2021 (9) TMI 722 - HC - Customs

Dismissal of stay application pending appeal - erroneous assumption that granting prayer in Miscellaneous Application pending Appeal, would amount to allowing the appeal itself - release of smuggled absolutely confiscated gold - error in not appreciating the difference between the appeal and miscellaneous application filed pending the appeal or not - HELD THAT - The Tribunal, while considering the prayer for interim stay, has to consider as to whether the balance of convenience is in favour of the Revenue, whether the Revenue has made out a prima faice case for grant of stay and whether irreparable hardship would be caused to the Revenue if the stay is not granted. To consider as to whether prima faice case has been made out by the Revenue, it may be necessary to have a consideration of the facts of the case and the merits of the appeal though not to the extent of deciding the appeal itself. With regard to the balance of convenience, the Tribunal has to examine the aspect that if stay is not granted what would be the consequence that will follow and with regard to hardship, that would be caused by the Revenue has also to be considered. If the stay is not granted, then, the respondent would seek return of the seized gold and that has to be ordered, then the appeal filed before the Tribunal itself would become infructuous - undue hardship would also be viewed from the point of view of the Revenue and to protect the interest of the Revenue - the order passed by the first Appellate Authority dated 14.11.2019 shall remain stayed till the disposal of the appeal filed by the Revenue before the Tribunal. There will be an order of stay of the order passed by the first Appellate Authority dated 14.11.2019 till the disposal of the appeal by the Tribunal - Appeal allowed.

Summary

Issues:
1. Appeal challenging order of Customs Tribunal
2. Stay application pending appeal
3. Consideration of twin test by Tribunal
4. Release of confiscated gold pending appeal
5. Duty of Tribunal to protect revenue interest
6. Appreciation of difference between appeal and miscellaneous application

Analysis:
1. The appeal was filed by the Revenue challenging the order passed by the Commissioner of Customs (Appeals-II) dated 14.11.2019. The respondent had filed an appeal against the Order-in-Original dated 10.09.2018, where confiscation of foreign origin gold bars was directed. The first Appellate Authority allowed the appeal, setting aside the confiscation and penalty. The Revenue, aggrieved by this decision, appealed to the Tribunal. The Revenue contended that the first Appellate Authority ignored evidence supporting confiscation and made errors in legal issues. The Tribunal dismissed the stay petition, stating that no prima facie case was made out by the Revenue.

2. The Division Bench granted an interim stay while considering the balance of convenience, prima facie case, and potential irreparable hardship to the Revenue. The Tribunal had to assess if the Revenue made out a prima facie case for stay and consider the balance of convenience and potential hardship. The Court noted that if the stay was not granted, the respondent would seek return of the gold, making the appeal infructuous. Therefore, to prevent undue hardship to the Revenue and protect its interest, the stay of the first Appellate Authority's order was deemed necessary until the appeal's disposal.

3. The Court allowed the appeal, setting aside the Tribunal's order and granting a stay of the first Appellate Authority's decision until the Tribunal's final decision. The Tribunal was urged to expedite the appeal's disposal. The observations in the Tribunal's order were also set aside, emphasizing that the main appeal should be decided on its merits and in accordance with the law. The judgment highlighted the importance of protecting the Revenue's interest and ensuring a fair consideration of the appeal before the Tribunal.