2022 (10) TMI 893 - HC - Customs

Maintainability of petition - waiver of mandatory condition of pre-deposit - Section 129E - HELD THAT - In HARESH NAGINDAS VORA, SACHIN LAXMICHAND SHAH VERSUS UNION OF INDIA, PRINCIPAL COMMISSIONER OF CUSTOMS (GENERAL) 2017 (6) TMI 964 - BOMBAY HIGH COURT this court held that Section 129E of the Act was amended on 1st October 2014 and the mandatory requirement of pre-deposit incorporated in the Section and powers and discretion conferred with appellate authority to waive / dispense with the pre-deposit was taken away. The amendment was to curtail substantial time expended on adjudication of waiver / dispensation applications. The court held that the Parliament had in its wisdom amended the provisions of Section 129E of providing deposit of 7.5% and 10%, respectively, as subclauses (i), (ii) and (iii), respectively, provide and it certainly cannot be held to be unreasonable, onerous, unfair or discriminatory. In fact, court upheld the constitutional validity of the amended Section 129E. The petitioner should approach the CESTAT by filing an Appeal under Section 129 E of the Act since there are various disputed questions of facts involved that requires to be considered. Further, as pointed out by Mr. Jetly, petitioner s statements have been recorded under Section 108 of the Act, where petitioner has admitted his role and none of those statements are retracted. The petition requires to be dismissed. Petition dismissed.

Issues Involved:
1. Legality of the impugned order dated 30th July 2019.
2. Mandatory pre-deposit requirement under Section 129E of the Customs Act.
3. Valuation and classification of the goods as prohibited.
4. Alleged breach of principles of natural justice due to denial of cross-examination.

Detailed Analysis:

1. Legality of the Impugned Order:
The petitioner challenged the order dated 30th July 2019, which was based on intelligence inputs leading to the interception and confiscation of a container containing Electroshock batons, Knuckle dusters, and suspected counterfeit personal care products. The respondents found the petitioner involved in importing these goods using 16 Importer Exporter Codes (IECs), of which 12 were non-existent, and 4 IEC holders denied any involvement. The impugned order found no outward remittances for the goods imported using these IECs.

2. Mandatory Pre-deposit Requirement under Section 129E:
The petitioner initially sought a waiver of the mandatory pre-deposit of 7.5% of the penalty under Section 129E of the Customs Act. The court referenced the case of Haresh Nagindas Vora Vs. Union of India, which upheld the constitutional validity of the amended Section 129E, mandating pre-deposits to expedite the disposal of appeals and reduce litigation. The court cited similar judgments, including Nimbus Communications Ltd. Vs. Commissioner of S.T. Mumbai-IV, affirming that the pre-deposit requirement is not unreasonable or discriminatory and serves the interest of revenue.

3. Valuation and Classification of Goods as Prohibited:
The petitioner contested the valuation of the goods and the classification as prohibited. The respondents argued that the adjudicating authority had detailed the facts, the role of the petitioner, and the basis for classifying the goods as prohibited under Section 2(33) of the Customs Act, read with Section 11 of the Foreign Trade (Development & Regulation) Act 1992 (FTDR Act) and the Foreign Trade (Regulation) Rules 1993 (FTDR Rules). The court referenced the Supreme Court's judgment in Om Prakash Bhatia Vs. Commissioner of Customs, Delhi, which clarified that goods not complying with import conditions are considered prohibited. The Delhi High Court's judgment in Commissioner of Customs & Central Excise, Delhi Vs. Achiever International further supported the classification of goods imported using dummy entities as prohibited.

4. Alleged Breach of Principles of Natural Justice:
The petitioner claimed a breach of natural justice due to the denial of cross-examination of certain persons whose statements were relied upon by the respondents. The court found this contention meritless, noting that the petitioner did not file a reply to the show cause notice despite multiple opportunities. The court held that the petitioner's conduct did not warrant invoking the jurisdiction under Article 226 of the Constitution of India and emphasized the availability of an effective alternative remedy of appeal under Section 129E of the Act.

Conclusion:
The court dismissed the petition, directing the petitioner to approach the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) for an appeal under Section 129E of the Act. The petitioner's statements recorded under Section 108 of the Act, admitting their role, were not retracted, reinforcing the court's decision. All rights and contentions were kept open for the appeal in CESTAT.

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