2016 (4) TMI 683 - HC - Customs

Confiscation of seized rough diamonds - Diamonds provisionally released by the time order is passed by Adjudicating Authority (AA) - AA ordered redemption fine of ₹ 32.61 lacs on the petitioners, and directed that the bank guarantee of ₹ 32.61 lacs furnished by the petitioners may be appropriated against such redemption fine. Additionally, there were also fines imposed. Held that - If there is any error apparent on the face of the record which requires rectification, it is always open for the authorities to exercise such powers. In catena of decisions, in the guise of rectification, the power of review which do not vest in the authority, cannot be exercised. Be that as it may, when the original order passed by the adjudicating authority is perused, in which the redemption fine and personal penalties were imposed. Clearly, the bank guarantees and bonds were to be executed by the petitioners for provisional release of the goods. This provisional release was substituted by confiscation and redemption fine. If therefore, the petitioners pay such redemption fine, they should be entitled to return of the bank guarantees and cancellation of the bonds. The redemption fine and the penalties having been modified by the Appellate Authority, direction ought to have been given for return of the bank guarantee and cancellation of the bonds upon the petitioners depositing substituted redemption fine. Linking the return of the bank guarantee and the cancellation of bond to the penalties, was either done wholly through oversight or at any rate without legal justification. In either case, we would strike down that portion of the appellate order and permit the petitioners to pursue their pending appeal before the Tribunal for the rest of the grievances. - Petition disposed of

Issues:
1. Confiscation of goods and imposition of penalties under the Customs Act, 1962.
2. Appellate authority's decision linking payment of penalty with release of bank guarantees and cancellation of bonds.
3. Rectification application regarding the appellate order's language.
4. Interpretation of Section 154 of the Customs Act, 1962 and the power of rectification.
5. Judicial review of the appellate authority's decision and its impact on pending appeals.

Issue 1: Confiscation of goods and imposition of penalties under the Customs Act, 1962:
The case involved a private limited company and its directors facing a show cause notice for confiscation of goods and penalties under the Customs Act, 1962. The order passed by the adjudicating authority directed the confiscation of rough diamonds and imposed fines on both the company and the directors. The appellate authority partially allowed the appeal, modifying the penalties and redemption fine imposed by the adjudicating authority.

Issue 2: Appellate authority's decision linking payment of penalty with release of bank guarantees and cancellation of bonds:
The appellate authority's order linked the payment of redemption fine and penalty with the release of bank guarantees and cancellation of bonds. The petitioners challenged this linkage, arguing that there was no connection between the penalties and the bank guarantees. The High Court found this linkage to be erroneous and struck down that portion of the appellate order, allowing the petitioners to pursue their pending appeal before the Tribunal for the remaining grievances.

Issue 3: Rectification application regarding the appellate order's language:
The petitioners filed a rectification application contending that the appellate authority mistakenly linked the payment of penalty with the release of bank guarantees and cancellation of bonds. The appellate authority dismissed this application, stating that he had become functus officio after signing the order and could not make changes other than typographical errors. The High Court disagreed with this reasoning and held that the appellate authority should have rectified the error in the order.

Issue 4: Interpretation of Section 154 of the Customs Act, 1962 and the power of rectification:
The High Court analyzed the powers of rectification under Section 154 of the Customs Act, 1962, emphasizing that rectification is not limited to typographical errors but can be used to correct any error apparent on the face of the record. The court highlighted that the authority cannot exercise the power of review under the guise of rectification but can rectify errors that require correction.

Issue 5: Judicial review of the appellate authority's decision and its impact on pending appeals:
The High Court reviewed the appellate authority's decision and concluded that the linkage between the payment of penalty and the release of bank guarantees was unjustified. The court directed the deletion of the relevant portion from the appellate order, allowing the petitioners to proceed with their pending appeal before the Tribunal for the remaining issues. The court emphasized the importance of rectifying errors that impact the rights of the parties involved.

Overall, the High Court's judgment clarified the correct interpretation of the appellate order and the powers of rectification under the Customs Act, 1962, ensuring that the petitioners' rights were upheld in the legal proceedings.

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