1971 (1) TMI 52 - SC - Customs

Whether the order of the first respondent, Central Board of Excise and Customs, New Delhi, rejecting the appeal filed by the appellant for non-compliance with the provisions of Section 129 of the Customs Act, 1962 was justified? Held that - No doubt, the rejection of the appeal by the first respondent will mean that the appellant is bound by the order of the third respondent levying penalty. Such a result has been brought about only by the default of the appellant in complying with the order of the first respondent to deposit half the amount of penalty. Therefore, it follows that the rejection of the appeal by the first respondent was legal and the order of the High Court dismissing the writ petition is valid. Appeal dismissed.

Issues Involved:
1. Justification of the Central Board of Excise and Customs rejecting the appeal for non-compliance with Section 129 of the Customs Act, 1962.
2. Legality of the demand notice for depositing the penalty under Section 129(1) of the Customs Act.
3. Appellant's contention that Section 129 does not empower the first respondent to dismiss the appeal for non-compliance.
4. The impact of the rejection of the appeal on the approval of the penalty order by the third respondent.

Detailed Analysis:

1. Justification of the Central Board of Excise and Customs rejecting the appeal for non-compliance with Section 129 of the Customs Act, 1962:

The main question was whether the first respondent's order rejecting the appeal for non-compliance with Section 129 of the Customs Act, 1962, was justified. The appellant was penalized under Section 112(b) and prosecuted under Section 135(b) of the Act. The third respondent confiscated the ruby stone and imposed a penalty of Rs. 20,000 on the appellant, who then filed an appeal under Section 123. The appeal was rejected by the first respondent for non-compliance with Section 129, as the appellant did not deposit the penalty amount. The appellant's subsequent revision petition was also rejected by the second respondent for the same reason.

2. Legality of the demand notice for depositing the penalty under Section 129(1) of the Customs Act:

Section 129(1) mandates that any person appealing against a decision or order must deposit the duty demanded or penalty levied. The proviso allows the appellate authority to waive this deposit if it would cause undue hardship. The appellant requested a waiver, claiming innocence and financial incapacity. The first respondent reduced the deposit requirement to Rs. 10,000, but the appellant failed to comply, leading to the rejection of the appeal. The second respondent also provided an opportunity to deposit the reduced amount, which the appellant again failed to do.

3. Appellant's contention that Section 129 does not empower the first respondent to dismiss the appeal for non-compliance:

The appellant argued that Section 129 does not explicitly authorize the dismissal of an appeal for non-compliance with the deposit requirement. However, the court noted that Section 129(1) makes the deposit obligatory, and the proviso allows for discretion in cases of undue hardship. The appellate authority's discretion to waive or reduce the deposit does not negate the requirement to comply with Section 129(1). The court held that the logical consequence of non-compliance is the rejection of the appeal, as retaining such an appeal would serve no purpose.

4. The impact of the rejection of the appeal on the approval of the penalty order by the third respondent:

The rejection of the appeal by the first respondent meant that the appellant was bound by the third respondent's order levying the penalty. This outcome was due to the appellant's failure to comply with the deposit requirement. The court concluded that the rejection of the appeal was legal, and the High Court's dismissal of the writ petition was valid.

Conclusion:

The court dismissed the appeal, upholding the first respondent's rejection of the appeal for non-compliance with Section 129(1) of the Customs Act, 1962. The appellant's failure to deposit the penalty amount, even after the reduction, justified the rejection of the appeal. The court affirmed that the rejection was legal and the High Court's order was valid. The appeal was dismissed with costs.

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