2021 (10) TMI 200 - HC - Customs

Forbearance on respondent from auctioning the 178 watches seized from the respondent till the disposal of the appeal - foreign made watches of various brands - revaluation of confiscated watches - confiscation - redemption fine - penalty - in an appeal filed by the respondent, can an order adverse to the interest of the respondent be passed, when admittedly, such portion of the order was not questioned before the First Appellate Authority? - HELD THAT - In the case on hand, the Original Authority directed redemption of the seized goods on payment of redemption fine and appropriate Customs Duty. The respondent was on appeal before the First Appellate Authority, questioning the correctness of the entire order, that is, on the revaluation of the goods, on imposition of redemption fine and payment of Customs Duty and penalty. The First Appellate Authority, therefore, would be required to test the correctness of the order passed by the Original Authority and if he does not agree with the order, he made set aside the order, but the respondent cannot be worse off in his own appeal filed before the First Appellate Authority - this question is required to be agitated before the Tribunal in the appeal which has been filed by the respondent. During the pendency of the appeal, it appears that the Department took steps to dispose of the seized watches, which permitted the petitioner to file the Writ Petition. During the pendency of the appeal before the CESTAT, it would not be appropriate for the Department to dispose the seized goods, especially when the Tribunal has directed the appeal to be heard during November, 2021, and furthermore, the Original Authority has directed redemption of the seized watches on payment of redemption fine and appropriate Customs Duty. Therefore, the appellant/Department has to necessarily await the decision of the Tribunal and abide by the direction that has been issued by the Tribunal. The effect of the Circular dated 10.03.2017 need not be gone into in the instant case, as the respondent has complied with the Pre-Deposit condition for preferring the appeal before the CESTAT and the appeal has been directed to be listed for final hearing before the Division Bench during November, 2021. Therefore, the steps taken by the appellant/Department for auctioning the goods have to necessarily be deferred and await the decision of the Tribunal in the appeal filed by the respondent. Appeal is dismissed with a direction to the appellant/Department not to initiate any coercive action against the respondent, as the respondent has complied with the Pre- Deposit condition in terms of 129(E) of the Act and the watches which have been seized shall continue to be retained as such and not put up for auction and the appellant/Department shall await the decision of the Tribunal and abide by the same.

Summary

Issues:
1. Appeal against order for auctioning seized watches.
2. Confiscation of foreign-made watches under Customs Act.
3. Appeal process before First Appellate Authority and Tribunal.
4. Legal question of adverse order in appeal.
5. Department's steps to dispose of seized goods during appeal.
6. Compliance with Circular on recovery proceedings during litigation.

Issue 1: Appeal against order for auctioning seized watches
The Writ Appeal was filed by the Commissioner of Customs against the order to forbear auctioning 178 watches seized from the respondent until the appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against the Order-in-Appeal, dated 05.12.2019.

Issue 2: Confiscation of foreign-made watches under Customs Act
The Original Authority directed the confiscation of 178 foreign-made watches under Sections 111(d) and 111(m) of the Customs Act, 1962, revalued at ?79,03,440 with an option for redemption on payment of a fine and Customs Duty. The respondent appealed, leading to differing decisions by the First Appellate Authority and Commissioner of Customs, resulting in the matter being taken to the Tribunal.

Issue 3: Appeal process before First Appellate Authority and Tribunal
The appeal process involved questioning the correctness of the order, including revaluation, redemption fine, Customs Duty, and penalty. The Tribunal directed the matter to be heard before a Division Bench in November 2021, raising the legal question of whether an adverse order can be passed against the respondent in the appeal.

Issue 4: Legal question of adverse order in appeal
The judgment highlighted the concern that the respondent should not be put in a disadvantageous position in their appeal, emphasizing that the respondent cannot be worse off in their own appeal before the First Appellate Authority. The Tribunal was identified as the appropriate forum to address this issue.

Issue 5: Department's steps to dispose of seized goods during appeal
The Department's attempt to dispose of the seized watches during the appeal process was deemed inappropriate, especially considering the pending Tribunal hearing. The Department was directed to await the Tribunal's decision and refrain from auctioning the seized goods.

Issue 6: Compliance with Circular on recovery proceedings during litigation
The judgment referenced Circular No.1053/2/2017-CX, which outlines guidelines for recovery proceedings during litigation. The respondent's compliance with pre-deposit conditions for the appeal before CESTAT prevented the Department from initiating recovery proceedings based on the Order-in-Appeal.

In conclusion, the Writ Appeal was dismissed, with directions for the Department not to take coercive action against the respondent, retain the seized watches, await the Tribunal's decision, and comply with the legal process.