2016 (7) TMI 543 - HC - Customs

Mandatory pre-deposit before filing an appeal - rejection of appropriation of amount deposited during investigation - Sec. 129 E of the Customs Act, 1962 - Held that - No public authority or public servant much less a quasi-judicial authority like the Commissioner of Customs can be allowed or permitted to pass these kind of communications or direct their subordinates to communicate such orders in the aforesaid kingly manner. This Court, therefore, records its displeasure on the tenor of the communication Annexure F dated 12.8.2015 given to the petitioner assessee. To say the least, there was not only a breach of principles of natural justice but the said communication also smacks of arbitrary act and non-application of mind by the learned Commissioner of Customs. The reconciliation of the deposits and the extent of pre-deposit required to be made for maintaining the present appeal in question before the CESTAT under S.129E of the Customs Act itself required the consideration of these facts by the said authority because this Court cannot undertake this exercise here in the present writ petition. Therefore, the matter would essentially require a remand back to the learned Commissioner to decide the representations of the petitioner assessee once again, after giving him an opportunity of hearing, by a detailed speaking order. It is needless to add that the petitioner assessee will have the liberty to avail appropriate legal remedy against such negative order of the Commissioner, if any. - Decided in favor of petitioner.

Summary

Issues:
1. Rejection of request for adjusting deposits against pre-deposit requirement under Customs Act.
2. Detention notice issued restricting sale of goods.
3. Appeal filed before CESTAT regarding demand notice and pre-deposit requirement.
4. Rejection of representations by Commissioner without reasons.
5. Interpretation of provisions of S.129 E of Customs Act regarding pre-deposit requirement.
6. Argument on authority to waive pre-deposit requirement.
7. Lack of quasi-judicial determination by Commissioner.
8. Direction for remand and stay of detention notice.

Analysis:
1. The petitioner company challenged the rejection of its request to adjust deposits against the pre-deposit requirement under the Customs Act. The Commissioner summarily rejected the representations without providing any reasons, hindering the appeal process before CESTAT. The petitioner sought a direction for the Commissioner to issue a certificate allowing adjustment of excess deposits against the pre-deposit requirement.

2. Subsequently, a detention notice was issued by the Assistant Commissioner, restricting the petitioner from selling goods under customs control. The High Court stayed the operation of the detention notice pending resolution of the pre-deposit issue.

3. The petitioner had filed an appeal before CESTAT against a demand notice and pre-deposit requirement. The representations made to the Commissioner regarding adjusting deposits were summarily rejected, leading to the appeal being stalled without a hearing on merits.

4. The rejection of representations by the Commissioner without a detailed speaking order was criticized by the High Court. The lack of quasi-judicial determination and absence of reasons for rejection were highlighted as violations of natural justice and arbitrary acts.

5. The Court analyzed the provisions of S.129 E of the Customs Act, emphasizing that the Tribunal no longer had the power to waive the pre-deposit requirement post-amendment in 2014. It was determined that the Commissioner needed to make a quasi-judicial determination regarding the adjustment of deposits against the pre-deposit requirement.

6. Arguments were presented regarding the authority to waive the pre-deposit requirement, with the Revenue contending that the Tribunal was the competent authority to consider such matters. The Court rejected this argument, emphasizing the Commissioner's role in determining the adjustment of deposits.

7. The High Court expressed dissatisfaction with the communication style of the Commissioner and directed a remand for a detailed speaking order after providing the petitioner with a hearing. The Court stressed the importance of a fair and reasoned decision-making process in quasi-judicial matters.

8. The Court directed the Commissioner to reevaluate the representations, stay the detention notice, and provide a fresh speaking order within a specified timeline. The Commissioner was instructed to consider adjusting excess deposits against the pre-deposit requirement and provide reasons if the representations were not accepted. The petitioner was granted the liberty to pursue legal remedies if needed.