2014 (4) TMI 302 - HC - Customs

Waiver of pre-deposit Deposition of ₹ 20 lakh by CHA as directed by the tribunal - Held that - Whilst the requirement of pre-deposit for an appeal is undisputed in terms of the provisions of the Customs Act, yet the Court has to be aware of the circumstances of each case - Appellant was not the consignee; as CHA it merely facilitated the filing of the bill of entry and other documents - As to whether it was negligent in the observance of the KYC Regulations is a matter it would have gone into in the appeal - At the same time, it does not appear from the record nor it was so argued by the Revenue that the CHA has been penalized under independent regulations for the performance of its duties - The direction to deposit ₹ 20 lakhs, in the peculiar circumstances of the case appears to be excessive and harsh - Therefore, the impugned order is modified; instead of ₹ 20 lakhs, the appellant is directed to deposit ₹ 5 lakhs or furnish bank guarantee or appropriate security in lieu thereof as a pre-condition of hearing of the appeal - The appeal is partly allowed Decided partly in favour of Appellants.

Summary

Issues:
1. Appellant aggrieved by CESTAT order to deposit Rs.20 lakhs for appeal consideration.
2. Allegations of negligence on appellant as a Customs House Agency (CHA).
3. Disputed liability for penalty due to mis-declaration in consignment.
4. Argument of undue hardship due to substantial pre-deposit amount.
5. Court's consideration of circumstances for pre-deposit requirement.
6. Modification of impugned order to deposit Rs.5 lakhs or furnish bank guarantee.

Analysis:
1. The appellant, a Customs House Agency (CHA), challenged the CESTAT order directing a pre-deposit of Rs.20 lakhs for appeal consideration. The appellant was not the consignee but facilitated bill of entry filing for a consignment of toys from China. Investigations revealed mis-declaration with prohibited items, leading to penalty imposition.

2. Allegations of negligence were raised against the appellant for failing to follow Know Your Customer (KYC) norms. The appellant argued that as a CHA, it couldn't be expected to ascertain the consignee's intentions. The Revenue contended the appellant's negligence led to the problematic consignment.

3. The issue of disputed liability for penalty arose as the appellant contested being held responsible for the consignment's contents. The original order imposed a penalty of Rs.30 lakhs on the appellant, who approached CESTAT seeking relief from the penalty.

4. The appellant argued that the substantial pre-deposit amount of Rs.20 lakhs caused undue hardship, especially since it was not the consignee and couldn't have known the actual contents of the consignment. The appellant deemed the pre-deposit amount, constituting 2/3rd of the penalty, as unjust.

5. The Court acknowledged the necessity of pre-deposit for appeals under the Customs Act but emphasized the need to consider the case's circumstances. It noted that the appellant, as a CHA, only facilitated documentation and questioned the negligence aspect regarding KYC Regulations.

6. Consequently, the Court modified the impugned order, reducing the pre-deposit amount from Rs.20 lakhs to Rs.5 lakhs or the option to furnish a bank guarantee or appropriate security within four weeks. The appeal was partly allowed, ensuring fairness and acknowledging the peculiar circumstances of the case.