2014 (6) TMI 230 - HC - Customs

Waiver of the condition of pre-deposit - penalty under Section 114(i) of the Customs Act, 1962 - Held that - Department has alleged different roles of different persons in the alleged smuggling of Red Sanders Logs; and the principal allegations appear to be directed against the exporter M/s Mehar Traders, one Shri Abdul Jaffer, said to be the master mind, and another Shri Shahnavaz N.Gavli. The acts and omissions of want of due diligence as also not coming out forthright in relation to the investigation, have been levelled against the Operational Executive and the Managing Director of the petitioner- Company, whose petitions have already been dismissed, as noticed hereinbefore. So far the petitioner-Company is concerned, the basis of quantum of penalty i.e., ₹ 50,00,000/- is not available as such in the order dated 12.03.2013. For the present purpose, we are of the view that when the petitioner has deposited a substantial amount of ₹ 20,00,000/- in terms of the order passed by this Court on 19.12.2013, any direction for deposit of any further amount may cause undue hardship to the petitioner. On the contrary, after such a deposit of the sum of ₹ 20,00,000/-, hearing of the petitioner s appeal by the Tribunal on merits would serve the cause of justice. Hence, the rule issued in this matter on 19.12.2013 deserves to be made absolute with further necessary observations - condition of pre-deposit, as imposed by the Tribunal in the impugned order dated 21.10.2013 is modified; the petitioner is held liable to make payment of an amount of ₹ 20,00,000/- (twenty lacs) towards the condition of pre-deposit; and the deposit already made by the petitioner pursuant to the order dated 19.12.2013 is taken as sufficient compliance of the requirements of pre-deposit - Decided conditionally in favour of assessee.

Summary

Issues:
1. Challenge against the order of Customs, Excise and Service Tax Appellate Tribunal for waiver of pre-deposit condition.
2. Imposition of penalty under Section 114(i) of the Customs Act, 1962.
3. Discrepancy in the quantum of penalty imposed on different individuals involved in the case.
4. Consideration of undue hardship in relation to the penalty amount.
5. Modification of pre-deposit condition by the High Court.

Analysis:

1. Challenge against Tribunal's Order for Pre-deposit Waiver:
The petitioner filed a writ petition challenging the order of the Customs, Excise and Service Tax Appellate Tribunal directing a pre-deposit of Rs.30,00,000 against a penalty demand of Rs.50,00,000. The High Court observed that the matter solely related to the quantum of the amount involved in the pre-deposit condition. The Court directed the petitioner to deposit Rs.20,00,000, considering the substantial amount already deposited, and restrained coercive recovery proceedings until final disposal of the appeal.

2. Imposition of Penalty under Customs Act:
The Commissioner of Customs imposed a penalty of Rs.50,00,000 on the petitioner-Company under Section 114(i) of the Customs Act, 1962, for alleged involvement in smuggling prohibited goods. The petitioner contended that the findings were based on assumptions and exceeded the allegations in the show cause notice. The High Court noted the allegations against various individuals and emphasized the need for a fair hearing of the appeal on its merits by the Tribunal.

3. Discrepancy in Penalty Imposed on Different Individuals:
Apart from the petitioner, other persons involved in the same transaction were also penalized, with varying amounts. The Operational Executive faced a penalty of Rs.5,00,000, while the Managing Director was penalized Rs.10,00,000. The Tribunal directed different deposit amounts for each individual. The High Court reviewed the penalties imposed on these individuals but focused on the petitioner's case for modification of the pre-deposit condition.

4. Consideration of Undue Hardship in Penalty Amount:
The High Court considered the plea of undue hardship in relation to the penalty amount imposed on the petitioner. After assessing the circumstances and the amount already deposited, the Court modified the pre-deposit condition to Rs.20,00,000, ensuring no coercive recovery proceedings until the appeal's final disposal. The Court emphasized the need for expeditious consideration of the appeal on its merits by the Tribunal.

5. Modification of Pre-deposit Condition by High Court:
In light of the circumstances and the petitioner's compliance with the directed deposits, the High Court modified the pre-deposit condition set by the Tribunal. The Court held the petitioner liable to pay Rs.20,00,000 towards pre-deposit, considering the amount already paid. The Court directed the Tribunal to proceed with the appeal promptly and refrained from coercive recovery actions until final disposal.

In conclusion, the High Court addressed the issues raised regarding the penalty imposition and pre-deposit condition, ensuring a fair hearing and due process for the petitioner while upholding the principles of justice and procedural fairness in the adjudication of the case.