2021 (5) TMI 220 - HC - Customs

Recovery during pendency of litigation - pre-deposit was made - Circular No.1053/2/2017-CX dated 10.03.2017 - Absolute Confiscation - imported branded Watches - HELD THAT - The Central Board of Excise and Customs has specifically addressed the question of recovery during pendency of litigation in the said circular and has held that Once the amount is paid, no coercive action shall be taken for recovery of the balance amount during the pendency of the appeal proceedings before these authorities. In the light of the categoric statement of the Board to the effect that no coercive action shall be taken for recovery of any balance of disputed dues, once the pre-deposit is made, the present communication has no legs to stand - petition disposed off.

Summary

Issues:
1. Redemption of seized watches under Section 125(2) of the Customs Act, 1962.
2. Confiscation of watches and penalty imposition by first appellate authority.
3. Filing of appeal before Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and condonation of delay.
4. Threat of disposal of seized goods pending appeal.
5. Interpretation of Section 129E regarding pre-deposit for filing appeal.
6. Circulars issued by the Central Board of Excise and Customs regarding recovery during pendency of litigation.

Analysis:
1. The petitioner company was subjected to a search by the Directorate of Revenue Intelligence, resulting in the seizure of imported watches. An order-in-original was issued granting an option to redeem the watches on payment of redemption fine and differential customs duty under Section 125(2) of the Customs Act, 1962, along with the imposition of a penalty.

2. The first appellate authority, in an appeal filed by the petitioner, ordered absolute confiscation of the watches and confirmed the penalty originally imposed. This decision was challenged by filing an appeal before CESTAT, South Zonal Bench, Chennai, albeit belatedly. The delay in filing the appeal was condoned by CESTAT, allowing the appeal to proceed.

3. Despite the appeal being listed for hearing, the petitioner received a communication threatening the disposal of the seized goods pending the appeal. This prompted the petitioner to file a writ petition seeking a mandamus to prevent the auctioning of the watches until the appeal was disposed of by CESTAT.

4. The court examined the provisions of Section 129E of the Customs Act, which mandates a pre-deposit before filing an appeal. The circulars issued by the Central Board of Excise and Customs clarified the pre-deposit requirements and emphasized that once the pre-deposit is made, no coercive action should be taken for the recovery of any balance of disputed dues during the appeal proceedings.

5. The court noted that the communication threatening disposal of the goods pending appeal had no legal basis, especially in light of the clear instructions from the Central Board of Excise and Customs regarding recovery during the pendency of litigation. The respondent's counsel acknowledged this position and confirmed that the communication would not be pursued further.

6. Consequently, the court granted the mandamus as sought by the petitioner, ensuring that no further coercive action would be taken for recovery of disputed dues once the pre-deposit was made. The writ petition was disposed of without imposing any costs on the parties involved.