2013 (10) TMI 1260 - HC - Customs

Waiver of pre deposit - Evasion of payment of custom duty - Undervaluation of imported electronic goods - Penalty u/s 112 - Held that - prima facie view of CESTAT that show cause notice issued by the Adjudicating Authority and the order-in-original indicate that the appellant was the mastermind behind the import of various goods and that the entire , activity of M/s. Parth Marketing and M/s. Chinmay Corporation were controlled and managed by the appellant through his staff and that the proprietor of M/s. Parth Marketing and M/s. Chinmay Corporation were receiving only monthly compensation for renting/lending their names and the transactions were undertaken by the appellant cannot be faulted - proprietor of M/s. Parth Marketing and M/s. Chinmay Corporation were receiving only compensation for renting/lending their names and the transactions were undertaken by the appellant. It is observed by the Tribunal prima facie that the intention to evade duty by misdeclaration of goods is clearly discernible when one goes through the evidence on reord against the appellant - Prima facie case not in favour of assessee - Stay denied.

Summary

Issues:
Whether CESTAT was justified in directing the appellant to make a pre-deposit of Rs. 1 crore for entertaining the appeal filed by the assessee.

Analysis:
The appellant started a unit in 1984-1985, importing components for assembly and sale of electronics. In 1999, a new company was created for trading electronic goods due to financial constraints. Subsequently, the appellant ceased partnership with another entity in 2005. In 2007, DRI conducted searches on M/s. Chinmay Corporation for alleged customs duty evasion. The DRI seized the appellant's computers for evidence. A show cause notice was issued in 2008, alleging undervaluation and duty evasion, leading to a significant duty, fine, and penalty levied in 2010.

Analysis (contd.):
The appellant appealed to CESTAT against the order. CESTAT directed a pre-deposit of Rs. 1 crore, which the appellant contested, arguing against being an importer, challenging DRI's jurisdiction, and disputing the validity of the show cause notice pre-2011. The appellant sought a waiver of the pre-deposit condition to hear the appeal on merits. The respondent contended that the appellant was the mastermind behind the imports, justifying the pre-deposit condition imposed by CESTAT.

Analysis (contd.):
The Adjudicating Authority found the appellant involved in gross undervaluation, misdeclaration of goods, and fraudulent practices. The appellant's control over import transactions was highlighted, supported by seized evidence. CESTAT's prima facie view upheld the pre-deposit requirement, emphasizing the appellant's central role in the import scheme. The Court agreed with CESTAT's decision, dismissing the appeal and upholding the pre-deposit condition for further proceedings on merit.

Analysis (contd.):
The Court supported CESTAT's findings regarding the appellant's active involvement in import operations, dismissing challenges against the show cause notice and the retrospective amendment validation. The Court affirmed CESTAT's authority to direct the pre-deposit, extending the time for compliance. The Tribunal was instructed to proceed with the appeal on merit post the pre-deposit, emphasizing independence in its decision-making process.