2018 (9) TMI 268 - AT - Customs

Recovery of Redemption Fine - Prohibition on Revenue from encashing the bank guarantee - appellant deposited the amount of 7.5% of the duty in terms of section 129 E of Customs Act 1962 - Held that - It is apparent that Section 129E does not grant any stay or puts any restrictions on the rights of Revenue to recover any amount. It merely prescribes payments of certain amounts as conditions mandatory for filing appeal in Tribunal. However it is seen that the Government vide circular no. 984/8/2014/CUS dated 16/09/2018 puts restrictions on themselves and provides certain guidelines for recovery of amounts during the pendency of appeals - A perusal of the circular shows that it has been issued with reference to section 35F of the Central Excise Act 1944 and section 129E of the Customs Act 1962. Both the sections prescribed the amount to be deposited with reference to the liability of duty and/or penalty imposed. There is no reference to redemption fine in the said section. There is no reason to interfere in the proceedings by encashment of Bank Guarantee to recover redemption fine as no stay application has been filed by the applicant in the matter - application dismissed.

Summary

Issues Involved:
1. Eligibility for benefit under Notification No. 21/2002.
2. Alleged mis-declaration of goods by the appellant.
3. Imposition of duty, interest, confiscation, and redemption fine.
4. Encashment of bank guarantee during the pendency of appeal.
5. Applicability of Section 129E of the Customs Act, 1962.
6. Interpretation of relevant circulars issued by CBEC regarding recovery during the pendency of appeals.
7. Jurisdiction and powers of the Tribunal to stay recovery actions.

Issue-wise Detailed Analysis:

1. Eligibility for Benefit under Notification No. 21/2002:
The appellants imported certain materials claiming benefit under Notification No. 21/2002. However, the Revenue found the goods ineligible for this benefit. The Commissioner denied the notification benefit, confirmed duty and interest, and seized the goods.

2. Alleged Mis-declaration of Goods by the Appellant:
The Revenue alleged that the appellant had mis-declared the goods to avail the benefit under the said notification. This mis-declaration led to the denial of the notification benefit and subsequent legal actions.

3. Imposition of Duty, Interest, Confiscation, and Redemption Fine:
The Commissioner’s order confirmed the duty and interest, seized the goods, and imposed a redemption fine of ?80 Lakhs in lieu of confiscation. The goods, provisionally released earlier, were held liable for confiscation.

4. Encashment of Bank Guarantee during the Pendency of Appeal:
The appellant contested the Commissioner’s order before the Tribunal and deposited 7.5% of the duty as per Section 129E of the Customs Act, 1962. The appellant argued that no recovery action, including encashment of the bank guarantee, should be taken during the appeal’s pendency, citing CBEC Circular No. 984/8/2014.

5. Applicability of Section 129E of the Customs Act, 1962:
Section 129E mandates a pre-deposit of 7.5% of the duty or penalty for filing an appeal but does not provide a stay on recovery actions. The Tribunal noted that Section 129E does not restrict the Revenue’s right to recover amounts during the appeal’s pendency.

6. Interpretation of Relevant Circulars Issued by CBEC Regarding Recovery During the Pendency of Appeals:
The appellant relied on CBEC Circular No. 984/8/2014, which restricts recovery actions during the pendency of appeals if the stipulated pre-deposit is made. However, the Tribunal observed that this circular does not explicitly cover redemption fines. The Tribunal referenced the case of Hindustan Platinum Pvt. Ltd., which differentiated between recovery of duty/penalty and other dues like redemption fines.

7. Jurisdiction and Powers of the Tribunal to Stay Recovery Actions:
The Tribunal acknowledged the Bombay High Court’s decision in My Dreams Properties, which affirmed the Tribunal’s power to stay recovery of redemption fines. However, the Tribunal noted that no stay application was filed by the appellant in the present case, and thus, there was no basis to interfere with the encashment of the bank guarantee.

Conclusion:
The Tribunal dismissed the miscellaneous application, allowing the Revenue to encash the bank guarantee to recover the redemption fine. The Tribunal emphasized that Section 129E does not stay recovery actions and that the relevant CBEC circulars do not restrict recovery of redemption fines. The Tribunal also highlighted the necessity of filing a stay application to prevent such recoveries, which the appellant failed to do.