By TIOL News Service

BANGALORE, JULY 04, 2016: THE Petitioner filed an appeal before the CESTAT aggrieved by Adjudication Order dated 26.3.2014 (passed by Mangalore Customs) and demand notice for Rs.8.31 crores served upon the assessee requiring the petitioner assessee to make a deposit of 10% / 7.5% as pre-deposit for maintaining the said appeal under S.129 E of the Customs Act. But the assessee made a representation to the respondent Commissioner of Customs, Mangalore that a sum of Rs.1,49,59,384/- on account of various deposits made by him while the matters were under Investigation & Audit pending before the respondent authorities and a part of that amount may be treated and adjusted against the aforesaid pre-deposit requirement as per S.129 E of the Customs Act. The assessee reiterated this request before the Commissioner and submitted that a sum of Rs.1,20,64,490/- was lying in deposit before the Office of the Deputy Commissioner / Assistant Commissioner of Customs, Krishnapatnam and thus, the said respondent Commissioner should issue a certificate as requested by the petitioner assessee that a part of this deposit made with the respondent may be adjusted as pre-deposit for maintaining the said appeal under S.129 E of the Customs Act.

However, the Petitioner got this reply from the department - "I am directed by the Commissioner to inform you that your request is not acceded". Aggrieved by the same, the Petitioner is before the High Court.

After hearing both sides, the High Court held:

++ the representations made by the petitioner assessee before the Commissioner of Customs was simple that certain amounts had been deposited by the assessee pending Investigation & Audit and no demand was yet raised and set off against such deposits and therefore, a part of which could certainly be treated as paid to the Department for complying with the requirement of pre-deposit under S.129 E of the Customs Act depending upon the determination of the relevant facts and figures by the respondent Commissioner as to whether any such excess deposit was available with the respondent Department or not and a part of which could be adjusted provisionally for the time being for meeting the requirement of S.129 E of the Customs Act on the part of the petitioner assessee;

++ the adjudicating authority neither determined facts nor heard the appellant, the rejection states in the said communication that "I am directed by the Commissioner to inform you that your request is not acceded". These kind of communications display arrogance and non-application of mind by responsible officer of the Department viz., Commissioner who, in fact, was expected to pass appropriate quasi-judicial order after giving an opportunity of hearing to the assessee on the representations made by it, since on the result of that order depended a substantive right of the assessee to maintain his appeal before the CESTAT in terms of S.129 E of the Customs Act;

++ no public authority or public servant much less a quasi-judicial authority like the Commissioner of Customs can be allowed or permitted to pass these kind of communications or direct their subordinates to communicate such orders in the aforesaid kingly manner; the Court, therefore, records its displeasure on the tenor of the communication. There was not only a breach of principles of natural justice but the said communication also smacks of arbitrary act and non-application of mind by the Commissioner of Customs. The reconciliation of the deposits and the extent of pre-deposit required to be made for maintaining the present appeal in question before the CESTAT under S.129 E of the Customs Act itself required the consideration of these facts by the said authority because this Court cannot undertake this exercise here in the present writ petition; therefore, the matter would essentially require a remand back to the Commissioner to decide the representations of the petitioner assess once again, after giving him an opportunity of hearing, by a detailed speaking order.

Thus, the High Court remanded the matter to the Commissioner with the following directions:

++ if the amount to the extent of predeposit required can be adjusted out of such 'spare' or 'extra' amounts already lying deposited with the same Department, irrespective of the different locations of the deposits and subject to pending 'Investigation & Audit', then the Commissioner will issue the requisite Certificate of 'such pre-deposit requirement' having been satisfied by the assessee petitioner. Otherwise, the cogent reasons will have to be recorded by the said respondent Commissioner for not accepting such representations of the petitioner assessee.

(See 2016-TIOL-1264-HC-KAR-CUS)