Research › Search › Judgment

Gujarat High Court · body

2024 DIGILAW 47 (GUJ)

Universal Gems v. Union Of India

2024-01-05

BHARGAV D.KARIA, NIRAL R.MEHTA

body2024
ORDER : (Bhargav D. Karia, J.) 1. Heard learned Senior Advocate Mr. N.D.Navati with learned advocate Mr. Bomi Sethna for the petitioner. 2. By this petition under Article 226 of the Constitution of India the petitioner has prayed for the following reliefs : “(a) That this Hon’ble Court be pleased to issue a writ in the nature of Declaration or an appropriate writ, order or direction holding and declaring that the requirement of mandatory pre-deposit under Section 129-E of the Act is not applicable in the facts and circumstances of the present case and in respect of Appeal bearing No. 1669 of 2023 pending before the Respondent No.2; (b) That this Hon’ble Court be pleased to issue a Writ of Mandamus or a Writ in the nature of mandamus, or any other appropriate Writ, Order or directions directing the Respondent No.2 its officers, servants, agents etc to admit and dispose of the pending Appeal bearing No. 1669 of 2023 without insisting for payment of the mandatory pre-deposit under section 129-E of the Act; (c) In the alternate to the prayer clause (a) and (b) above, that this Hon’ble Court be pleased to issue a Writ of Mandamus, or a Writ in the nature of mandamus, or any other appropriate Writ, Order of directions, directing the Respondents its officers, servants, agents etc to release the confiscated goods pertaining to shipping bills no. 4004674 dated 21.05.2021 and 4004784 dated 25.05.2021 without insisting for redemption fine to enable the petitioner to make the payment of mandatory pre-deposit under section 129-E of the Act; (d) That pending the hearing and final disposal of the present Writ Petition, this Hon’ble Court be pleased to issue writ of Mandamus, or a writ in the nature of mandamus, or any other appropriate Writ, Order or directions, directing the Respondents, its officers, servants, agents etc. to keep operation of the Impugned order being Order-in-original bearing No. 32/AKS/ADC/SRT/2022-23 dated 15.12.2022 (Annexure A) in abeyance and not to act or adopt any action against the Petitioner in the course of furtherance of the impugned order. to keep operation of the Impugned order being Order-in-original bearing No. 32/AKS/ADC/SRT/2022-23 dated 15.12.2022 (Annexure A) in abeyance and not to act or adopt any action against the Petitioner in the course of furtherance of the impugned order. (e) for ad-interim reliefs in terms of the prayers above; (f) for dispensation with the service of the prior notice to the respondents; (g) costs of the petition and orders thereon; and (h) such further and other reliefs, as this Hon’ble Court may deem fit and proper in the nature and circumstances of the case, and in the interest of justice.” 3. The petitioner has challenged the Order-in-Original dated 15.12.2022 passed by the Additional Commissioner before the appellate authority. 4. The petitioner obtained an approval from the competent authority i.e. Development Commissioner, Surat SEZ, Sachin for manufacture and export of Cut and polished lab grown diamonds from rough lab grown diamonds as per letter of approval dated 15.02.2021. 5. The petitioner was also permitted to procure rough lab grown diamonds for manufacture of cut and polished lab grown diamonds. 6. The petitioner by letter dated 02.03.2021 intimated to the Development Commissioner, Surat SEZ, Sachin, that the petitioner has commenced business activities from their unit from 25.02.2021. The Customs Department withheld two consignments pertaining to Shipping Bills No. 4004674 dated 21.05.2021 and Shipping Bill No. 4004784 dated 25.02.2021 on 27.05.2021 on the basis of certain information. 7. Upon investigation it was concluded that the goods were attempted to be improperly exported by the petitioner are cut and polished natural diamonds and not cut and polished lab grown diamonds. Accordingly, the total quantity of 58089.13 carats recovered as against 23301.75 carats declared on the Shipping Bills having total value of Rs. 2,04,62,84,341/- as against value of Rs. 2,93,22,613/- declared on the shipping bills. 8. After issuing a show-cause notice and giving opportunity of hearing to the petitioner, the Order-in-Original was passed by the Additional Commissioner of Customs, Surat, dated 15.12.2022 as under: “order (i) I order confiscation of the seized Cut and Polished Natural diamonds weighing 57620.01 Carats and Cut and Polished Labgrown diamonds, weighing 469.12 Carats, totally weighing 58089.13 Carats and valued at Rs. 2,04,62,84,341/- (Rupees Two Hundred Four and Forty one only) attempted to be improperly exported by mis-declaring the quantity, description and value by M/s. Universal Gems, Surat SEZ, Sachin, Surat covered under Shipping Bill Nos. 2,04,62,84,341/- (Rupees Two Hundred Four and Forty one only) attempted to be improperly exported by mis-declaring the quantity, description and value by M/s. Universal Gems, Surat SEZ, Sachin, Surat covered under Shipping Bill Nos. 4004674 dated 21.05.2021 and 4004784 dated 25.05.2021 under section 113(h) & (I) of the Customs Act, 1962 read with Sections 21, 22 and 25 of the SEZ Act, 2005 and Rules 45(1) and 46 of SEZ Rules, 2006. However, I give an option to the Noticee, M/s. Universal Gems, Surat SEZ, Sachin, Surat to pay a redemption fine of