Case Law Details

Case Name : M/s Advance Netways Marketing Pvt. Ltd. Vs CCE (Bombay High Court)
Appeal Number : cuappl no. 61/2014
Date of Judgement/Order : 13/04/2015
Related Assessment Year :
Courts : All High Courts (3793) Bombay High Court (681)

Brief of the case:

In the case of Advance Netways Marketing Pvt. Ltd. Vs. CCE, Hon’ble Bombay High Court denied to interfere in the order of CESTAT who directed to deposit 50 % of total duty payable and 10 % out of penalty payable. Hon’ble Court made such observation after perusing the order passed by CESTAT and held that it appears to us that the learned Tribunal has taken into consideration all the three factors i.e. prima facie case, undue hardship and interest of the Revenue. As such it cannot be said that the discretion exercised by the CESTAT is exercised in a perverse or impossible manner.

Facts of the case:

  • Appellant had made export of certain goods declaring the same as automobile parts such as door bidding, fuel pump fitting, front suspension bush, oil seal etc. and availed export benefit by way of Duty Entitlement Pass Book (DEPB) Scheme.
  • Appellant against the DEPB credit obtained DEPB Script from the Director General of Foreign Trade which were sold in open market. As per the said Scheme, the bearer of DEPB Script is entitled to import the goods without payment of duty.
  • The Customs Authorities started investigation in respect of exports made by Delhi based firms namely M/s S.S. Enterprises, M/s Neel Impex and M/s Agarwal Traders and found that the exported goods were overvalued to get undue DEPB benefit.
  • Revenue found that the said applicant was also exporting similar goods, investigation started and it was found that there are many transactions between the present appellants and M/s S.S. Enterprises, M/s Neel Impex and M/s Agarwal Traders.
  • The appellants denied their relationship with the aforesaid three firms.
  • On the basis of further investigation show cause notices were issued to the Exporters’ firms for recovery of DEPB credit obtained by them and for confiscation of the goods which were exported by declaring higher value and for imposition of penalties.
  • The Commissioner of Customs (Exports) vide order dated 30th July 2012 directed the recovery of DEPB credit obtained by the appellants by invoking the extended period of limitation and also imposed penalties on the Exporters as well as other applicants.
  • Aggrieved from the order of CCE appellant/exporter filed appeals before CESTAT. And along with appeals, an application for exemption for pre-deposit came to be filed. The said applications were partly allowed. The learned CESTAT directed the appellants to deposit 50% of the duty and 10% of the penalty in each case levied as a pre-condition for hearing the appeals. Being aggrieved thereby, the present appeals.

Contention of the revenue:

  • In order to show transaction between the appellant and the said three firms the samples were taken from the consignments of these three firms and market enquiry was conducted and it was found that the Exporters declared inflated value of motor vehicle parts and availed undue DEPB credit and on the basis of the said DEPB credit, obtained DEPB Script which were sold in the open market.
  • During investigation, the Exporter firms failed to produce any documentary evidence regarding procurement of the large quantity of parts which were exported.
  • The present appeals arise only out of the order directing pre-deposit. While considering an application for pre-deposit, the Tribunal is required to take into consideration only three factors namely prima facie case, undue hardship and interest of the Revenue. He submits that the learned Tribunal has rightly taken into consideration all these factors while passing the impugned order.
  • It is only after taking into consideration all the factors, the Tribunal has directed to deposit only 50% of the duty and only 10% of the penalties as pre-deposit.

Contention of the appellant:

  • In the statement recorded under Section 108 of the Customs Act, 1962 in respect of procurement of exported goods, appellant stated that all the records were destroyed in a fire which took place in their godown.
  • The exported goods were procured from the open market from the traders and the procurement was looked after by one Mr. Sanjay who thereafter left the job.
  • Considering the facts of the case and in view of the financial difficulty of the appellant Tribunal ought to have waived the entire duty and penalties and heard the appeals on merits without insisting on any pre-deposit.
  • The procedure adopted by the Original Authority is dehorse the provisions of statute.
  • The Authorities are seeking to recover the duty payable by the importers from the appellants which is not permissible in law. Appellant submits that the Division Bench of this Court in the case of Commissioner of Customs (EP) Vs. Jupiter Exports [2007 (213) 614 (Bom.)] has held that in view of the provisions of Section 28 it is not permissible to recover the duty from an Exporter.
  • Even the Authorities have not identified the importer. It is, therefore, submitted that in the facts of the present case, the duty which is basically a duty on importer is sought to be recovered from the appellants which is not permissible in law.
  • The authorities have not even followed the procedure prescribed in the Circular issued by the Government of India dated 8th December 1997.No show cause notice is issued as per requirement of the circular.
  • In the present case the matter is sought to be re-opened almost after four-to-five years and as such is not permissible in law.
  • Various documents which are sought by the present appellants were not supplied to them. It is, therefore, submitted that the order which is passed is in breach of principles of natural justice.

Held by the Court:

  • The court decided following question of law

“Whether the Tribunal ought to have waived the predeposit of duty and penalty under Section 129E of the Act as calling upon the Appellant to deposit the same or part of the same would cause undue hardship to the Appellant in view of financial difficulty of the Appellant ?” 

  • All these appeals arise out of the order passed by the learned CESTAT dated 4th December 2013 thereby partly allowing the applications filed by the appellants and directing them to deposit 50% amount of duty and 10% amount of penalty in each case, as a pre-condition of hearing the appeals.
  • Two significant expressions used in the provisions are “undue hardship to such person” and “safeguard the interests of revenue”. Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view.
  • For a hardship to be ‘undue’ it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant would derive from compliance with it.
  • After perusal of the order passed by the CESTAT, it appears to us that the learned Tribunal has taken into consideration all the three factors i.e. prima facie case, undue hardship and interest of the Revenue. The learned Tribunal has not rejected the application in toto, but out of total duty payable only 50% has been directed to be deposited, so also out of penalty payable only 10% penalty has been directed to be deposited. As such it cannot be said that the discretion exercised by the CESTAT is exercised in a perverse or impossible manner. In that view of the matter, we find no error could be found in the view taken by the learned Tribunal.

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Category : Excise Duty (4056)
Type : Judiciary (10281)
Tags : high court judgments (4099) Jagjeet Singh (141)

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