By TIOL News Service

AHMEDABAD, DEC 11, 2014: BY this appeal, the appellant assessee has called in question the order dated 23rd June, 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as "the Tribunal"), whereby the Tribunal has directed the assessee to deposit an amount of Rs.20,00,000/- by way of pre-deposit as a condition for hearing and disposing the appeal preferred by the appellant before the Tribunal by proposing the following questions stated to be substantial questions of law:

"(A) Whether, in the facts of the case, and especially, in the light of the decision in the matter of Tamil Nadu News prints & Papers Ltd. (supra), the appellant could justifiably be subjected to any pre-deposit, for having its appeal heard on merits?

(B) Whether the impugned order of the Hon'ble Tribunal is not liable to be set aside additionally for the reason that it is totally bereft of any findings, even, prima facie, on the merits of the case?"

By an order-in-original dated 27.03.2014 the Commissioner of Customs ("the Adjudicating Authority") held that the coal imported by the appellant was "bituminous coal" classifiable under SHN 2701 1200 of the Customs Tariff Act, 1975 and not "Steam Coal" as claimed by them and consequently attracted duty under serial No.124 of Notification No.12/2012-Cus and was not entitled to the benefit of serial No.123 thereof. The Adjudicating Authority accordingly, rejected the classification of the coal imported by the appellant under CTH 2701 1920 and had ordered reclassification of the same under CTH 2701 1200 of the Customs Tariff Act and denied the appellant the benefit of notification No.12/2012 as amended under SI. No.123 in respect of coal imported under the cover of bills of entry as mentioned at Annexure-A to the show-cause notice. The Adjudicating Authority determined the differential customs duty payable by the appellant at Rs.2,09,40,075/- and also ordered recovery of interest at the applicable rate on such amount and imposed penalty of Rs.31,00,000/- under section 112(a) of the Customs Act, 1962. Being aggrieved by the order-in-original dated 27th March, 2014, the appellant went in appeal before the Tribunal. Along with appeal, the appellant also preferred a stay application. By the impugned order, the stay application has been partly allowed by directing the appellant to deposit a sum of Rs.20,00,000/- as a condition for hearing and disposing of the appeal on merits and granting waiver of pre-deposit of the balance amount involved and staying the recovery thereof.

Against the order of pre-deposit, the importer is before the High Court.

The High Court observed that the Tribunal has considered the submissions made by the learned counsel for the respective parties at length and has, thereafter, found that the entire issue before it was an arguable and contentious one which needs to be gone in detail, inasmuch as, the interpretation of the headings under which the goods in question would fall, has to be considered in its proper perspective. The Tribunal was, therefore, of the considered view that all the arguments could be considered at length at the time of final disposal of the appeals and in order to hear and dispose the appeals on merits, all the appellants need to be put to some condition. Accordingly, the Tribunal has directed the appellant to deposit Rs.20,00,000/- as a condition for hearing and disposing the appeal on merits. Thus, while directing pre-deposit of Rs. 20,00,000/- the Tribunal has duly assigned reasons for doing so. Under the circumstances, the contention that the impugned order is a non-speaking one stands repelled.

The High Court further observed,

It is by now well settled that the three aspects to be focussed while dealing with an application under section 129E of the Act are: (a) prima facie case, (b) balance of convenience, and (c) irreparable loss. The Tribunal in the impugned order has expressed the view that the appellant has an arguable case and also that in order to hear and dispose of the appeal, the appellant needs to be put to some condition. A perusal of the stay application made by the appellant reveals that insofar as financial hardship is concerned all that is stated is "The Applicant is pleading undue financial hardship in making pre-deposit of any amount in view of excellent prima facie case on merits". Thus, the only ground of financial hardship pleaded is not actual financial hardship but that the appellant has an excellent prima facie case on merits.

The High Court is of the view that the Tribunal, while considering the appellant's application under section 129E of the Act, has exercised its discretion judicially. Under the circumstances, it is not possible to state that there is any legal infirmity in the impugned order so as to give rise to any question of law, much less a substantial question of law, so as to warrant interference. The appeal, therefore, fails and is, accordingly, dismissed.

(See 2014-TIOL-2204-HC-AHM-CUS)