicate upon the show cause notice as the customs authority at Ghaziabad would have exclusive jurisdiction to adjudicate on the show cause notice and thereby whether the order passed by the Commissioner of Customs was without jurisdiction and hence a nullity?
[b] Whether the Section 28 of the Customs Act, 1962 could be invoked as the present case is neither a case of non-payment of duty nor a case of short levy of duty and therefore, extended period of 5 years would not be available and hence whether the show cause notice itself was beyond the period of limitation prescribed ?
[c] Whether the respondent-Commissioner of Customs so also the CESTAT were duty bound and required under law to first decide the question of jurisdiction and limitation and than only consider the question of merits ?
[d] Whether the CESTAT by not considering the question of jurisdiction and limitation has committed grave error in law by directing the appellant to deposit Rs. 75 lakhs ?
As is apparent from the above noted questions, the issue pertains to waiver of pre-deposit requirement and to permit the appellant to pursue his appeal before the Tribunal. In brief, the facts are as under :-
A show cause notice dated 2nd July 2010 was issued by the Additional Director General, Directorate of Revenue Intelligence [LZU], Lucknow calling upon the appellant and several other persons and entities why Crude Palm oil [industrial grade/non-edible grade] should not be confiscated under Section 111 of the Customs Act, 1962 [hereinafter referred to as, the Act ]; why the benefit of concessional rate of duty enjoyed by the buyer be not disallowed and recovered in terms of Section 28 of the said Act read with Rule 8 of the Customs [Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods] Rules, 1996 [ the said Rules for short] and further, why penalties as provided under Sections 112, 114A and 114AA of the Act of 1962 be not imposed.
The appellant is facing final order passed in connection with such show cause notice wherein, under Order dated 31st March 2012, he is facing two separate personal penalties of Rs. 3 Crores each under Section 112(b) and 114AA of the said Act. Against such order in-original, the appellant has preferred appeal before the Tribunal. Pending such appeal, the appellant prayed for waiver of pre-deposit requirement as well as stay of the penalties. In such proceedings, the Tribunal passed impugned order and directed the appellant to deposit a sum of Rs. 75,00,000/= within stipulated time, on condition of which, rest of the pre-deposit requirement would stand waived and the appellant would also be covered by the stay against further recovery. It is this order that the appellant has challenged in the present Appeal.
Learned counsel for the appellant vehemently contended that the Tribunal has committed a serious error in not waiving the entire pre-deposit requirement. He submitted that the Customs authorities have no jurisdiction either to recover the duty, or to impose penalties. He submitted that in the facts of the case, Section 28 of the Act could not be invoked. He further submitted that even if there was any diversion of the goods, after its importation, the same could be dealt with by the Excise authorities and not by the Customs authorities. He submitted that in any case, two proceedings could not parallely proceed and unless and until the proceedings for recovery of duty forgone are completed by the Excise authorities in terms of Rule 8 of the Rules, the Customs authorities could not take any decision on the question of confiscation of the goods, or imposition of penalties. In this respect, he relied on the following decisions :-[1]
Commissioner of Customs, New Delhi v. C.T Scan Research Centre [P] Limited, reported in 2003 [155] ELT 3 (SC); and [2] Commissioner of Customs {EP}, Mumbai v. Prayag Exporters Private Limited, reported in 2003 [155] ELT 4 (SC).
Counsel further submitted that the Tribunal did not examine these decisions, though the same were presented.
From the record, we notice that the goods were brought within the country by paying concessional rate of duty. Such concessions were, however, conditional and require the goods to be utilized for manufacturing certain products only viz., soap. Investigation however, revealed that in large number of cases, there was diversion of the goods, and the material so imported was not used for the purpose for which the concessional duty was made available. We are not delving further in this aspect of the matter, since the appeals are still pending before the Tribunal and we would not like to prejudice interest of either side in the process of dealing with this issue of pre-deposit waiver. Suffice, however, to state that the Tribunal has recorded that the transporters had implicated the appellant in such diversion and that such statement had not been retracted.
The Tribunal, considering the facts and circumstances of the case, while deciding the question of waiver of pre-deposit, required the appellant to deposit a sum of Rs. 75,00,000/= against the total penalties of Rs. 6 Crores that is 12.5% of the total penalties confirmed against the appellant. It may be, as pointed out by the counsel for the appellant, that the Tribunal found serious infirmities in one of the penalties so imposed. The fact still remains that the Tribunal, after giving reasons, granted substantial waiver of the pre-deposit requirement to the appellant. We do no see any scope for interference in such order of the Tribunal, since in our opinion, no question of law arises.
We notice that neither before the Tribunal nor before us, the appellant had pleaded or proved his case for financial hardship. In that view of the matter, the sole question that the Tribunal needs to examine is whether did the appellant build up such a strong prima facie case as to justify total waiver of the pre-deposit requirement. Law on the issue of requirement of pre-deposit is sufficiently clear. In a recent decision of Delhi High Court in case of Golden Tabacco Limited v. Commission of C.Ex., Delhi-I, reported in 2012 (275) ELT 375 (Delhi) has culled out such principles emerging from the decision of the Supreme Court. We may usefully notice the observations made in such decision, thus -
4.
