2015 (11) TMI 1464 - HC - Customs

Waiver of pre-deposit - Confiscation of exported goods - Classification of machined rigs - Classification under Chapter Sub-heading 84829900 or under Drawback tariff item No. 848221 - Held that - Appellate Tribunal had thought it fit to direct pre-deposit of ₹ 48,03,301/- as against the demand of excess drawback of ₹ 2,71,78,810/-, whereas the Commissioner (Appeals) has thought it fit to direct the petitioners to pre-deposit ₹ 24,00,000/- and ₹ 10,00,000/- in relation to demand of excess drawback of ₹ 48,03,301/-. Evidently therefore, the amount of pre-deposit as directed by the Appellate Tribunal and the Commissioner (Appeals) in more or less similar circumstances is highly disproportionate. Under the circumstances, the case of the petitioners would fall within the ambit of undue hardship as held by the Supreme Court in the case of Benara Valves Ltd. v. Commissioner of Central Excise (2006 (11) TMI 6 - SUPREME COURT OF INDIA). Besides, apart from the merits of the order of the Commissioner (Appeals), as pointed out by the learned counsel for the petitioners, the classification issue which is involved in the appeal before the Commissioner (Appeals) stands concluded by an order dated 29.10.2015 of the Appellate Tribunal in favour of the petitioners. Under the circumstances, the petitioners have a prima facie case for waiver of pre-deposit. When the court has found merit in the case of the petitioners and the matter does not involve any disputed question of fact, there is no bar against this court exercising powers under Article 226 of the Constitution of India merely because of the existence of an alternative statutory remedy. Under the circumstances, this court, having already applied its mind to the merits of the case and the scope of the controversy being narrow, does not deem it fit to relegate the petitioners to avail of the alternative remedy under the statute. - relief granted - Decided in favour of assessee.

Summary

Issues:
1. Challenge to order of Commissioner of Customs (Appeals) for non-compliance of pre-deposit.
2. Disparity in pre-deposit amount directed by Appellate Tribunal and Commissioner (Appeals).
3. Application of undue hardship principle.
4. Alternative statutory remedy under section 129DD of the Customs Act, 1962.

Analysis:

Issue 1: Challenge to order of Commissioner of Customs (Appeals) for non-compliance of pre-deposit:
The petitioners challenged an order by the Commissioner of Customs (Appeals) dismissing their appeal due to non-compliance with pre-deposit requirements. The original order by the adjudicating authority imposed penalties and demands on the petitioners. The Commissioner of Customs (Appeals) directed pre-deposit amounts, which the petitioners failed to comply with, leading to the dismissal of their appeals.

Issue 2: Disparity in pre-deposit amount directed by Appellate Tribunal and Commissioner (Appeals):
The petitioners highlighted a significant difference in the pre-deposit amounts directed by the Appellate Tribunal and the Commissioner (Appeals) for similar issues. They argued that the Commissioner (Appeals) ordered a much higher pre-deposit amount compared to the Tribunal's decision on a related matter. This disparity raised concerns about the reasonableness of the pre-deposit amounts imposed by the Commissioner (Appeals).

Issue 3: Application of undue hardship principle:
The petitioners invoked the principle of undue hardship, citing a Supreme Court decision. They argued that the pre-deposit amount ordered by the Commissioner (Appeals) was disproportionate and caused undue hardship. They emphasized that the Tribunal's decision on the same issue favored a lower pre-deposit amount, indicating an inconsistency in the application of pre-deposit requirements.

Issue 4: Alternative statutory remedy under section 129DD of the Customs Act, 1962:
The respondents contended that the petitioners should have pursued the alternative statutory remedy available under section 129DD of the Customs Act, 1962, instead of approaching the court. However, the court found merit in the petitioners' case and decided not to relegate them to the statutory remedy due to the narrow scope of the controversy and absence of disputed factual questions.

In conclusion, the court allowed the petition, quashed the Commissioner's order, and directed the petitioners to deposit a specified amount as pre-deposit. The appeals were restored to the Commissioner (Appeals) for further consideration, emphasizing the importance of applying the undue hardship principle and ensuring fairness in pre-deposit requirements.

This detailed analysis covers the various issues raised in the legal judgment, providing a comprehensive understanding of the case and the court's decision.