Rs. 82,00,00,000/- (Rupees Eighty-Two Crores Only) in lieu of confiscation under Section 125 of the Customs Act, 1962. (ii) I order confiscation of the seized rough rejection (mix) of natural diamonds totally weighing 3676.15 carats valued at Rs. 74,823/- (Rupees Seventy Four Thousand Eight Hundred and Twenty Three only), unauthorisedly procured/stored in the factory premise, under section 111(d) and 111(o) of the Customs Act, 1962 read with Section 21, 22 and 25 of the SEZ Act,2005 and Rule 27 of SEZ Rules, 2006. However, I give an option to the Noticee, M/s. Universal Gems, Surat SEZ, Sachin, Surat to pay a redemption fine of Rs. 29000/- (Rupees Twenty-Nine Thousand Only) in lieu of confiscation under section 125 of the Customs Act, 1962. (iii) I impose a penalty of Rs. 82,00,00,000/- (Rupees Eighty-Two Crores Only) upon the Noticee, M/s. Universal Gems, Surat SEZ, Sachin, Surat under Section 114(iii) of the Customs Act,1962. (iv) I impose a penalty of Rs. 29,000/- (Rupees Twenty Nine Thousand) upon the Noticee, M/s. Universal Gems, Surat SEZ, Sachin, Surat under section 112(a)(i) of the Customs Act, 1962. (v) I impose a penalty of Rs. 1,00,00,00,000/- (Rupees One Hundred Crores) upon the Noticee, M/s. Universal Gems, Surat SEZ, Sachin, Surat under Section 114AA of the Customs Act,1962.” 9. The petitioner being aggrieved has preferred Statutory Appeal No. 1669/2023 under section 128 of the Customs Act,1962 before the Commissioner of Customs (Appeals). 10. The petitioner is also required to make mandatory pre-deposit being 7.5% of the penalties imposed to the tune of Rs. 1,82,00,29,000/- in total, and for admission of the appeal maximum amount of Rs. 10 crores be deposited. 11. As the petitioner has no source of income/profit and not in financial position to arrange for Rs. 10. The petitioner is also required to make mandatory pre-deposit being 7.5% of the penalties imposed to the tune of Rs. 1,82,00,29,000/- in total, and for admission of the appeal maximum amount of Rs. 10 crores be deposited. 11. As the petitioner has no source of income/profit and not in financial position to arrange for Rs. 10 crores for the purpose of pre-deposit, the petitioner has prayed to approach this Court under Article 226 of the Constitution of India with the aforesaid prayers. 12. We have not gone into merits of the matter and hence, the facts are not required to be considered in detail as it would amount to considering the same on merits. 13. Learned Senior Advocate Mr. N.D.Nanavati for the petitioner has prayed for direction and declaring that requirement of mandatory pre-deposit under section 129-E of the Customs Act,1962 is not applicable in the facts and circumstances of the case for considering the Appeal No. 1669/2023 pending before the respondent No.2 in view of the very weak financial condition of the petitioner as narrated in the memo of the petition. Learned Senior Advocate Mr. Nanavati therefore prayed that the petitioner may be exempted from payment of the pre-deposit considering the facts of the case. 14. Section 129E of the Customs Act which is amended w.e.f. 2014, reads as under: [129E. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.--The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal,-- (i) under sub-section (1) of section 128, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of a decision or an order passed by an officer of customs lower in rank than the Principal Commissioner of Customs or Commissioner of Customs; (ii) against the decision or order referred to in clause (a)of subsection (1)of section 129A, unless the appellant has deposited seven and a half per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b)of subsection (1) of section 129A, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against; (iii) against the decision or order referred to in clause (b)of subsection (1) of section 129A, unless the appellant has deposited ten per cent. of the duty, in case where duty or duty and penalty are in dispute, or penalty, where such penalty is in dispute, in pursuance of the decision or order appealed against: PROVIDED that the amount required to be deposited under this section shall not exceed rupees ten crores: PROVIDED FURTHER that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No. 2) Act, 2014.” 15. On perusal of the aforesaid provision, it is clear that it is mandatory for the person being aggrieved by the order passed by the authority to deposit 7.5% or 10%, as the case may be, of the total demand as pre-condition and pre-deposit towards preferring appeal before the appellate authority. This mandatory provisions are required to be adhered to by the petitioner. We are of the opinion that the same cannot be declared to be inapplicable in the facts of the case as it is mandatory requirement for the petitioner to pre-deposit requisite amount so as to enable the appellate authority to consider the appeal on merits. 16. It is made clear that we have not considered the merits of the matter or prima face case of the petitioner in view of the mandatory provision requiring the petitioner to pre-deposit requisite amount as per section 129E of the Customs Act. The petitioner would be entitled to raise all the contentions raised in this petition before the appropriate authority. 17. In view of the above, the petition, being devoid of any merit, is accordingly dismissed. No order as to costs.