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2004 DIGILAW 2072 (ALL)

Ashwani Kumar Jain v. CEGAT

2004-10-14

PRAKASH KRISHNA

body2004
PRAKASH KRISHNA, J. ( 1 ) THESE three writ petitions arise of a common order dated 25-6-2001 passed by Respondent No. 1 on three applications, each filed by each of the petitioners in respect of three appeals pending before Respondent No. 1. The facts are identical and the above petitions were heard together. Therefore it is convenient to dispose them of by a common judgment. ( 2 ) SHRI Ashwani Kumar Jain claims himself the Managing Director of M/s. Agemo Leather components (P) Ltd. and Director of M/s. Sukumar Chemicals (P) Ltd. According to the petitioners they are engaged in export of ready-made garments and electronic wrist watches etc. The export worth Rs. 13 crores was made by M/s. Agemo Leather Component (P) Ltd. during the period 27-6-1998 to 29-8-1998. Similarly, M/s. Sukumar Chemicals (P) Ltd. made export from 1-12-1997 to 31-8-1998 of around Rs. 27 crores. The further allegation is that these amounts were received through Banker. ( 3 ) ON getting information, the Central Excise Preventive Officer of the Central Excise and customs, Meerut-II made investigation on 14-9-1998 at the business premises of the petitioner. During investigation the department opened three containers which were duly sealed with customs one time lock seal and shipping line seal was found outside the Customs bonded area ready for dispatch. The investigating/search party of the department brought these containers to the Customs bonded area and were opened on 15-9-1998 in the presence of Shri Ashwani Kumar jain, the petitioner in Writ Petition No. 979 of 2001. After opening the containers it was found that the containers were filled with old, used, soiled and torned clothes. Some of the clothes in container No. II contained labels like made in U. S. A. , Taiwan and Hong Kong etc. Whereas in the shipping bill goods were shown as shirts etc. During search operation of the premises of the petitioner cartons containing similar kind of clothes were found. The department seized the goods found during search operation in the premises of the petitioner as well as contents of the containers. Thereafter proceedings were initiated against the petitioners. The respondent No. 2 after issuing show cause notice and hearing the petitioners by the common order in respect of three petitioners levied penalty of Rs. 5 crores on Ashwani Kumar Jain. Penalty to the tune of rs. 1. 75 crore plus Rs. Thereafter proceedings were initiated against the petitioners. The respondent No. 2 after issuing show cause notice and hearing the petitioners by the common order in respect of three petitioners levied penalty of Rs. 5 crores on Ashwani Kumar Jain. Penalty to the tune of rs. 1. 75 crore plus Rs. 75 lacs were levied on M/s. Agemo Leather Components (P) Ltd. and a sum of Rs. 1. 25 crore as penalty was levied against M/s. Sukumar Chemicals (P) Ltd. Aggrieved against the aforesaid common order dated 5-10-2000 passed by the Commissioner, Customs, three separate appeals bearing No. E/17/19/2001-NB were preferred by the petitioners before respondent No. 1. The applications on identical ground were filed in those appeals for waiver of pre-deposit of penalty levied by the Commissioner of Customs. The respondent No. 1 by the impugned order has granted partial waiver. It directed Shri Ashwani Kumar Jain to make pre-deposit of rupee one crore towards penalty levied on him, to make deposit of Rs. 75 lacs and rs. 20 lacs out of the penalties levied on M/s. Agemo Leather Component (P) Ltd. and Rs. 50 lacs by M/s. Sukumar Chemicals (P) Ltd. ( 4 ) AGGRIEVED by grant of partial waiver the petitioners have preferred the above writ petitions. ( 5 ) HEARD Shri Pramod Kumar Jain, learned Counsel for the appellant and S/shri S. P. Kesharwani, subodh Kumar and Prakash Mehrotra for the department. ( 6 ) AT the outset learned Standing Counsel appearing on behalf of the department submitted that the present writ petitions have become infructuous. It was submitted that the petitioners have failed to make necessary deposits as directed by the impugned order. The respondent No. 1 by subsequent order dated 3-9-2001 dismissed the appeals for want of compliance with the stay order under Section 129e of the Customs Act. Now appeals are no longer pending, therefore, the question of grant of waiver has become academic. ( 7 ) IN reply learned Counsel for the petitioner submitted that the amendment application being no. 97776 of 2001 has already been filed for amending the writ petition. By way of amendment it has been prayed for that a writ, order or direction in the nature of certiorari be issued quashing the consequential order dated 3-9-2001. Faced with the situation learned Standing Counsel for the department did not press this point any further. 