2011 (6) TMI 304 - HC - Customs

High Court Upholds Tribunal Decision on Customs Act Predeposit Rule, Modifies Partner's Deposit

The High Court of Bombay upheld the Customs, Excise and Service Tax Appellate Tribunal's decision on predeposit requirements under the Customs Act, 1962. ... Waiver of predeposit under Section 129E - Whether in the facts and circumstances of the case, the Tribunal was correct in law in directing the Appellants to predeposit a sum of Rs.1 crore and Rs.25 lakhs under Section 129E of the Customs Act, 1962 - The contention of the Appellants is that subsequent to the order passed by the Commissioner and during the pendency of the proceedings before the Appellate Tribunal, they produced the remittance certificates from the Union Bank of India in support of their contention that monies were in fact received - Admittedly, the remittance certificates were not produced before the Commissioner - The fact remains that at present, the statement of the Bank official recorded under Section 108 is that the Bank realization certificates that were produced were not genuine - that no case was made out to completely waive the requirement of predeposit. The order of the Tribunal requiring the First Appellant to deposit an amount of Rs.1 crore, therefore, does not warrant interferenceRegarding the deposit an amount of Rs.25 lakhs - Appellants submitted that the judgment of the Supreme Court does not decide the question as to whether a penalty can be imposed on a partner of the firm when a penalty has already been imposed on the firm - Therefore, the ends of justice would be subserved if the order directing the Second Appellant to deposit an amount of Rs.25 lakhs is modified and the requirement of predeposit is waived in so far as the Second Appellant is concerned - Accordingly dispose of this appeal by modifying the order of the Tribunal to the extent to which the Second Appellant has been called upon to deposit an amount of Rs.25 lakhs. Issues:- Appeal against order of Customs, Excise and Service Tax Appellate Tribunal on waiver of predeposit under Customs Act, 1962- Imposition of penalties on partnership firm, partners, and customs officers- Substantial questions of law admitted for appeal- Allegations of fraudulent exports under DEPB Scheme- Application for waiver of predeposit before Tribunal- Tribunal's order on waiver of predeposit and deposit amounts- Arguments for and against waiver of predeposit- Consideration of Supreme Court judgment in Siddhachalam Exports Pvt. Ltd.- Tribunal's findings on overinvoicing, forged documents, and financial hardship- Decision on waiver of predeposit for firm and partnerAnalysis:The High Court of Bombay heard an appeal against the Customs, Excise and Service Tax Appellate Tribunal's order regarding waiver of predeposit under the Customs Act, 1962. The Commissioner had imposed penalties on a partnership firm for fraudulent exports under the DEPB Scheme, including a substantial penalty on the firm and its partners. The appeal raised substantial questions of law related to the Tribunal's decision on predeposit requirements. The firm was accused of overinvoicing goods exported under the DEPB Scheme, leading to investigations and penalties. An application for waiver of predeposit was partially allowed by the Tribunal, requiring the firm and one partner to make specified deposits. The Tribunal considered various arguments, including references to the Supreme Court judgment in Siddhachalam Exports Pvt. Ltd., overinvoicing allegations, and the authenticity of documents.The Appellants argued for a complete waiver of predeposit based on legal grounds, including the application of the Supreme Court judgment and alleged procedural irregularities. However, the Respondent contended that the Tribunal had appropriately considered all aspects and reduced the predeposit requirement after evaluating the merits of the case. The Court analyzed the Supreme Court's decision in Siddhachalam Exports Pvt. Ltd., emphasizing the need for accurate valuation of exported goods and proper procedures for determining value. The Court found that the Tribunal had adequately considered the arguments presented and the reasons for not granting a complete waiver of predeposit.The Court further examined the Tribunal's findings on overinvoicing, forged documents, and lack of evidence supporting financial hardship. Despite the Appellants' submission of additional material during the appeal, the Court upheld the Tribunal's decision on predeposit requirements. However, considering the specific circumstances involving the partner's liability, the Court modified the deposit amount for the partner, waiving the predeposit requirement. The Court extended the time for deposit and disposed of the appeal, answering the questions of law accordingly. No costs were awarded in the judgment.