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Jogibhai Devjibhai Tandel Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(1985)(19)ELT503Tri(Mum.)bai
AppellantJogibhai Devjibhai Tandel
RespondentCollector of Customs
Excerpt:
.....under this act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied : provided that where in any particular case, the collector (appeals) or the appellate tribunal is of opinion that the 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 or it may deem fit to impose so as to safeguard the interests of revenue.' this section makes it obligatory for the appellant to deposit the amount of duty or penalty pending the appeal. the proviso to this section however enables the tribunal to dispense with the deposit of.....
Judgment:
1. This application involves a short but an interesting question of law. It arises under the following circumstances.

2. The Collector of Customs, Ahmedabad, in an adjudication proceedings imposed a penalty of Rs. 10 lakhs on the applicant (who will be herein-after referred to as 'the appellant'). Feeling aggrieved the appellant preferred an Appeal No. CD. (Bom.) A. No. 538 of 1983 and also made an application for stay for dispensation of pre-deposit of penalty amount of Rs. 10 lakhs. The stay application bearing No. 78/83 filed by the appellant came up for consideration before this Bench on 20-10-1983. On that day the Bench passed an order directing the appellant to deposit Rs. 1 lakh in cash and to execute a personal bond for the balance amount in favour of the Collector of Customs, Ahmedabad, within 30 days and to intimate the Registry of the compliance.

3. When the appellant did not intimate the compliance a show cause notice dated 24-11-1983 was issued to the appellant to show cause within 15 days from the date of receipt of the notice as to why his appeal should not be rejected for non-compliance with the provisions of Section 129-E of the Customs Act. In reply to the said show cause notice the appellant has filed the above numbered Misc. Application, 4. In this application among other things the appellant stated that on account of his dire financial condition, it was physically impossible for him to comply with the terms and conditions imposed in the order of the Tribunal dated 20-10-1983. As the appellant has no financial resources and does not even have any bank account it was impossible for him to deposit or give a personal bond for the balance amount which he cannot honour. It was further stated 'the appellant states that the said order merely related to the question of stay of recovery of the penalty amount and the said terms and conditions pertained only to the question of stay of the said recovery. The appellant craves leave to refer to the said order dated 20-10-1983 for its true construction and legal effect in the light of the relevant provisions of the Customs Act and the relevant Rules. In any way it is humbly stated that, in law, the failure to comply with the conditions on which a stay is granted cannot affect the fate of the appeal, but can at the highest result in the stay being vacated. While the appellant respectfully submits that the terms and conditions for granting the stay were unduly harsh and physically impossible of compliance, the failure or inability of the appellant to comply with the same cannot and or ought not result ipso facto in the rejection or dismissal of the appeal. It was also stated in the application that even if the stay is vacated for failure to comply with the said conditions he was entitled for hearing on merits of the appeal.

5. During the hearing of this application, Shri Canteenwala, the learned Advocate for the appellant made it clear that the import of the order dated 20-10-1983 was that it stayed the recovery of the penalty and also dispensed with the pre-deposit subject to the conditions specified therein. Shri Canteen-wala reiterated the legal contentions urged in the application. As has been stated in the application, Shri Canteenwala urged that the failure or inability of the appellant to comply with the terms of the order dated 20-10-1983 can- not result ipso facto in the rejection or dismissal of the appeal. The learned Advocate submitted that failure to comply with the conditions of the order dated 2040-1983 could have the effect of vacating the stay in so far as it relates to the recovery and it cannot have the effect of debarring the appellant's appeal being heard. The learned Advocate further submitted that neither Section 129-E of the Gustoms Act nor Rule 17Ca) (Appeal) 1982, provides for dismissal or rejection of the appeal for failure to comply with the terms and conditions or order of stay of recovery and/or dispensing with the requirement of making a deposit. It was further urged by the learned Advocate that a right of appeal has been conferred upont the appellant under the Act and that right cannot be taken away by reason of non-deposit. In support of his contention, Shri Canteenwala relied upon the decision of the Bombay High Court (Nagpur Bench), reported in AIR 1983, Bombay, page 301, Prabhakar v. Vinayak Rao.

