2019 (5) TMI 84 - HC - Customs

Non-compliance of pre-deposit - EPCG scheme to import capital goods at concessional rate of duty - HELD THAT - The assessee submitted copy of certificate of discharge on 6.6.2017. The respondent informed the assessee that it had no power to review or withdraw its order. Thereafter, the assessee filed appeal alongwith application for condonation of delay as well as waiver of mandatory pre-deposit. The Tribunal directed the assessee to make the pre-deposit. Ultimately, the assessee filed an affidavit before the Tribunal that it was not in a position to make the mandatory pre-deposit due to financial constraints. Thus, the assessee failed to fulfill the required conditions. Appeal dismissed on account of failure to make the pre-deposit.

Summary

Issues:
- Appeal under Section 130 of the Customs Act, 1962 for quashing order confirming demand of duty and penalty
- Violation of fundamental rights under Article 21 of the Constitution of India
- Violation of principles of natural justice
- Prejudice caused to the Appellant
- Sustainability of impugned orders when certificate of discharge of export obligation obtained

Analysis:
1. The appellant-assessee appealed under Section 130 of the Customs Act, 1962 to challenge the order confirming the demand of duty and penalty. The appellant contended that the impugned order violated fundamental rights under Article 21 of the Constitution of India, breached principles of natural justice, caused prejudice, and questioned the sustainability of the orders despite obtaining a certificate of discharge of export obligation.

2. The appellant, engaged in export business, imported capital goods under the Export Promotion Capital Goods Scheme (EPCG) introduced by the Government. Despite fulfilling 98% of the export obligation within three years, the appellant failed to apply for a discharge certificate within the specified period. Consequently, a show cause notice was issued for confiscation of imported goods, recovery of duty, interest, and penalty. The appellant later submitted the certificate of discharge, but the respondent stated it had no power to review or withdraw the order.

3. The appellant then filed an appeal with the Tribunal seeking condonation of delay and waiver of mandatory pre-deposit. The Tribunal directed the appellant to make the pre-deposit, which the appellant failed to do due to financial constraints. As a result, the Tribunal dismissed the appeal for non-compliance. The appellant's counsel did not identify any error or illegality in the Tribunal's decision.

4. The High Court, after hearing both parties, found no grounds to interfere with the Tribunal's order dismissing the appeal due to the appellant's failure to make the mandatory pre-deposit. The Court emphasized that the pre-deposit was 7.5% of the total duty amount and concluded that no substantial question of law arose. Consequently, the Court dismissed the appeal, finding no merit in the appellant's arguments.

Conclusion:
The High Court upheld the Tribunal's decision to dismiss the appeal filed by the appellant-assessee for failure to comply with the mandatory pre-deposit requirement. The Court found no legal basis to interfere with the Tribunal's order and concluded that no substantial question of law was raised in the case. Therefore, the appeal was dismissed, affirming the Tribunal's decision.