2016 (9) TMI 28 - HC - Customs

Waiver of pre-deposit 10% of penalty amount directed to be deposited or to furnish 100% bank guarantee of penalty amount discretion of appellant authority to dispense with pre-deposit unconditionally or subject to some conditions inability shown by petitioner to pay the pre-deposit amount Held that - There is nothing on record to prove that the petitioners are financially disabled to make pre-deposit of 10% of the penalty amount to have their appeal entertained by the appellate authority. The discretion that has been exercised by the appellate authority is neither arbitrary nor capricious and, therefore, no interference warranted - Petitioner to make pre-deposit failing which the appeal shall stand dismissed petition dismissed decided against petitioner.

Summary

Issues:
Challenge to order imposing penalty under Foreign Trade Act, Application for waiver of pre-deposit, Lack of reasons in appellate authority's order, Interpretation of provisions regarding pre-deposit in appeals.

Analysis:
The petitioners challenged an order imposing a penalty of ?20,00,000 under the Foreign Trade (Development & Regulation) Act, 1992, by filing an appeal under section 15 of the Act. The Additional Director General of Foreign Trade advised the petitioners to deposit 10% of the penalty amount or provide 100% bank guarantee within seven days. The petitioners contested this directive in a writ petition, primarily on the grounds of lack of reasons provided in the order.

During the proceedings, the petitioners relied on a Division Bench decision of the Bombay High Court to argue that the appellate authority's order should be set aside due to its silence on why complete waiver of pre-deposit was not granted. The relevant provisions of section 15(1) of the Act were examined, highlighting that the appellate authority has the discretion to dispense with pre-deposit either unconditionally or subject to conditions.

Upon reviewing the impugned order, it was found that a penalty of ?20,00,000 was imposed on the petitioners, who contended in their appeal that their financial condition did not allow them to deposit this amount. The appellate authority, after considering this plea, directed the petitioners to pay 10% of the penalty amount for the appeal to be entertained. The court noted that there was no evidence to prove the petitioners' financial inability to make this pre-deposit.

The court concluded that the discretion exercised by the appellate authority was not arbitrary or capricious, hence no interference was justified. The writ petition was dismissed without costs, and the petitioners were given seven days to make the pre-deposit as directed. Failure to comply would result in the appeal being dismissed. If the payment was made within the stipulated time, the appellate authority was instructed to proceed with the appeal on its merits, provided it was otherwise in order.