6. Shri Krishan Kumar, for the respondent Collector however, urged that pre-deposit is a condition precedent under Section 129-E of the Customs Act to hear the appeal. Since the appellant had not complied with the terms of the order dated 20-10-1983 and since he did not seek any extension of time for compliance of the order, the only course left to the Tribunal is to dismiss or reject the appeal.

7. The short question for consideration is whether the Tribunal cannot dismiss or reject the appeal of the appellant for non-compliance with the provisions of Section 129E of the Customs Act, 1962 (hereinafter to be referred to as 'the Act'). Section 129E reads : 'where in any appeal under this chapter, the decision or order appeal- ed against relates to any duty demanded in respect of goods which arc not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied : Provided that where in any particular case, the Collector (Appeals) or the Appellate Tribunal is of opinion that the 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 or it may deem fit to impose so as to safeguard the interests of revenue.' This Section makes it obligatory for the appellant to deposit the amount of duty or penalty pending the appeal. The proviso to this Section however enables the Tribunal to dispense with the deposit of duty or penalty or both, if in the opinion of the Tribunal that the deposit would cause undue hardship to the appellant. As has been stated in the stay petition No. 78/83 the appellant prayed for dispensing with the pre-deposit of Rs. 10 lakhs, the penalty imposed on the appellant by the Collector of Customs, Ahmedabad. The Bench that considered the application only directed the appellant to deposit 1/10th of the penalty amount, namely ; Rs. 1 lakh and to execute a personal bond for (he remaining penalty amount of Rs. 9 lakhs. The appellant was given four weeks time to comply with the order and to report compliance. The appellant did not report compliance and therefore, as late as on 24-11-1983 a show cause notice was issued to the appellant as to why the appeal should not be rejected for non-compliance with the provisions of Section 129-E of the Act. In reply to the show cause notice in the Misc. Application under consideration the appellant admitted that he did not comply with the order dated 20-10-1983 in that he did not deposit Rs. 1 lakh nor execute a bund for the remaining amount. He did not seek extension of time for compliance with the order or sought any other relief. It is thus clear that the appellant neither complied with the provisions of Section 129-E of the Act nor the order dated 20-10-1983. Therefore, the question arises as to whether Section 129-E of the Act gives any power to the Tribunal to dismiss the appeal for non-compliance with the requirements regarding deposit of the penalty amount. As has been stated Shri Canteenwala, the learned Advocate for the appellant contended that Section 129-E does not give power to the Tribunal to dismiss the appeal for non-compliance with the requirement regarding deposit of the penalty amount. It was his contention that even if the appellant failed to comply with the provisions of Section 129-E or the order passed by the Tribunal the appellant's appeal shall have to be heard on merit. Shri Canteenwala tniinly relied on the decision of the Bombay High Court referred to above. We have carefully gone through the said decision. The question which arose for consideration in that case was whether compliance with the provisions contained in the Sub-rule (1A) of Rule 3 of Order 41 of the Civil Procedure Code is a condition precedent to file an appeal against the decree for payment of money. After referring to the legislative history His Lordship Justice Ginwala held that the Parliament never intended that a person who intends to prefer an appeal against the decree for payment of money has, as of necessity, to comply with the provisions contained in the said Sub-Rule as a condition precedent for the tenability of the appeal. The ratio of the decision is not applicable to the facts of the present case. The provisions contained in Order 41 of the Civil Procedure Code is materially different from the provisions contained in Section 129-E of the Customs Act. The provisions similar to the provisions of Section 129-E came up for consideration before the Supreme Court in a case reported in AIR 1971 Supreme Court page 2280, Navinchandra v. Central Board of Excise and Customs. Section 129 (1) of the Customs Act, 1962 as it stood prior to coming into force of Finance Act 2 of 1980 read 129. (1) 'Where the decision or order appealed against related to any duty demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, any person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied : Provided that where in any particular case the appellate authority is of opinion that the deposit of duty demanded or penalty levied will cause undue hardship to the appellant, it may in its discretion dispense with such deposit, either unconditionally or subject to such conditions as it may deem fit.' The provisions contained in the above Section is more or less identical to the provisions contained in Section 129-E of the Act. The facts of the case in the Supreme Court decision referred to above are that the Central Board of Excise and Customs rejected the appeal for non-compliance with the provisions of Section 129 (1) of the Act as it then stood. The appellant therein carried the matter in revision before the Government of India and the Government of India give the appellant a further opportunity to deposit the sum of Rs. 10,000/- which was ordered to be deposited by the Central Board of Excise and Customs.

