1998 (8) TMI 211 - AT - Customs

Summary

Issues:
1. Modification of Stay Order
2. Interpretation of Section 129E of the Customs Act
3. Pre-deposit of duty and penalty
4. Confiscation of goods and control by Customs authorities
5. Application for Rectification of Mistake

Analysis:

1. Modification of Stay Order:
The applicant company filed a Misc. Application seeking modification of Stay Order No. S/262-63/98-NB, dated 23-4-1998, citing deteriorating financial conditions. The company was declared a sick unit by BIFR, and their Bank refused to grant any advance. The consultant referred to a Delhi High Court decision emphasizing that duty need not be deposited if goods are under Customs control. The Tribunal considered the arguments and modified the stay order, dispensing with the pre-deposit of duty but granting a four-week extension for penalty payment.

2. Interpretation of Section 129E of the Customs Act:
The interpretation of the word 'control' in Section 129E was a point of contention. The Revenue argued that control referred to Customs control before goods' clearance, while the applicant contended that control included the vesting of property rights upon confiscation. The Tribunal analyzed the situation of a 100% Export Oriented Unit (EOU) under Customs control, where confiscated goods were under Government control. Considering these factors, the Tribunal agreed with the applicant's interpretation, waiving the pre-deposit of duty under Section 129E.

3. Pre-deposit of Duty and Penalty:
The Tribunal acknowledged the specific provision under Section 125 of the Customs Act for duty payment upon redeeming confiscated goods. It was decided that duty pre-deposit would be waived due to the nature of the case and the control of goods by the Government post-confiscation. However, the penalty pre-deposit was maintained at 10% of the total amount imposed, with a deadline for payment set by the Tribunal.

4. Confiscation of Goods and Control by Customs Authorities:
The Tribunal highlighted that in cases of confiscation, the property vests in the Government, and duty payment is only required if the Government decides to release the goods. The control over goods by Customs authorities post-confiscation was a crucial factor in the decision to waive the pre-deposit of duty, emphasizing the unique circumstances of the case.

5. Application for Rectification of Mistake:
The Respondent argued that the application was for Rectification of Mistake, not modification. However, the Tribunal considered the arguments presented by both sides and concluded that the issue primarily revolved around the interpretation of 'control' in Section 129E, leading to the decision to modify the stay order and waive the pre-deposit of duty based on the specific circumstances of the case.