2021 (10) TMI 200 - HC - Customs

Customs Commissioner's Appeal Dismissed for Seized Watches - Tribunal Stresses Fairness

The Writ Appeal filed by the Commissioner of Customs against the order to forbear auctioning seized watches was dismissed. The Tribunal highlighted ... Confiscation and redemption under Section 125 of the Customs Act - pre-deposit requirement under Section 129E of the Customs Act - auction and disposal of seized goods during pendency of appellate proceedings - appellate authority's power in an appeal filed by the respondent and protection against being placed in a worse position - retention of seized goods pending tribunal adjudicationAuction and disposal of seized goods during pendency of appellate proceedings - pre-deposit requirement under Section 129E of the Customs Act - retention of seized goods pending tribunal adjudication - Whether the Department could proceed to auction or otherwise dispose of the seized watches during the pendency of the respondent's appeal before the CESTAT where the respondent had complied with the pre-deposit condition. - HELD THAT: - The court found that the respondent had complied with the pre-deposit requirement for preferring the appeal to the CESTAT and that the Tribunal had directed listing of the appeal before the Division Bench for final hearing. In those circumstances, and particularly during the pendency of the appeal, it would not be appropriate for the Department to dispose of the seized goods. The question whether the Circular dated 10.03.2017 (guidelines for recovery during pendency of litigation) applies need not be determined because the statutory pre-deposit condition was satisfied and the appeal was fixed for hearing. Consequently, coercive steps such as auctioning the watches were to be deferred until the Tribunal decided the appeal; the Department was directed to retain the seized watches and await the Tribunal's decision.The Department shall not initiate any coercive action, including auctioning the seized watches, and shall await and abide by the decision of the Tribunal, the respondent having complied with the pre-deposit requirement.Appellate authority's power in an appeal filed by the respondent and protection against being placed in a worse position - confiscation and redemption under Section 125 of the Customs Act - Whether, in an appeal filed by the respondent against the Order in Original, the First Appellate Authority can pass an order adverse to the respondent on a portion of the Order in Original that was not specifically questioned before the First Appellate Authority. - HELD THAT: - The court noted the legal question that may arise before the Tribunal: an appellant (here the respondent in the original proceeding) should not be put in a worse position by an appellate decision in his own appeal on aspects not challenged before the first appellate authority. The judgment recognises that the First Appellate Authority is expected to test the correctness of the original order but emphasises that the respondent cannot be made worse off in his own appeal. The court did not resolve this substantive question on merits; instead it observed that the matter requires to be agitated and decided by the Tribunal in the appeal already filed by the respondent.Left open for decision by the Tribunal; the question is to be raised and adjudicated in the respondent's appeal before the CESTAT.Final Conclusion: Writ appeal dismissed. The Department is directed not to take any coercive action (including auction) in respect of the seized watches while the respondent's appeal before the CESTAT (where the pre deposit has been made) is pending; the substantive question whether an appellate authority may make an order more adverse on points not contested before it is left for determination by the Tribunal. Issues:1. Appeal against order for auctioning seized watches.2. Confiscation of foreign-made watches under Customs Act.3. Appeal process before First Appellate Authority and Tribunal.4. Legal question of adverse order in appeal.5. Department's steps to dispose of seized goods during appeal.6. Compliance with Circular on recovery proceedings during litigation.Issue 1: Appeal against order for auctioning seized watchesThe Writ Appeal was filed by the Commissioner of Customs against the order to forbear auctioning 178 watches seized from the respondent until the appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against the Order-in-Appeal, dated 05.12.2019.Issue 2: Confiscation of foreign-made watches under Customs ActThe Original Authority directed the confiscation of 178 foreign-made watches under Sections 111(d) and 111(m) of the Customs Act, 1962, revalued at Rs. 79,03,440 with an option for redemption on payment of a fine and Customs Duty. The respondent appealed, leading to differing decisions by the First Appellate Authority and Commissioner of Customs, resulting in the matter being taken to the Tribunal.Issue 3: Appeal process before First Appellate Authority and TribunalThe appeal process involved questioning the correctness of the order, including revaluation, redemption fine, Customs Duty, and penalty. The Tribunal directed the matter to be heard before a Division Bench in November 2021, raising the legal question of whether an adverse order can be passed against the respondent in the appeal.Issue 4: Legal question of adverse order in appealThe judgment highlighted the concern that the respondent should not be put in a disadvantageous position in their appeal, emphasizing that the respondent cannot be worse off in their own appeal before the First Appellate Authority. The Tribunal was identified as the appropriate forum to address this issue.Issue 5: Department's steps to dispose of seized goods during appealThe Department's attempt to dispose of the seized watches during the appeal process was deemed inappropriate, especially considering the pending Tribunal hearing. The Department was directed to await the Tribunal's decision and refrain from auctioning the seized goods.Issue 6: Compliance with Circular on recovery proceedings during litigationThe judgment referenced Circular No.1053/2/2017-CX, which outlines guidelines for recovery proceedings during litigation. The respondent's compliance with pre-deposit conditions for the appeal before CESTAT prevented the Department from initiating recovery proceedings based on the Order-in-Appeal.In conclusion, the Writ Appeal was dismissed, with directions for the Department not to take coercive action against the respondent, retain the seized watches, await the Tribunal's decision, and comply with the legal process.