97776 of 2001 has already been filed for amending the writ petition. By way of amendment it has been prayed for that a writ, order or direction in the nature of certiorari be issued quashing the consequential order dated 3-9-2001. Faced with the situation learned Standing Counsel for the department did not press this point any further. He could not raise any serious objection for incorporating the aforesaid relief in the writ petition. Consequently, the petitioners are permitted to amend the writ petition by incorporating the relief sought by them to be incorporated in the writ petition and the amendment application stands allowed. ( 8 ) LEARNED Counsel for the petitioner submitted that the respondent No. 1 has committed an illegality in not granting full waiver. Elaborating the argument it was submitted that grant of partial waiver is arbitrary and illegal, inasmuch as it has not taken into consideration "undue hardship" to be caused to the petitioners by refusing to grant waiver. In contra, learned Counsel for the department submitted that the impugned orders are perfectly justified, in the facts and circumstances of the case and, it is not open to this Court to issue a writ, order or direction by substituting its own finding. The Court is not exercising appellate jurisdiction and in exercise of the power under Article 226 of the Constitution of India, the Court is required to see as to whether there is any manifest error of law or not. ( 9 ) SECTION 129a of the Customs Act provides right of appeal. Section 129e of the Customs Act reads as follows : "where in any appeal under this Chapter, decision or Order appealed against relates to any duty demanded in respect of the goods which are not in the control of Customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order, shall pending appeal, deposit with proper officer, duty demanded or penalty levied : provided that where in any particular case, the Collector (Appeals) or the Appellate Tribunal is of the opinion that deposit of duty demanded or penalty levied would cause "undue hardship" to such person, the Collector (Appeals) or as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he may or it may deem fit to impose so as to safe-guard the interest of revenue. " The aforesaid proviso as pointed out by Shri Subodh Kumar, learned Standing Counsel has been interpreted by the Apex Court in the case of Vijay Prakash D. Mehta and Jwahar D. Mehta v. Collector of Customs (Preventive), Bombay, 1989 (39) E. L. T. 178 (S. C.) = AIR 1988 SC 2010 . It has been held that the aforesaid Section provides a conditional, right of appeal in respect of an appeal against the duty demanded or penalty levied. It has been further held that although section does not specifically provides for rejection of appeal for non-deposit of duty or penalty, yet it has made it is obligatory on the appellant to deposit duty or penalty, pending appeal, failing which the Appellate Tribunal is fully competent to reject the appeal. In that case, the Apex Court has placed reliance upon its earlier judgment given in the case of Navin Chandra Chhotey Lal v. Central Board of Excise and Customs, 1981 (8) E. L. T. 679 (S. C.) = AIR 1971 SC 2280 . The proviso gives power to the appellate authority to dispense with such deposit unconditionally or subject to such condition in cases of undue hardship. It is a matter of judicial discretion of the appellate authority. As it has been held in the above case the discretion must be exercised on relevant material, honestly, bona fide and objectively. Once it is held that the discretion was exercised by the authority concerned, or relevant material, honestly, bona fide and objectively, it is not open to contend the improper exercise of jurisdiction by the authority concerned. The petitioner strenuously contended that the respondent No. 1 improperly exercised the jurisdiction and relied upon judgment of this Court in the case of Ashish Kumar Chaurasiya v. CEGATE, new Delhi, 2003 (158) E. L. T. 151 (All ). It has been held in the above case that the authority should keep in mind as to whether appellant is in a position to pay or deposit the duty and interest demanded on the penalty levied. Non-grant of waiver will make the appeal ineffective, therefore the Tribunal should be careful in rejecting the waiver application. Considering the totality and circumstances of that case, the Court directed the petitioner to deposit Rs. 50,000/only and stayed balance amount during the pendency of appeal. Non-grant of waiver will make the appeal ineffective, therefore the Tribunal should be careful in rejecting the waiver application. Considering the totality and circumstances of that case, the Court