2020 (9) TMI 180 - HC - Customs

High Court Orders Release of Seized Caustic Soda, Emphasizes Compliance with Appellate Decisions

The High Court directed the respondents to release the petitioner's imported caustic soda immediately, emphasizing the lack of legal basis for continued ... Release of seized goods - confiscation - First appellate authority set aside the original order - Non-release of goods has been justified and defended by the respondents on the ground that the Department has filed appeal against the order-in-appeal before the CESTAT - HELD THAT:- The original authority took the view that importation of caustic soda by the petitioner was without compliance to BIS standard IS 252:2013 made mandatory vide Government of India order dated 03.04.2018. Therefore, the said importation being in contravention of BIS requirements, was liable to confiscation under section 111(d) of the Customs Act. While further holding that penal action under section 112(a) of the Customs Act was invocable in the case of the petitioner, it was however observed that petitioner had acted bona fidely without any mala fide intention. Coming to the appeal preferred by the petitioner, appellate authority vide the order-in-appeal dated 20.12.2019 noted that the appellant i.e., the petitioner had made the requisite pre-deposit of ₹ 7,50,000.00 on 27.11.2019 which is 7.5% of the penalty imposed in the order-in-original. Therefore, the appellate authority declared that appellant had made the mandatory pre-deposit and thus this requirement was satisfied - Appellate authority further noted that the appeal was heard on 09.12.2019. While counsel for the appellant attended the hearing and made submissions on behalf of the appellant, there was no representation on behalf of the Department. Department neither filed any crossobjection on the appeal memo nor submitted any written argument. Thus, it is quite evident that the Department did not contest the appeal filed by the petitioner under section 128 of the Customs Act. Significantly, neither in the affidavit-in-reply nor in the written submissions filed by the respondents there is any explanation for such default by the Department. This conduct of the Department is inexplicable and quite baffling to say the least. The foreign manufacturer obtained licence on 30.09.2019 from BIS for the standard specification IS 252:2013 for its manufactured goods i.e., caustic soda which was imported into India by the petitioner on 01.11.2018. Post the order-inappeal, test report of the sample of the goods of BIS accredited laboratory showed that the goods conform to BIS standard IS 252:2013 specification. Objection of the respondents is that at the time of arrival on import on 01.11.2018 the goods did not have the BIS standard specification IS 252:2013 marking. Therefore, seizure and subsequent confiscation is justified. What is crucial from the above is that an appeal to CESTAT has to be filed within three months from the date of communication of the order sought to be appealed against with the period of limitation extendable on sufficient cause being shown. Therefore what is of relevance is that the limitation of three months commences from the date on which the order sought to be appealed against is communicated and not from the date of decision or opinion rendered by the Committee of Commissioners under sub-section (2) - though respondents have not mentioned the date on which the order in appeal was communicated to the Chief Commissioner or Commissioner of Customs, it is however stated in paragraph 8 of the written submissions that in terms of the order-inappeal dated 20.12.2019, samples were drawn on 08.01.2020. This goes to show that the order-in-appeal was communicated to the respondents prior to 08.01.2020. However as the respondents have not mentioned the date of communication of the order-in-appeal, we take 08.01.2020 as the date of communication. The three months limitation period would therefore be upto 07.04.2020. In the present case there is no dispute that by the order-in-appeal dated 20.12.2019, the order-in-original dated 22.11.2019 was set aside. By the order-in-original the goods in question were confiscated. After the order-in-original is set aide, the order of confiscation no longer survives. When an order is set aside by a superior authority or appellate authority, the consequence thereof is that such an order loses its effectiveness and becomes inoperative - it is evident that after the order-in-original has been set aside there is now no order of confiscation of the goods. While power of seizure is provided in section 110 of the Customs Act, section 111 thereof deals with confiscation of improperly imported goods. As per sub-section (1) of section 110, if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. Therefore, seizure is made if the proper officer has reason to believe that any goods is liable to confiscation. Thus seizure may be said to be the first step to confiscation - So when the order of confiscation is set aside, the order of seizure cannot survive. Principles of judicial discipline require that orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. If this healthy rule is not followed, the result will be undue harassment to the assessees and chaos in administration of tax laws. The non-release of the goods of the petitioner by the respondents is without any justification and liable to be interfered with - on thorough consideration of the matter we direct the respondents to release the goods i.e., caustic soda of the petitioner imported vide bill of entry dated 01.11.2018 forthwith without any delay. Writ petition is allowed but without any order as to cost. Issues Involved:1. Compliance with the appellate order dated 20.12.2019.2. Release of seized goods imported on 01.11.2018.3. Confiscation of goods under section 111(d) of the Customs Act.4. Imposition of penalty under section 112(a) of the Customs Act.5. Authority of Commissioner (Appeals) to remand cases post-2001 amendment.6. Effect of pending appeal before CESTAT on compliance with the appellate order.Detailed Analysis:Issue 1: Compliance with the appellate order dated 20.12.2019The petitioner sought a direction to respondent No.3 to comply with the appellate order dated 20.12.2019, which required fresh samples of the imported goods to be tested in a BIS accredited laboratory to ascertain conformity with IS 252:2013 specifications. Despite the appellate authority's direction to complete this process within six weeks, the original authority failed to pass a fresh order or release the goods, citing the pending appeal before CESTAT.Issue 2: Release of seized goods imported on 01.11.2018The petitioner imported caustic soda on 01.11.2018 without the required BIS certification. The appellate authority directed the original authority to test the goods and release them if they conformed to IS 252:2013. The test report confirmed conformity, but the goods were not released due to the Department's pending appeal before CESTAT.Issue 3: Confiscation of goods under section 111(d) of the Customs ActThe original authority confiscated the goods under section 111(d) for non-compliance with BIS standards. The appellate authority set aside this order, directing fresh testing and potential release of the goods. The High Court noted that with the order-in-original set aside, the confiscation order no longer stood, rendering the continued seizure without legal basis.Issue 4: Imposition of penalty under section 112(a) of the Customs ActThe original authority imposed a penalty on the petitioner under section 112(a), considering the importation without BIS certification. However, the authority noted the petitioner's bona fide actions, including applying for BIS certification before shipment. The appellate authority did not address the penalty specifically but set aside the entire order-in-original.Issue 5: Authority of Commissioner (Appeals) to remand cases post-2001 amendmentThe respondents contended that post-2001, the Commissioner (Appeals) lacked the power to remand cases. The High Court disagreed, stating that the power to remand is inherent in appellate jurisdiction and necessary for meaningful appellate review. The omission of specific remand provisions in the 2001 amendment did not eliminate this power.Issue 6: Effect of pending appeal before CESTAT on compliance with the appellate orderThe respondents argued that the pending appeal before CESTAT justified non-compliance with the appellate order. The High Court rejected this, emphasizing that the mere filing of an appeal does not suspend the appellate order's operation unless a stay is granted. The Court criticized the respondents for not pursuing the appeal diligently and for not complying with the appellate authority's directions.Conclusion:The High Court directed the respondents to release the petitioner's imported caustic soda forthwith, noting the lack of legal basis for continued seizure and the respondents' failure to comply with the appellate order. The Court highlighted the importance of judicial discipline and the need for subordinate authorities to follow appellate decisions unless stayed by a competent court.