2015 (8) TMI 996 - HC - Customs

Court sets aside deposit order, emphasizes reasonableness of conditions imposed

The High Court allowed the appeal, setting aside the Tribunal's order directing the appellant to deposit Rs. 20 lakhs for hearing the appeal. The Court ... Waiver of pre-deposit - Precondition to Appeal – Remission of duty on lost, destroyed and abandoned goods – Commissioner vide impugned order confirmed payment of duty demand and imposed penalty, also precondition to deposit sum for filing appeal was also imposed – Whether imposing such pre-condition was justified – Held that:- Reproduction of Commissioner’s findings show that there was no conclusion reached that assessee had violated any comprehensive policy or any provisions in Customs Manual –That itself made out arguable case, therefore there were no basis for imposing precondition for hearing of appeal on merits and stay of recovery – Conditions imposed ought to be reasonable and not excessive –They must have bearing on nature of reliefs that assessee claimed and to which it was held disentitled –In matters of natural calamities where customs manual or terms and conditions of bond prima facie ought not guide, Customs Commissioner to decide appeal – Thus, Tribunal was not justified in imposing condition of deposit on assesse – Appeal allowed and matter resotred before the Tribunal – Decided in favour of Assesse. Issues:1. Denial of remission of duty for goods burnt in fire.2. Tribunal's order directing deposit of Rs. 20 lakhs for hearing the appeal.3. Applicability of Section 23 of the Customs Act, 1962.Analysis:Issue 1: Denial of remission of duty for goods burnt in fireThe Commissioner of Central Excise and Customs, Nashik, denied remission of duty for goods burnt in fire by the appellant. The Commissioner found that the appellant did not have sufficient fire prevention measures in place, as indicated by the Deputy Commissioner's report. The Commissioner held that the appellant failed to ensure adequate measures to prevent fire incidents, leading to the destruction of duty-free goods. The final order confirmed the duty demand against duty-free procurement of raw materials and finished goods, along with imposing penalties and interest. The appellant challenged this order before the Tribunal.Issue 2: Tribunal's order directing deposit of Rs. 20 lakhs for hearing the appealThe appellant approached the Customs Excise and Service Tax Appellate Tribunal, West Zonal Bench, challenging the Commissioner's order. The Tribunal directed the appellant to deposit Rs. 20 lakhs as a condition for hearing the appeal on merits. Despite the appellant's inability to comply with this condition, the appeal was dismissed. The appellant raised substantial questions of law regarding the denial of an opportunity to be heard on the appeal's merits and the excessive nature of the deposit condition.Issue 3: Applicability of Section 23 of the Customs Act, 1962The High Court analyzed the provisions of Section 23 of the Customs Act, 1962, which allows for remission of duty in cases of loss, destruction, or abandonment of goods. The appellant argued that the destruction of goods in a fire, over which they had no control, warranted remission of duty. The Court found that the Tribunal's insistence on the appellant depositing Rs. 20 lakhs as a precondition for hearing the appeal was unjustified. The Court emphasized that the conditions imposed on the appellant should be reasonable and consistent with the nature of the relief sought. The Court quashed the Tribunal's order, setting aside the deposit condition and restoring the appeal for proper hearing.In conclusion, the High Court allowed the appeal, noting that the Tribunal's imposition of the deposit condition was unwarranted. The Court clarified that its observations were tentative and prima facie, and the appeal would be heard in accordance with the law without expressing any opinion on the rival contentions.