2015 (11) TMI 1230 - HC - Customs

Waiver of pre deposit - Denial of duty drawback claim - Imposition of penalty - Held that - Though substantially the Tribunal has directed only 1/3rd or 1/4th of the penalty amount to be deposited as a pre-condition for entertaining the appeals and though in normal circumstances, we would not interfere with such an order, the cases on hand falls under a different category. The appeals filed by the appellants are pending from 2007 before the Tribunal. A period of eight years have gone. Therefore, there is no point in the fight over the pre-deposit condition, prolonging the appeals. Admittedly, the department has recovered the entire duty drawback amount of ₹ 12,22,953/-. Even if the appeals are eventually dismissed by CESTAT, the only amounts to be recovered from the appellants would be the penalty amounts. - we allow the appeals and set aside the pre-deposit condition imposed by the CESTAT. - Decided in favour of assessee.

Summary

Issues:
Appeal against pre-deposit of penalty by Customs Excise and Service Tax Appellate Tribunal.

Analysis:
The judgment by the High Court of Madras involved three different assessees challenging a common order by the Customs Excise and Service Tax Appellate Tribunal, which directed them to make a pre-deposit of a portion of the penalty levied on them. The case originated from the detention of export consignments due to suspicions of inferior quality and excess duty drawback claims. The appellants were M/s.Sindhu Textiles, M/s.Sri Sairam Exports, and M/s.J.M.Fashions. The Commissioner of Customs issued an Order in Original fixing the value of goods, ordering confiscation, and imposing penalties on the companies and individual partners. The Tribunal later directed the appellants to make specific deposits out of the penalty amounts, leading to the filing of writ petitions against this pre-deposit condition.

The High Court noted that the appellants' main grievance was the pre-deposit requirement despite the recovery of the entire unlawfully claimed duty drawback amount. While acknowledging that the Tribunal usually required only a fraction of the penalty amount as a pre-condition for appeals, the Court found these cases to be exceptional due to their prolonged pendency since 2007. Given the significant delay and the fact that the duty drawback amount had been fully recovered, the Court deemed the pre-deposit condition unnecessary and potentially causing undue hardship to the appellants. Therefore, the High Court allowed the appeals, setting aside the pre-deposit condition imposed by the Tribunal and instructed the Tribunal to expedite the final hearing of the appeals due to their long-standing nature.

In conclusion, the High Court's judgment in this case addressed the issue of pre-deposit of penalties by the Customs Excise and Service Tax Appellate Tribunal. The Court considered the unique circumstances of prolonged pendency and full recovery of unlawfully claimed duty drawback amounts, leading to the decision to remove the pre-deposit condition to prevent further hardship to the appellants. The judgment emphasized the need for a priority hearing of the appeals due to their extended duration, ultimately providing relief to the appellants by allowing their appeals and closing the connected miscellaneous petitions without costs.