2020 (4) TMI 474 - AT - Customs

Release of imported goods - stay of implementation of impugned order - Commissioner of Customs dropped the proceedings - As per revenue, seizure and confiscation is also necessary for recovery of duty - HELD THAT - We fail to see the extent to which continued control of the imported goods could alleviate possible harm to the exchequer. The show cause notice proposes that the said goods be confiscated and such confiscation, not being deprived of the option of redemption, merely enables recovery of fine without recourse to the goods themselves. Sale of these goods, under section 142 of Customs Act, 1962, is, consequently, not an acceptable course of action. Moreover, the value of goods under control of customs authorities is but a fifth of the amount in dispute. The legal implication of stay of implementation of the impugned order remains unexplained. An order dropping proceedings, if held to be non-operable pending disposal of the appeal, merely restores the allegations in the show cause notice for fresh determination by the Tribunal save file file. The appeal of Revenue has the very same consequence - No case has been made out by Revenue that, sans our intervention, miscarriage of justice will ensue. The Tribunal is legally enjoined to determine a dispute arising from the relevant tax laws and not as an alternative for administration of the tax system. The effect of the present application for stay of operation appears to be the latter and which we decline to, tacitly or covertly, to be a participant in. Accordingly, the application for stay is rejected. As the issue involves substantial revenue, the application is allowed and Registry is directed to list the appeal for disposal on 30th March 2020.

Summary

Issues:
Stay of consequences of order-in-original, Validity of certificate of origin, Revenue implications, Justification for withholding imported goods, Legal implication of stay of implementation.

Stay of consequences of order-in-original:
The Revenue sought a stay of the consequences of an order-in-original that dropped proceedings initiated by a show cause notice. The Tribunal considered the urgency of the matter and the substantial revenue involved. The appeal was premised on the belief that withholding the imported goods was necessary to secure potential recovery in case of success before the appellate authority. The Tribunal noted that deciding on the withholding of goods would essentially be deciding the appeal itself. The Tribunal emphasized the need to establish irreparable harm to the exchequer or the perversity of the order to grant the stay.

Validity of certificate of origin:
The case involved 'areca nuts' imported under the claim of Sri Lankan origin for preferential duty rates, despite being shipped from Indonesia. The Tribunal analyzed various judgments related to the validity of certificates of origin. It was argued that the certificates issued by the designated authority should not be questioned unless canceled by the same authority. The Tribunal noted that the evidence challenging the origin of the goods pertained to past consignments, not the current ones under customs control.

Revenue implications:
The Tribunal assessed the revenue implications of withholding the imported goods. It was argued that continued control over the goods could prevent harm to the exchequer. However, the Tribunal found that confiscation of the goods, with the option of redemption, could enable fine recovery without selling the goods. The value of the goods under customs control was significantly less than the disputed amount, and controlling the goods did not guarantee securing the revenue.

Justification for withholding imported goods:
The Tribunal considered the arguments presented by the Revenue for withholding the imported goods. It was highlighted that the impugned order dropping the proceedings would merely restore the allegations in the show cause notice for fresh determination by the Tribunal. The Tribunal emphasized that the stay of the order would essentially be deciding on the appeal, which was not listed before them.

Legal implication of stay of implementation:
The Tribunal deliberated on the legal implications of staying the implementation of the impugned order. It was noted that the order dropping proceedings would be non-operable pending the appeal, leading to fresh determination by the Tribunal. The Tribunal declined the application for stay, emphasizing that its role was to determine disputes arising from tax laws, not to administer the tax system as an alternative.

In conclusion, the Tribunal rejected the application for stay of the order's operation, emphasizing the need for substantial evidence of irreparable harm or perversity in the order. The Tribunal also directed the appeal to be listed for disposal on a specified date due to the substantial revenue involved.