The law on the question of pre-deposit, when the statute requires the appellant to deposit the impugned tax or demand which is challenged in an appeal, has been lucidly and clearly expounded by the Supreme Court in their decisions in Benara Valves Ltd. vs. CCE, (2006) 13 SCC 347 and Indu Nissan Oxo Chemicals Industries Ltd. vs. Union of India, (2007) 13 SCC 487. Undue hardship which entitles an appellant to seek waiver, means something which is not warranted by the conduct of the appellant or very much disproportionate to the said conduct. Undue hardship is caused when the hardship is not warranted by the circumstances. Undue hardship is normally associated with economic hardship but the use of word undue before the word hardship would show that it should be excessive hardship or hardship greater than what the circumstances warrant. The other aspect which has to be kept in mind is the need and requirement to safeguard the interest of Revenue. Tribunals while disposing of applications for waiver of pre deposits have to keep in mind the said two factors.
In the case of Union of India vs. Adani Exports Limited, 2007 (218) ELT 164 (SC), the Supreme Court examined a similar provision of pre-deposit in Section 129E of the Customs Act, 1962. It was held that prima facie case is one of the aspects which has to be taken into consideration to decide whether or not to grant full or partial stay but the interest of the Revenue is important and cannot be ignored. Right to appeal is neither an absolute right nor an ingredient of natural justice, principles of which must be followed in all judicial or quasi-judicial adjudications. The right to appeal is a statutory right which can be circumscribed by the condition for the grant. (See Govt. of Andhra Pradesh vs. P. Laxmi Devi, (2008) 4 SCC 720.)
6. In the case of Indu Nissan (supra), reference was made to the earlier decision of the Supreme Court in Metal Box India Ltd. vs. CCE (2003) 11 SCC 197 and it was held that Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA, for short) does not by itself or ex facie entitle a sick company to claim waiver of pre-deposit in the appellate proceedings on the ground of undue hardship. Payment of pre-deposit does not fall under any of the categories mentioned in Section 22 of the SICA. Learned Tribunal in the order dated 15th February, 2010 has recorded the appellant s contention with reference to the Section 22 of the SICA and rejected the same relying upon the aforesaid decisions. It may be noted that rehabilitation scheme or the package was finalized by the BIFR by the order dated 17th December, 2002 and we are in the year 2010-11. BIFR order pertains to the past demands and cannot relate to demands which were to arise in future. As per the written arguments filed by the appellant, what was restructured under SICA was repayment of the confirmed duty amounts totaling Rs.5516.82 Lakhs in installments from the financial year 2005-06 onwards. It is the case of the appellant that Rs. 4120 Lakhs has been prayed to the Excise Department but the installment due on 30th September, 2010 was delayed in view of financial difficulty. It is pleaded by the appellant that disputed liability of excise was outside the purview of the scheme; yet it is submitted that the Excise Department had agreed not to impose condition of pre-deposit in future for hearing of an appeal on disputed liabilities during the rehabilitation period. The respondent has disputed the said contention and has stated that no such concession was agreed. The response of the respondent has been placed on records as Exhibit-DD to the counter affidavit. The respondent has placed on record a newspaper report that the appellant has sold immovable properties in Mumbai for Rs. 591 Crore. Along with the counter affidavit the respondent has enclosed, the response of the appellant, admitting that they had entered into a development transaction to develop property measuring 8 acres in Vile Parle (West), Mumbai. This contention of the appellant relying upon SICA is accordingly rejected.
This now brings us to consideration of the main objections of the learned counsel for the appellant. Section 111 of the Act pertains to confiscation of improperly imported goods, etc and provides that the goods mentioned in clauses (a) to (p) therein, brought from a place outside India shall be liable to confiscation. Clause (o) thereof reads as under :-
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;
If the allegations contained in the show-cause notice and as confirmed by the adjudicating authorities are ultimately held to be true, in our prima facie opinion, there would be a case of application of Section 111 [o] of the Act. It in turn would bring in the applicability of Section 112 of the Act, which pertains to penalty for improper importation of goods. Clause [a] thereof provides that any person, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, shall be liable to penalties as specified in clauses [i] to [v]; as the case may be. Thus, irrespective of the question whether under Section 20A of the Act, the Customs authorities could recover the duty forgone, the question of applicability of Section 111 (o) and Section 112 would certainly still survive.
For the same reason, Rule 8 of the said Rules also, in our prima facie consideration, would not prevent the Customs Department from proceeding further in terms of Section 111 or 112 of the Act. Rule 8 of the said Rules pertains to recovery of duty in certain cases and empowers the Assistant Commissioner of Central Excise to ensure that the goods imported are used by the manufacturer for the intended purpose and in case, they are not so used, to take action to recover the differential duty, which was exempted at the time of importation.
In the result, we see no reason to interfere with the order impugned. Tax Appeal is therefore, dismissed. Civil Application for stay also stands rejected.
(AKIL KURESHI, J.) (Ms. SONIA GOKANI, J.) Prakash* Page 9 of 9