directed the petitioner to deposit Rs. 50,000/only and stayed balance amount during the pendency of appeal. The aforesaid judgment has no application to the facts of the present case and is clearly distinguishable. In that case the petitioner was not maintaining any Bank account and had no immovable property except a share in the ancestral property. Silver bars were recovered from possession of the third person, who happened to be tenant of the petitioner and was indulged in illegal activities from the premises in question. There the petitioner claimed himself as milkman and in view of these facts this Court made aforesaid observation. The factual position in the present case is otherwise. The petitioner of the first writ petition claims himself to be the Director of the petitioner-Company in the second and third writ petition. It is not the case of the petitioner that they are not carrying on the business of export of ready-made garments and watches. Since the facts are diametrically opposite the observation made in the case of Ashwani Kumar Chaurasia have no application to the facts of the present case. ( 10 ) IT was then submitted that the petitioners are not in a financial position to deposit the amount as directed by the impugned orders as a condition precedent for hearing of the appeals filed by them before the respondent No. 1. It was contended that the respondent No. 1 has not taken into account the hardship placed before it. This argument at the first instance appears to be attractive but on deeper probing it does not hold water. In Paragraph 4 of the writ petition No. 979 of 2001 the petitioners have given magnitude of their export business. On their own showing in a period of about two months M/s. Agemo Leathers (P) Limited, had affected export sale worth Rs. 13 crores and in a period of about nine months M/s. Sukumar Chemicals (P) Limited has made export sale worth Rs. 27 crores. Thus the petitioner according to their own showing made export sale worth approximately Rs. 40 crores up to 31-8-1998. These are admitted figures of the petitioners. It has been further admitted that the petitioners have received the aforesaid amount through their bankers. 27 crores. Thus the petitioner according to their own showing made export sale worth approximately Rs. 40 crores up to 31-8-1998. These are admitted figures of the petitioners. It has been further admitted that the petitioners have received the aforesaid amount through their bankers. Meaning thereby that the petitioners were possessed of about Rs. 40 crores. Search operation is dated 14th/15th September, 1998. These undisputed facts have to be kept in mind to decide the question of grant of partial waiver by the respondent No. 1 in appeals. The petitioner have not given details and particulars where Rs. 40 crores have gone. The tribunal in Para 10 of its order has observed that plea of appellants regarding financial hardship also cannot be on the face of it taken to be true so as to allow them total waiver of pre-deposit of the penalty amount. This observation of the Tribunal clearly shows that even though the Tribunal was not satisfied with the plea of financial hardship raised by the petitioner, yet as a matter of grace granted partial relief. The Tribunal in the appeal of Ashwani Kumar allowed the waiver to the extent of 80% and directed him to deposit only 20% of the disputed amount. On the facts of the case it cannot be held that the Tribunal mis-directed itself and committed illegality in not granting full waiver or there is no application of mind by the Tribunal. Similarly in the appeal filed by M/s. Agemo Leather Components (P) Limited and M/s. Sukumar Chemicals (P) Limited the Tribunal has waived more than 50% of the disputed amount of penalty by the impugned order. ( 11 ) DURING the pendency of the writ petition the petitioners filed certain documents by way of supplementary affidavit disclosing the assets and property held by Ashwani Kumar Jain, wife and the only son. Details of the properties have been filed as Annexure-1 to the supplementary affidavit sworn on 21-3-2004. Much reliance could not be placed upon the said annexure in absence of any supporting material. Learned Standing Counsel has rightly pointed out that said disclosure by the petitioners were not made before respondent No. 1. Details of the properties have been filed as Annexure-1 to the supplementary affidavit sworn on 21-3-2004. Much reliance could not be placed upon the said annexure in absence of any supporting material. Learned Standing Counsel has rightly pointed out that said disclosure by the petitioners were not made before respondent No. 1. Even otherwise from the details of the properties contained in Annexure-1 it is clear that Ashwani Kumar Jain besides house at 79-Railway Road