2016 (5) TMI 1212 - HC - Customs

Court sets aside dismissal of appeal for non-compliance with pre-deposit rule, remands for merit hearing, imposes cost on Revenue.

The Court set aside the dismissal of the appeal for non-compliance with the pre-deposit requirement under Section 129E of the Customs Act, 1962. It found ... Seeking exemption from pre-deposit - Section 129E of the Customs Act, 1962 - Entire amount of Customs duty has been recovered prior to filling of appeal with encashment of Bank Guarantee - Held that:- when the encashment of Bank guarantee was to the extent of duty then the Commissioner (Appeals) has still ignored the aforesaid. It happened for the reason that after keeping the appeal pending for ten months without pointing out any defect, it was decided without giving opportunity of hearing to the appellant. As an outcome of which, the order was passed in ignorance of the application regarding exemption from predeposit. The way Commissioner (Appeals) has conducted the appeal, shows ignorance of the material available on record. The condition of pre-deposit get satisfied with recovery of the amount of duty which is much more than 7.5% of the duty imposed on the petitioner herein. Therefore, dismissal of appeal in reference to Section 129E of the Act of 1962 cannot be said to be proper. The impugned order is thus set aside with remand of the case to the Commissioner (Appeals) for its hearing on merit. - Petition allowed by way of remand Issues: Challenge to dismissal of appeal for non-compliance with pre-deposit requirement under Section 129E of the Customs Act, 1962.Detailed Analysis:1. Background of the Case:The petitioner challenged the dismissal of their appeal by the Commissioner, Central Excise and Customs (Appeal), Jaipur, due to non-compliance with the pre-deposit requirement under Section 129E of the Customs Act, 1962. The appeal was filed against the order of the Deputy Commissioner, Customs.2. Petitioner's Arguments:The petitioner contended that the appeal was dismissed without hearing them, despite submitting an application stating that the entire amount had been recovered through the encashment of a Bank guarantee, satisfying the 7.5% duty deposit condition. The petitioner argued that the dismissal was unjust as the recovered amount was towards Customs duty, not a penalty.3. Respondent's Arguments:The Revenue, represented by Mr. Vinay Mathur, argued that the appeal was not maintainable due to the petitioner's failure to comply with the conditions of Section 129E of the Act of 1962. They emphasized that the appeal could only be heard after compliance with the pre-deposit requirement.4. Court's Evaluation:After considering the submissions, the Court noted that the Customs duty had been recovered through the encashment of the Bank guarantee before the appeal was filed. The Court highlighted a circular issued by the department for adjusting amounts paid during investigations or audits towards the pre-deposit condition.5. Judgment and Decision:The Court found that the Commissioner (Appeals) had overlooked the recovery of the duty through the Bank guarantee encashment, leading to the unjust dismissal of the appeal. The Court set aside the impugned order and remanded the case for a hearing on merit. A cost of &8377; 20,000 was imposed on the Revenue for the erroneous order, emphasizing the need to avoid unnecessary litigation.6. Conclusion:The Court allowed the writ petition, directing the parties to appear before the Commissioner (Appeals) for further proceedings. The judgment highlighted the importance of considering all relevant facts before dismissing an appeal based on non-compliance with pre-deposit requirements, aiming to ensure a fair hearing and prevent avoidable legal disputes.