2011 (7) TMI 228 - HC - Customs

Waiver of pre-deposit - it is not open to the petitioner to allege that the first respondent had not considered the contentions raised on behalf of the petitioner and that the impugned order had been passed by the first respondent, without giving sufficient reasons - Unless the petitioner shows that the conditions enshrined in Section 129 E of the Customs Act, 1962, are made out, by sufficient evidence, the waiver of pre-deposit of penalty cannot be granted, totally, as prayed for by the petitioner - Considering the nature of the dispute and the difficulties highlighted by the appellants seeking dispensation of deposit, it is directed that the appeals shall now be heard without requiring further deposit, if the appeals are free from other defects in accordance with law - Even if it could be accepted that the petitioner had made certain averments regarding its financial difficulties, it would not be entitled to the relief of waiver of pre-deposit of penalty, as such averments had not been substantiated with sufficient evidence - Since, specific averments had not been made by the petitioner regarding financial hardship , in the applications filed for the waiver of pre-deposit of penalty, with supporting evidence, the first respondent had no occasion to give detailed reasons for rejecting the request of the petitioner - Decided against the assessee

Summary

Issues Involved:
1. Challenge to the impugned order requiring pre-deposit as per Section 129E of the Customs Act, 1962.
2. Alleged involvement of the petitioner firm in wrongful duty drawback claims.
3. Consideration of financial hardship and prima facie case for waiver of pre-deposit.
4. Adequacy of reasons provided by the first respondent in the impugned order.

Issue-wise Detailed Analysis:

1. Challenge to the Impugned Order Requiring Pre-deposit:
The petitioner firm, a Custom House Agency, filed a writ petition challenging the impugned order of the first respondent dated 14.2.2011, which required a pre-deposit as per Section 129E of the Customs Act, 1962. The petitioner sought a direction for the first respondent to hear the appeal on merits without insisting on the pre-deposit.

2. Alleged Involvement in Wrongful Duty Drawback Claims:
The second respondent's officers alleged that certain unscrupulous persons had floated fictitious firms and exported consignments by grossly inflating values to avail wrongful duty drawback. The petitioner firm was implicated based on the instructions of one K. Gunasekaran, without verifying the exporters' credentials. Consequently, the goods were confiscated, and penalties were imposed on the petitioner firm under Sections 114(iii) and 117 of the Customs Act, 1962.

3. Consideration of Financial Hardship and Prima Facie Case:
The petitioner argued that it had a prima facie case as it was not involved in the irregular activities of K. Gunasekaran and merely filed shipping bills based on instructions. The petitioner also claimed financial hardship, managed by a sole proprietor, with its license initially suspended and later canceled. The petitioner cited several judicial precedents emphasizing that financial hardship and prima facie merits should be considered for waiver of pre-deposit.

4. Adequacy of Reasons Provided by the First Respondent:
The petitioner contended that the first respondent did not consider the grounds raised for waiver of pre-deposit and passed the impugned order without proper reasons. The petitioner argued that the specific contentions were not recorded, showing a lack of application of mind by the first respondent. The petitioner cited cases like Amitava Saha vs. CESTAT and Adinath Dyeing and Finishing Mills vs. Commr. of C.EX., Ludhiana, emphasizing the need for the Tribunal to consider prima facie cases, balance of convenience, and irreparable loss.

Respondent's Argument:
The respondent argued that the petitioner did not specifically raise the ground of 'financial hardship' with sufficient evidence as required under Section 129E of the Customs Act, 1962. The application for waiver of pre-deposit was devoid of facts and particulars. The respondent cited cases like Vijay Prakash D.Mehta vs. Collector of Customs and Benara Valves Ltd. vs. Commissioner of Central Excise, emphasizing that waiver of pre-deposit is not automatic and must be substantiated with evidence.

Court's Conclusion:
The court concluded that the petitioner did not show sufficient cause or reason to grant the reliefs sought. Even if financial difficulties were averred, they were not substantiated with sufficient evidence. The order of the first respondent was not erroneous or invalid solely for lacking detailed reasons, as the petitioner did not raise specific grounds with sufficient evidence to satisfy Section 129E of the Customs Act, 1962. The court held that the petitioner did not make out a prima facie case for waiver of pre-deposit, and the writ petition was devoid of merits. Consequently, the connected miscellaneous petitions were closed without costs.