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Cus - s. 129E - Redemption of confiscated goods - Tribunal is clothed with express power u/r 41 of Procedure Rules to make such order as it is necessary to secure ends of justice: HC

By TIOL News Service

MUMBAI, JAN 12, 2018: THE substantial question of law before the High Court is -

"Whether the Customs, Excise and Service Tax Appellate Tribunal has no more jurisdiction to entertain an Application for stay of the order impugned before it?

The facts:

An order-in-original was passed by the Commissioner of Customs confirming the demand of the differential duty. Penalty was also imposed. Goods were ordered to be confiscated along with an option to pay the redemption fine.

It is the case of the petitioner that they complied with the mandatory requirement of the deposit of 7.5% of the duty/penalty in dispute as required u/s 129E of the Customs Act, 1962.

Subsequently, they made an application before the CESTAT seeking stay of the direction regarding deposit of redemption fine and/or praying for dispensing with the requirement of deposit of redemption fine.

The CESTAT by its order dated 18th April 2016 - 2016-TIOL-1201-CESTAT-MUM rejected the Miscellaneous application by observing that the Tribunal was powerless to entertain the application for interim relief.

The petitioner submitted that apart from being an appellate authority, inherent powers are vesting in the Appellate Tribunal to grant interim relief. Moreover, even under Rule 41 of the Procedural Rules, sufficient powers are vested in the Appellate Tribunal to stay the recovery of the redemption fine in the interest of justice.

The counsel for the respondent department opposed the petition by pointing out that in view of compliance of the statutory requirement of deposit made by the petitioner, till the disposal of the appeal, the department cannot take any further steps on the basis of the order of confiscation; that there is an option given in the order-in-original to the petitioner to redeem the goods on payment of redemption fine and that there is no occasion for the Tribunal to entertain any application for interim relief. Inasmuch as in the absence of any express provision either in the Act or the Procedure Rules, there is no inherent power vested in the Appellate Tribunal to grant interim relief.

The High Court adverted to the Board Circular 984/08/2014-CX dated 16.09.2014, clause 4 of the same, and observed that insofar as the penalty and differential duty payable under the impugned order-in-original are concerned, no steps can be taken to recover the balance amount till the disposal of the appeal.

In the matter of the prayer of the petitioner for permitting them to redeem the goods without payment of redemption fine, the High Court noted that the question was whether the Appellate Tribunal had jurisdiction to entertain such an application. After examining the decision cited of Venugopal Engineering Ltd. - 2014-TIOL-88-HC-MUM-CUS, paragraph13, the High Court observed thus -

"8. It is true that the said decision was rendered before section 129E was amended. The amendment was made with effect from 6th August 2014. Prior to the said amendment, the requirement of the statute was of the pre-deposit of entire amount of disputed duty as well as penalty and there was a power vested in the Appellate Tribunal to waive the requirement of the pre-deposit. According to us, the fact that this decision was rendered prior to the amendment to section 129E is immaterial as what is held by the Division Bench is that there is an inherent power vested in the Appellate Tribunal to stay the order appealed against before it. The said view taken by the Division Bench is well supported by a leading decision of the Apex Court in the case of Income Tax Officer, Cannanore v. M.K.Mohammed Kunhi - 2002-TIOL-122-SC-IT-LB …"

The High Court also placed reliance on the decision in J. K. Synthetics Ltd. v. Collector of Central Excise - 2002-TIOL-261-SC-CX, in the matter of interpretation of rule 41 wherein it is held that the Appellate Tribunal is clothed with express power under Rule 41 to make such order as it is necessary to secure the ends of justice.

It was, therefore, observed -

"12. As held earlier, the Appellate Tribunal dealing with an appeal under the Customs Act has incidental or ancillary powers to grant appropriate interim relief. As appellate jurisdiction has been conferred on the Appellate Tribunal, by necessary implication, in a given case, the Appellate Tribunal has power to grant appropriate interim relief. The interim relief can be granted where, in a given case, the order impugned is very harsh and prima facie illegal. The interim relief can be granted in various circumstances including in a case where the failure to grant interim relief may render the appellate power nugatory. In a given case, pending an appeal, the Appellate Tribunal can permit redemption of confiscated goods subject to deposit of a part of redemption fine and subject to furnishing of security, bank guarantee etc. for the balance amount. It all depends upon the facts and circumstances of the individual case. Needless to add that where the Tribunal is dealing with such an application for grant of interim relief, the power to grant interim relief cannot be exercised in a routine manner or as a matter of course as the Tribunal is dealing with taxation and revenue laws and as public exchequer is involved. It is obvious that only when a strong prima facie case is made out that the Tribunal can grant appropriate interim relief. The Tribunal can always impose conditions for balancing the interests of the revenue and the assessee and for ensuring that that the amount of demand is secured in some form."

Concluding that the opinion expressed by the Appellate Tribunal in the impugned order is not correct and there is power vested in the Appellate Tribunal to grant interim relief, subject to constraints, the impugned order was quashed and set aside and the matter was remanded (since Tribunal had not dealt with the merits of the case made out in the miscellaneous application) for decision afresh on an expeditious basis.

The appeal was partly allowed.

(See 2018-TIOL-74-HC-MUM-CUS)