2008 (4) TMI 665 - HC - Customs

Dispensation of pre-deposit - Held that - The question now to be debated before the Tribunal is in respect of the demand of ₹ 62,64,550/- by way of additional customs duty. 25% thereof would roughly come to about ₹ 15,66,137/- which may, for the sake of convenience, be rounded off to ₹ 15,60,000/-. The petitioner has already given bank guarantee of ₹ 7.60 lacs and therefore, we are of the view that the petitioner should now deposit a further sum of ₹ 8 lacs in cash within two months from today. We are also of the view that bank guarantee of ₹ 7.60 lacs lying with the department should be permitted to be encashed.

Summary

Issues:
Challenge to order of Customs Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad on Stay Application, challenge to order of Commissioner of Customs (Appeals), pre-deposit order passed by the Tribunal under Section 129E of the Customs Act, 1962.

Analysis:
The petitioner challenged an order of the Customs Excise and Service Tax Appellate Tribunal, West Zonal Bench at Ahmedabad, dated 4-3-2008, regarding Stay Application No. 03 of 2008 in Customs Appeal No. 01 of 2008. The appeal stemmed from an order dated 26-10-2007 of the Commissioner of Customs (Appeals), Jamnagar, affirming the demand of Rs. 75,89,375/- for basic customs duty and additional duty of customs concerning a ship purchased by the petitioner in auction proceedings. Despite challenging the provisional assessment, the petitioner failed in the previous litigation. During that time, the petitioner had to deposit Rs. 8 lacs, which grew to around Rs. 13 lacs due to cumulative interest, and provide a bank guarantee of Rs. 7.60 lacs. The Tribunal's order directed the petitioner to deposit an additional Rs. 25 lacs, with pre-deposit of the remaining amount being waived, leading to the current challenge.

The petitioner argued that the Tribunal erred in applying the principle of res judicata, contending that findings from provisional assessment should not bind the final assessment. Additionally, the petitioner invoked a statutory exemption for the demand of additional customs duty, asserting that failure to produce the exemption notification during the provisional assessment or previous litigation should not invalidate their defense. On the other hand, the Assistant Solicitor General opposed the petition, stating that the Tribunal's pre-deposit order was discretionary and need not be interfered with, especially since the final assessment mirrored the previous litigation's outcome.

The Court, after hearing both parties, refrained from delving into the merits of the contentions due to the specific challenge to the Tribunal's pre-deposit order under Section 129E of the Customs Act, 1962. However, considering the petitioner's liability for basic customs duty, previously litigated, the Court allowed the department to appropriate Rs. 13,24,824/- from the fixed deposit, along with encashing the bank guarantee if there was a shortfall. The debate before the Tribunal now focused on the demand of Rs. 62,64,550/- for additional customs duty, with the petitioner required to deposit a further Rs. 8 lacs in cash and permitting encashment of the existing bank guarantee of Rs. 7.60 lacs.

In conclusion, the Court partly allowed the petition, substituting the Tribunal's order and outlining specific directives for the department and the petitioner. Notably, the Court clarified that its decision did not express any opinion on the issue of res judicata raised in the petition. The rule was made absolute to the specified extent, providing a clear path for further proceedings in Customs Appeal No. 1 of 2008.