2020 (4) TMI 10 - HC - Customs

Maintainability of appeal - validity of Compounding Order - demand of redemption fine or not - Whether in the facts and circumstances of the present case, an appeal under Section 129A(3) was maintainable before the CESTAT, challenging a Compounding Order passed by the Compounding Authority? - HELD THAT - The issue is answered in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS GIRISH B. MISHRA 2013 (6) TMI 179 - GUJARAT HIGH COURT where it was held that Appeal against any such order would lie before the Tribunal in terms of Clause (a) of sub-section (1) of Section 35B of the Central Excise Act - We may clarify that although the decision of the Coordinate Bench in the case of Girish B. Mishra is in connection with the provisions of the Central Excise Act, yet the provisions of customs are analogous to the provisions of the Act, 1944. The case is squarely applicable to the present facts. Whether in the facts and circumstances of the present case, the CESTAT was right in interpreting the Order in Original dated 31.03.2005 and coming to a conclusion that there was no demand of redemption fine? - HELD THAT - The Tribunal in so many words has observed that there was no clear proposal in the show-cause notice with regard to imposition of the redemption fine and also in the order-in-original. The tribunal has observed that there is no crystallized demand of redemption fine against each of the noticee. None of the questions of law as proposed by the Revenue could be termed as substantial questions of law - appeal dismissed.

Summary

Issues:
1. Maintainability of appeal challenging a Compounding Order passed by the Compounding Authority before CESTAT.
2. Interpretation of Order in Original regarding the demand of redemption fine.

Analysis:
1. The first issue revolves around the maintainability of an appeal under Section 129A(3) challenging a Compounding Order before CESTAT. The Court referred to a previous judgment in the case of Commissioner of Central Excise Vs. Girish B. Mishra, where it was clarified that the order rejecting an application for compounding is not an order passed by the adjudicating authority under the Act. The Court emphasized that such orders fall under the purview of the Act, making appeals against them permissible before the Tribunal. This principle was deemed applicable to the current case involving the Customs Act, 1962.

2. The second issue pertains to the interpretation of the Order in Original regarding the demand of redemption fine. The tribunal, in its findings, highlighted that the rejection of compounding applications was solely based on the non-deposit of redemption fine. Citing a case precedent of Shivam Development Trust Vs. Union of India, the tribunal observed that without a clear proposal in the show-cause notice or the Order in Original regarding the imposition of redemption fine, there is no crystallized demand against the appellants. Consequently, the rejection of the application due to non-payment of redemption fine was deemed incorrect and illegal. The tribunal directed the competent authority to reconsider the compounding application within a specified timeframe.

In conclusion, the Court dismissed the tax appeal, as it found that none of the proposed questions of law by the Revenue could be classified as substantial. The judgment provided clarity on the maintainability of appeals challenging Compounding Orders and emphasized the necessity of a clear proposal regarding redemption fines in official documents to validate their imposition.