When the appellant therein failed to avail himself of the opportunity the Government of India rejected his revision application. A Writ Petition filed by the appellant therein to quash the orders of the Central Board of Excise and Customs and the Government of India was dismissed in limine by the High Court of Punjab. The appellants challenged the orders of the High Court before the Supreme Court.

During the hearing as in the present case the learned Counsel before the Supreme Court contended that Section 129(1) of the Act did not give any power to the Board of Central Excise and Customs to dismiss the appeal for non-compliance with the requirement regarding deposit of penalty amount. While considering this contention the Supreme Court observed : 'Section 129 no doubt gives a right of appeal. But it is followed by Section 129 (1) regarding making of deposit pending the appeal. It must also be noted that so far as the deposit of duty is concerned, the requirement regarding the deposit will come into force only if the goods in respect of wh'ch duty is demanded are not under the control of Customs Authorities. Though sub (1) of Section 129 may appear to make it necessary that the appellant should deposit the duty or penalty before his appeal could be heard on merits, the proviso whittles down the regiour of sub (1). But in the Act by the proviso to sub (1) of Section 129, which has been quoted above, discretion has been given to the appellate authority to either waive the deposit of the entire amount of penalty or duty or reduce the quantum to be so deposited if the appellate authority is of the opinion that that the requirement regarding the deposit of the full amount of penalty or duty will cause undue hardship to the appellant. The Supreme Court further observed in paragraph 18 of the judgment 'no doubt Section 129 does not expressly provide for the rejection of the appeal for non-compliance with the requirement regarding the deposit of penalty or duty; but when Sub (1) of Section 129 makes it obligatory on an appellant to deposit the duty or penalty pending the appeal and if a party does not comply either with the main Sub or with any order that may be passed under the proviso, the appellate authority is fully competent to reject the appeal for non-compliance with the provisions of Section 129 (1). That is exactly what the first respondent had done in this case. Accepting the contention of Mr. Trevedi will mean that the appeal will have to be kept on file forever even when the requirement of Section 129(1) has not been complied with. Retention of such an appeal on file will serve no purpose whatsoever because unless Section 129(1) is complied with, the appellate authority cannot proceed to hear an appeal on merits.

Therefore, the logical consequence of failure to comply with Section 129(1) is the rejection of appeal on that ground.

8. No doubt the rejection of the appeal by the first respondent will mean that the appellant is bound by the order of the third respondent levying penalty. Such a result has been brought about only by the default of the appellant in complying with the order of the first respondent to deposit half the amount of the penalty. Therefore, it follows that the rejection of the appeal of the first respondent was legal and the order of the High Court dismissing the writ petition is valid. The above decision of the Supreme Court is a complete answer to the contentions raised by Shri Canteenwala.

9. As in the case of the appellant before the Supreme Court the appellant herein neither complied with the provisions of Section 129-E nor the order passed on 20-10-1983 even though sufficient time has been given for compliance. In the present application he has pleaded that he cannot comply with the order.

10. In the said circumstances we reject the Misc. Application and also dismiss the appeal C.D. (T) (Bom.) Appeal No. 538 of 1983 for non-compliance with the order dated 20-10-1983 passed by this Bench.


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