2008 (8) TMI 325 - HC - Customs

Clandestine removal - , it was clear that, prima facie, there were various anomalies and discrepancies in the claims of export made by the petitioner and huge quantities of castor oil was removed without being properly accounted for in the related documents and records required to be maintained under the law. There is prima facie evidence of excess removal of goods and contradictory stand of exporting excess goods as well as removing excess quantities in the domestic market However on the issue of stay or pre-depost, it held that (a) The impugned order dated 30-8-2007 shall stand modified to the extent that, instead of 15%, the petitioner shall be required to deposit 10% of the duty amount on or before 30-8-2008; (b) The parties shall appear before the Tribunal on such date as may be fixed by the Tribunal, on or before 30-8-2008; and (c) If the amount is deposited as aforesaid, the Tribunal shall take up for hearing the appeal of the petitioner, as far as practicable on day-to-day basis, and decide it as expeditiously as practicable.

Summary

Issues Involved:
1. Challenge to the orders of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and the Commissioner of Customs.
2. Financial hardship and inability to deposit pre-deposit amounts.
3. Allegations of clandestine removal and misdeclaration of goods.
4. Confiscation and penalties imposed on the petitioner.
5. Maintainability of the petition under Article 226 of the Constitution.
6. Compliance with the pre-deposit order and the Tribunal's findings.

Issue-wise Detailed Analysis:

1. Challenge to the Orders of CESTAT and the Commissioner of Customs:
The petitioner invoked Article 226 of the Constitution to set aside the orders dated 30-8-2007 and 10-12-2007 of CESTAT and the order-in-original dated 30-3-2007 of the Commissioner of Customs, Kandla. The Commissioner confirmed a duty demand of Rs. 201,80,46,133/- under Sections 3(1) and 11A of the Central Excise Act, 1944, and Rs. 1,05,17,210/- under the proviso to Section 28 of the Customs Act, 1962, along with equivalent penalties. CESTAT directed the petitioner to deposit 15% of the duty demanded within 12 weeks, waiving the balance duty and penalties subject to this pre-deposit.

2. Financial Hardship and Inability to Deposit Pre-deposit Amounts:
The petitioner argued financial incapacity to deposit even 15% or 10% of the duty amount due to financial sickness. The petitioner's net worth was negative, and the company was registered with BIFR for being declared as sick. Despite these claims, the Tribunal found that the petitioner did not make out a strong prima facie case for a total waiver of dues.

3. Allegations of Clandestine Removal and Misdeclaration of Goods:
The Commissioner's order detailed various instances of clandestine removal and misdeclaration of goods:
- Excess Removal: Duty demand of Rs. 19,30,85,283/- for excess removal of castor oil beyond the quantity shown in transshipment permits.
- Post-Sailing Removal: Duty demand of Rs. 163,44,63,995/- for removal of goods after the sailing of vessels without proper shipping bills.
- AR.4 Without Shipping Bills: Duty demand of Rs. 13,52,72,384/- for removal of goods under AR.4 without corresponding shipping bills.
- False Declarations: Confiscation of goods and demand of duty amounting to Rs. 40,76,058/- for false declarations and forged bills of lading.
- Bleaching Earth: Confiscation of 852.759 MT Bleaching Earth and payment of duty amounting to Rs. 1,05,17,210/- under Section 111(o) of the Customs Act, 1962.

4. Confiscation and Penalties Imposed on the Petitioner:
The Commissioner found sufficient evidence of deliberate, clandestine, and illegal removal of goods, leading to penalties on the petitioner and associated individuals. The Tribunal, considering the financial hardship, directed a partial pre-deposit while waiving the balance duty and penalties.

5. Maintainability of the Petition under Article 226 of the Constitution:
The respondent argued that the petition under Article 226 was not maintainable as the petitioner had availed of a statutory alternative remedy. The Tribunal had already considered the petitioner's contentions and granted substantial relief by directing a partial pre-deposit.

6. Compliance with the Pre-deposit Order and the Tribunal's Findings:
The petitioner failed to comply with the Tribunal's order to deposit 15% of the duty amount. Despite the Tribunal extending the time for pre-deposit, the petitioner did not make the deposit and pursued multiple modification applications. The Tribunal found prima facie evidence of anomalies and discrepancies in the petitioner's export claims, justifying the pre-deposit requirement.

Conclusion:
The High Court modified the Tribunal's order, reducing the pre-deposit requirement to 10% of the duty amount, to be deposited by 30-8-2008. The Tribunal was directed to hear the appeal expeditiously upon compliance with the modified order. The petition was partly allowed, and the miscellaneous civil application was disposed of accordingly.