2011 (6) TMI 655 - AT - Customs

Applications waiver of pre-deposit - appellant is carrying on the business of duty-free shop - theft/burglary took place at the above duty-free shop - appellant estimated loss of Rs.60 lakhs due to the theft and furnished a list of stolen goods - show-cause notice also proposed to revoke the bond executed under Section 59(2) of the Act Held that - Commissioner (Appeals) did not find it feasible to go into the merits of the case . Secondly, where the appellant has pleaded financial hardships. Commissioner (Appeals) did not give the appellant an opportunity to amplify this plea. Thus, both ways, the stay order dated 16.6.2010 passed by the Commissioner (Appeals) is bad in law on account of non-consideration of case on merits and of the plea of hardships apart from negation of natural justice. orders of the Commissioner (Appeals) are liable to be set aside. appeals are allowed by way of remand

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant in two appeals.
2. Dispute regarding duty demanded from the duty-free shop at Goa International Airport.
3. Appellant's challenge against the order of the Commissioner (Appeals) for non-compliance with pre-deposit directive.
4. Consideration of appellant's case on merits and financial hardships by the lower appellate authority.
5. Request for remand of the case for fresh decision on merits without insisting on pre-deposit.

Analysis:
1. The appellant, operating a duty-free shop at Goa International Airport, faced a demand for duty of Rs.96,66,209/- due to non-duty paid/warehoused goods found short on physical verification post a theft incident. The Assistant Commissioner confirmed the duty demand under Section 72(1)(a) for violating Section 71 of the Customs Act. The appellant filed an appeal to the Commissioner (Appeals) along with a plea for waiver of pre-deposit, which was rejected, leading to the present appeal before the Tribunal challenging the non-compliance issue.

2. The appellant contended that the theft incident, with a registered crime, rendered the department's non-accountal of goods claim baseless. They argued having a strong prima facie case against the duty demand, mentioning valid insurance covering the stolen goods for the Customs department's benefit. The appellant criticized the lower appellate authority for not considering their case on merits before directing pre-deposit, despite pleading financial hardships and filing an appeal with the Tribunal against the pre-deposit directive.

3. The Tribunal observed a fundamental flaw in the lower appellate authority's stay order, noting the failure to assess the appellant's prima facie case on merits as required in stay applications under relevant Acts. The Tribunal found the Commissioner (Appeals) disregarded the appellant's financial hardships plea, emphasizing the importance of considering such pleas and ensuring natural justice. The dismissal of the appeal based on non-compliance without a fair hearing further highlighted procedural errors.

4. While the appellant and the Senior Advocate urged for a remand of the case for fresh decision on merits without pre-deposit, the SDR also supported the remand, suggesting a reevaluation of the stay matter. The Tribunal, after analyzing precedents and legal provisions, concluded that the lower appellate authority's failure to consider the case on merits necessitated a remand for a fair assessment considering both merits and financial hardships, emphasizing adherence to legal principles and natural justice.

5. Consequently, the Tribunal allowed both appeals by remanding the case to the Commissioner (Appeals) for a fresh decision on the stay application, emphasizing the need for a thorough consideration of the appellant's case on merits and financial hardships, ensuring a just and lawful resolution based on the specific circumstances of the case and applicable legal provisions.