Meerut, claims to be the HUF property, has a house at Dehradun, land, factory land, shed, Farm house and a Qualis Car. Similarly his wife Smt. Rani Jain has another house at 80/1 Railway Road Meerut, one Car "santro", Farm land approximately eight bigha claimed to be banjar and another Farm land approximately three bigha. The correctness or otherwise cannot possibly be judged by this Court in the present proceeding. ( 12 ) A feeble attempt was made by the petitioner to urge that Section 129e of the Customs Act is not valid in view of judgment of Apex Court in the case of Madia Chemicals Limited v. Union of india, 2004 V. A. D. (SC) 249, The said argument has no force inasmuch as there is no challenge in the writ petition about the validity of the provision of Section 129e of the Customs Act. The apex Court has already considered Section 129e of the Customs Act in the case of Vijay prakash D, Mehta (supra ). Moreover the case of Madia Chemicals Limited was on different footing. In that case the condition of pre-deposit was imposed while approaching to the adjudicating authority at the first instance, not in appeal. This distinguishes the law laid down by supreme Court in the case of Madia Chemicals Limited (supra ). The statute involved therein was not pari materia with the Customs Act, 1962. ( 13 ) A Division Bench of this Court in the case of M/s. L. Kant Paper Mills (P) Ltd. v. CEGAT, 1994 UPTC 816, has repelled the argument of the learned Counsel for the petitioner that the tribunal while disposing of the interim application filed by the petitioner for dispensing with pre-deposit of duty acted arbitrarily on the ground that the Tribunal after taking financial hardship that might cause to the petitioner in reducing the amount. Moreover as observed by the above Division Bench the order passed by the Tribunal is interlocutory order and no final order has been passed as the appeal is pending, it is not proper to interfere under Article 226 of the constitution against the interim order which is purely interlocutory in nature, particularly when there is no apparent error on the face of the order passed by the authorities. ( 14 ) IT was also submitted that the petitioners are entitled for the duty drawback and the department is illegally withholding the same, on the earlier exports. An opportunity was given to the department to file a reply. The department has come out with the case that entitlement of the petitioner to receive the duty drawback is very much in dispute. The department is disputing this claim of the petitioner. A writ petition for direction for payment of duty drawback was also filed. The said writ petition was dismissed by the Division Bench of this Court and the Supreme Court has also rejected Special Leave Petition. Therefore the said argument that the petitioner should not be asked to deposit any amount in view of pending claim with regard to duty drawback, lacks merit. ( 15 ) AFTER the close of hearing of argument an affidavit dated 23-9-2004 was filed on behalf of the petitioner. Paragraph 4 of the said affidavit reads as under: "4. That the petitioners are facing financial crises but however, looking to the facts and circumstances and in order to purchase peace, deponent submits that the direction may be issued for hearing of the appeals by the Tribunal and so far as pre-deposit is concerned the petitioners of each petition will deposit Rs. 15 lacs, Rs. 15 lacs and Rs. 20 lacs each respectively totalling to rs. 50 lacs or a consolidated amount of Rs. 50 lacs may be directed to be deposited in respect of all three writ petitions bearing Nos. 980/2001, 981 /2001 and 979/2001, which were consolidated and connected together and three months time may be granted for depositing the amount. Till that time the recovery proceedings may be stayed and Tribunal may be directed to decide the appeal within reasonable time. " ( 16 ) IN view of the above averments it is desirable that the matter may be restored back to the file of respondent No. 1 to reconsider the matter. Till that time the recovery proceedings may be stayed and Tribunal may be directed to decide the appeal within reasonable time. " ( 16 ) IN view of the above averments it is desirable that the matter may be restored back to the file of respondent No. 1 to reconsider the matter. It is for the Tribunal to accept the offer made by the petitioner. Liberty is granted to the petitioner to file fresh applications containing aforesaid offer before the Tribunal and the Tribunal shall reconsider the matter and pass appropriate orders in accordance with law uninfluenced by the observations made in this judgment. ( 17 ) THE writ petitions are disposed of in the light of the observations made in the preceding paragraph. However there shall be no order as to costs. . .