APPEAL BEFORE HIGH COURT AGAINST PRE-DEPOSIT ORDER OF TRIBUNAL IS MAINTAINABLE

[Mr. M. GOVINDARAJAN]

Sec.129E of Customs Act, 1962 ('Act' for short) deals with the deposit of duty and interest demanded and penalty levied pending appeal. It provides that where in any appeal, the decision or order appealed against relates to any duty and interest demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer duty and interest demanded or penalty levied.

Where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue. Where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty and interest demanded or penalty levied the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its hearing.

The issue taken for this article is whether appeal can be filed against the order of pre-deposit of the Appellate Tribunal before the High Court.  For this purpose we may refer the case law 'Auram Jewellery Export (P) Ltd., V. Union of India' - 2010 (251) ELT 365 (All). In this case the appellant is manufacturing and exporting gold jewellery. It received 15 kgs. Of imported gold from M/s Metal and Mineral Trading Corporation Limited. They were required to manufacture gold jewellery and export the same directly in respect of gold purchased by them and through Metal and Mineral Trading Corporation Ltd., in respect of gold taken on loan. The strong room of the appellant was sealed by the customs authorities on account of alleged malpractice and series of summons were issued. The strong room was broken in presence of panch witnesses and no gold was found. The appellant made allegation that the gold has been taken away by the customs officers/MMTC officials by breaking open the strong room when the responsible persons of the appellant company were not present in the unit. A criminal complaint was failed against the appellant by MMTC. The appellant was discharged by the Magistrate.

However a show cause notice was issued upon the appellant on the ground that the export obligations have not been fulfilled and gold procured duty free has not been accounted for and accordingly duty was sought to be demanded from MMTC/the importer and penalties were sought to be imposed on MMTC and the appellant. The Commissioner of Customs confirmed the demand of duty and imposed penalty upon them. In addition he imposed penalty on the appellant company and upon its Director.

The appellant filed appeal before the Appellate Tribunal against the order of Commissioner of Customs. Before the Tribunal the appellant contended that the appellant company has been taken over by UP State Financial Corporation as they were not able to repay the loan taken from them. The Company is not functioning and factual actual financial hardships. The director of the company has not misappropriated the gold and he was also facing acute financial hardship and an affidavit to that effect has also been filed.

The Tribunal held that passing of the order by the concerned Magistrate discharging the appellant from the charge of misappropriation of gold does not absolve them of the obligation to account for duty free gold acquired by them for the purpose of making ornaments and exports. In view of the fraudulent nature of the case, the Custom department contended therein that there should be pre deposit of the entire amount of penalties imposed up on the appellant. The Tribunal prima face held that appellant company is directly responsible for accounting in respect of gold on both the counts. On their own actions and omissions, they rendered the gold liable for confiscation and therefore, made themselves liable for penalty. The plea of financial hardships has to be considered with a lot of reservations. Prima facie, they are involved in fraudulent activities. No prima facie case of waiver of entire amounts of penalties has been made out by the appellant. The Tribunal directed to deposit of sum of Rs.5 lakhs by the appellant and Rs.1 lakh by the director. 

The appellant company deposited Rs. 1 lakh as pre deposit for the Director but did not deposit Rs.5 lakhs for the company due to financial hardships and preferred the appeal before High Court.  

The Department contended that the appeal is not maintainable from the order of pre deposit. The orders which are required to be passed by the appellate tribunal under section 129B of the Customs Act, 1962 are appealable orders. The order of pre deposit is to e governed by Sec.129E of the Act.

The High Court held that the submission of the Department cannot be held to be justifiable when an appeal shall lie to the High Court from every order passed in Appeal by the Appellate Tribunal on or after the 1st day of July, 2003, if the High Court is satisfied that the case involves a substantial question of law as per Section130 of the Act. The Court further held that the words 'every order in passed in appeal' do not apparently exclude the jurisdiction of the High Court in determining the question of pre deposit as under Section 129E of the Act. Thus, in totality, the court was unable to persuade to agree with the contention of the Department and accordingly held that the appeal against pre deposit order is maintainable.