DECEMBER 18, 2024

By S K Rahman, IRS, working as Principal Commissioner (AR) at CESTAT Delhi

AFTER delivery of Hon'ble Supreme Court Judgment dated 07-11-2024 2024-TIOL-115-SC-CUS-LB - COMMISSIONER OF CUSTOMS Vs M/s CANON INDIA PVT LTD, the issue of jurisdiction of DRI to issue Show Cause Notices (SCN) has been settled in favour of Revenue. The appeals pending in Hon'ble CESTAT Pr. Bench Delhi where the SCNs have been issued by DRI/Preventive/Audit/SIIB etc are being listed for hearing on merits of the case. Some of these cases are as old as 2011. When the case comes up for hearing, it is noticed that, the counsel for the Appellants is seeking adjournment on various grounds including 'yet to prepare for the case on merits'.

2.  Seeking unwarranted adjournments is not a sign of healthy judicial system. When appeal is filed by importer/exporter/any private party, a pre-deposit @ 7.5%/10% of the disputed amount is deposited as per section 129E of Customs Act, 1962. The balance amount of 92.5%/90% of the disputed amount is stayed against recovery. Such adjournments may give temporary relief to the appellant, but the Department stands to lose the recovery of the balance 92.5%/90% of the disputed amount.

3.  As per Sec 129B(1A) of Customs Act, 1962,

"(1A) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing :

Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal."

Thus, if no sufficient cause is shown or if adjournments are granted for more than 03 times, the Hon'ble CESTAT may not give further adjournments. The Hon'ble CESTAT may pass Final Order on merits considering the Appeal Memorandum and other available documents on record. Once, Final Order is passed after hearing the case on merits with Departmental Representative, the parties approach Hon'ble CESTAT, for Restoration of Appeal. This creates unproductive work and does not help neither Appellant nor Respondent.

4.  In one such case, Final Order No. 55357-55360 /2024 dated 19-03-2024 - 2024-TIOL-298-CESTAT-DEL was passed after offering 06 dates for hearing to the Appellant by Hon'ble CESTAT. After issue of the CESTAT Final Order, the concerned Appellants have filed Restoration of Appeal which have been dismissed vide Misc Order No. 50589-50590 /2024 dt. 08.11.2024 2024-TIOL-1176-CESTAT-DEL.

5.  Brief Facts of the Case:

5.1 The brief facts of the case are reproduced for ease of reference. The appellant obtained an Advance Authorization for export of garments under the category of textile general and were entitled to import raw material which was to be used in the manufacture of the export products. Intelligence was received that such fabrics imported under the Advance Authorisation were being diverted by the importer for sale in the open market. Searches were conducted and imported goods were seized, on the reasonable belief that there was violation of condition no. 14 of the Advance Authorisation No. 3010093690 dated 07.05.2013 which indicated the factory address for the processing of the imported raw material as Baddi, HP. Subsequent to the investigations, show cause notice dated 01.04.2014 and corrigendum dated 11.05.2015 were issued. A second show cause notice dated 06.06.2018 was also issued. Both the notices were adjudicated by the Order-in-Original No. 12/2020/ M.K.S./Pr. Commr/Import/ICD/TKD dated 03.06.2020. Being aggrieved by the impugned order, the appellants had filed the appeals before the Tribunal. As no one had appeared for the appellant and the co-noticee, this Bench had proceeded to decide the case based on the appeal memorandum and accordingly Final Order No. 55357-55360 /2024 dated 19-03-2024 was issued.

5.2 The appellant has filed C/ROA/51943/2024 in respect of CESTAT Final Order No. 55357-55360 /2024 dated 19-03-2024 with reference to Customs Appeal Nos. C/50671/2021 and the Co-noticee has filed C/ROA/51942/2024 for CESTAT Final Order No. 55357-55360 /2024 dated 19-03-2024 in respect of Customs Appeal Nos. C/50858/2021.

6.  The Authorised Representative for Department has vehemently opposed such Restoration of Appeal on the grounds that:

i. Six hearings have been offered to the appellant but no one has appeared. As per Proviso to Sec 129B (1A) of the Customs Act, 1962, not more than three adjournments are to be allowed.

ii. As per para 6.5 of CESTAT Final Order,

"Sh. R K Goyal, failed to appear for recording of statement in spite of many summons. No evidence has been placed before us to negate any of the findings of the adjudicating authority in the impugned order".

iii. The appellant importer, have not denied the findings of the investigation. They have not retracted anything in the form of letter.

7. The Hon'ble CESTAT has held that:

7.1 During the hearing of the main appeal, no one appeared for the appellants for six times. The daily order sheets of all the above listed seven hearings were regularly uploaded on the CESTAT website https://cestat.gov.in/order-status. The Section 153 (1)(ca) of Customs Act, 1962 states that an Order under the Customs Act, 1962 may be served by making it available on the common portal. The appellant waited for one full year after the withdrawal of the Vakalatnama of the earlier advocate, to approach and appoint a new advocate.

7.2 Restoration of Appeal (ROA) is not a matter of right of the appellants. It is not to be permitted in routine manner, and is permitted only in exceptional cases where it is inevitable and there are valid reasons for restoring the appeal. it is not a case where the appeal has been dismissed for want of presence or prosecution. In the instant application, the appellant/co-noticee have failed to submit any valid reasons for failing to appear as and when the case was posted for hearing.

7.3 The CESTAT Final Order No. 55357-55360 /2024 dated 19-03-2024 has been passed on merits after considering all the grounds of appeal and submissions of the appellant in the Appeal Memorandum and by considering the submissions of Revenue. In the instant case, the Tribunal has decided the case on merits taking into the grounds of appeal from the Appeal Memorandum filed by the appellant and the co-noticee.

8. Accordingly, the Hon'ble CESTAT has dismissed RoAs C/ROA/51943/2024 and C/ROA/51942/2024 filed by the appellant and the co-noticee respectively.

9.Takeaways from the above are:

9.1 In 1868, British Prime Minister William Gladstone famously said, "Justice delayed is justice denied." For the confirmed demand of the Department, if party appeal is pending for a long time, the Department stands to lose the recovery of the confirmed demand.

9.2 Even if the Appellant wins the case after prolonged delay, it is a pyrrhic victory that comes at a great cost, perhaps making the ordeal to win not worth it, as all along the pendency of the case, the appellant has been showing in his balance sheets as 'Litigated amount due to Government'.

9.3 Taking advantage of Hon'ble Supreme Court Judgment dated 07-11-2024 2024-TIOL-115-SC-CUS-LB - COMMISSIONER OF CUSTOMS Vs M/s CANON INDIA PVT LTD, it is better to fight the case on merits and end the litigation once for all.

(The views expressed are personal and not in official capacity)