2015 (1) TMI 1075 - HC - Customs

Illegal auction of confiscated goods - The defendant had approached the Custom authorities at Lucknow and came to know that goods were already disposed of for a consideration of ₹ 1,04,481/-. Later, the same was offered to be refunded provided fulfilment of certain formalities, but the assessee has claimed entire value of the goods i.e. ₹ 3,80,000/- - Appellate authority allowed to refund entire claim. - Held that - Supreme Court in the case of Northern Plastics Ltd. v. Collector of Customs & Central Excise - 1999 (9) TMI 86 - SUPREME COURT OF INDIA as well as in the case of Shilps Impex v. U.O.I. - 2002 (1) TMI 62 - SUPREME COURT OF INDIA held that during the pendency of the appeal confiscated goods could not have been auctioned without prior permission of the appellate court. Matter was sub judice before the appellate court, but the Department in a haste manner has disposed of the goods without seeking permission from the appellate court where the matter was sub judice. Thus, the Department has committed a serious blunder by auctioning the goods which was a subject matter of an appeal and without prior permission of the appellate court, is not permissible to sale the same, as per the case laws and the circulars which have already been discussed by the appellate authority in their orders. - Decided against Revenue.

Summary

Issues:
Appeal against order of Customs, Excise & Service Tax Appellate Tribunal - Confiscation and penalty on Alcael Mobile Sets - Release of confiscated goods - Auction of goods without appellate court permission - Validity of Tribunal's order.

Analysis:
The appeal was filed by the Department against the order of Customs, Excise & Service Tax Appellate Tribunal regarding the confiscation and penalty imposed on Alcael Mobile Sets purchased by the assessee from M/s. Sagar Enterprises. The goods were intercepted and handed over to Customs & Central Excise Officer of Allahabad, leading to confiscation and penalty. However, the penalty was later cancelled by the Commissioner (Appeals) and the goods were released. The Department's review petition was also dismissed. The defendant approached the Additional Commissioner for release of goods, but they were informed that the goods were deposited with Customs department in Lucknow. The goods were auctioned for a lesser amount than claimed by the assessee, leading to a dispute. The Deputy Commissioner sanctioned the sale proceeds in favor of the respondents, which was challenged by the Department through various appeals.

During the proceedings, it was highlighted that as per legal precedents, confiscated goods cannot be auctioned during the pendency of an appeal without prior permission from the appellate court. In this case, the Department auctioned the goods hastily without seeking permission from the appellate court where the matter was sub judice. This action was deemed a serious error, as it contravened established case laws and circulars. The Tribunal upheld the order of the first appellate authority, directing payment of the difference between the claimed value and auction proceeds along with interest. The High Court found no grounds to interfere with the Tribunal's decision, as the Department's actions were in violation of legal principles and procedures.

Therefore, the High Court dismissed the appeal filed by the Department, affirming the Tribunal's order and emphasizing the importance of following due process and obtaining necessary permissions before auctioning confiscated goods during the appeal process.