2022 (11) TMI 171 - HC - Customs

High Court sets deadline for case statement submission & Bank Guarantee return

The Bombay High Court directed Respondent No.1 to submit the statement of the case within six weeks after finding that Respondent No.2 had not abandoned ... Directory versus mandatory time limit for statutory references - statutory duty of appellate tribunal to draw up and refer statement of case - liability for delay attributable to a public body - return and substitution of bank guarantee pending adjudicationDirectory versus mandatory time limit for statutory references - statutory duty of appellate tribunal to draw up and refer statement of case - liability for delay attributable to a public body - Construction of the 120 day time limit in Section 130(A)(4) of the Customs Act and consequence of non submission of the statement of case by the Appellate Tribunal (CESTAT). - HELD THAT: - The court held that the 120 day period in Section 130(A)(4) is directory and not mandatory. Treating the period as mandatory could deprive a party of the statutory right to have a question of law considered by the High Court when delay is attributable to the Tribunal, a public body beyond the parties' control. The court applied the principle that statutory directions imposing duties on public bodies should be construed as directory where strict enforcement would work injustice to parties who have no control over the default, relying on earlier authorities [Raja Benoy Kumar Sahas Roy vs. Commissioner of Income Tax] and noting supporting observations in Duncan Brothers & Company Ltd. . On the facts, the Assistant Commissioner's affidavit and communications established that Respondent No.2 had not abandoned the reference and that papers in three of eight matters (including the petitioner's) had been submitted to CESTAT; accordingly CESTAT was directed to submit the statement of case within six weeks of receipt of this order and Respondent No.2 was directed to follow up and provide details to CESTAT within two weeks of upload. [Paras 7, 8, 11]Section 130(A)(4)'s 120 day period is directory; CESTAT must submit the statement of case within six weeks and Respondent No.2 shall follow up and provide necessary details within two weeks.Return and substitution of bank guarantee pending adjudication - judicial discretion to direct return of security - Petitioner's claim for immediate return of the Bank Guarantee furnished to the High Court. - HELD THAT: - The petition for immediate return of the Bank Guarantee was refused. The court recorded the petitioner's plea of severe liquidity difficulties but found it cannot direct return at this stage because the reference remains to be processed; however, the court provided a remedial mechanism: if, after CESTAT forwards the statement of facts, the Customs Application is not disposed within one year, the petitioner may apply for return of the Bank Guarantee and its substitution with satisfactory security, to be considered on merits at that time. [Paras 12, 13]Immediate return of the Bank Guarantee is refused; petitioner may reapply for return or substitution of security if the reference is not disposed within one year after submission of the statement of facts.Final Conclusion: The petition is disposed: the court declares the 120 day period in Section 130(A)(4) to be directory, directs CESTAT to submit the statement of case within six weeks with Respondent No.2 to follow up, refuses immediate return of the Bank Guarantee but permits a fresh application for return or substitution if the matter is not disposed within one year. Issues:1. Dismissal and quashing of the case directed by Respondent No.12. Return of Bank Guarantee of Rs.26,86,000Issue 1: Dismissal and Quashing of the Case Directed by Respondent No.1The petition sought dismissal and quashing of the case directed to be filed by Respondent No.1 in Customs Application No. 28 of 2001. The petitioner had furnished a Bank Guarantee of Rs.26,86,000 against directions from the Hon'ble Apex Court. The court raised substantial questions of law and directed the Customs Excise And Service Tax Appellate Tribunal (CESTAT) to send the statement of the case to the Bombay High Court expeditiously. However, the statement of the case was not submitted by CESTAT within the prescribed 120 days. The court considered submissions and communications, concluding that Respondent No.2 had not abandoned the application, as papers had been submitted in some matters. The court held that the time limit in the Customs Act should be construed as directory, not mandatory, to protect the statutory right of parties. Legal precedents were cited to support this view, emphasizing that a party should not suffer due to a public body's fault. Respondent No.1 was directed to submit the statement of the case within six weeks, with follow-up actions specified.Issue 2: Return of Bank Guarantee of Rs.26,86,000Regarding the return of the Bank Guarantee, the court noted the petitioner's severe liquidity crisis and business turmoil. Due to this, the court did not direct the return of the Bank Guarantee at that time. However, it allowed the petitioner to reapply for its return and substitution with satisfactory security if the Customs Application was not disposed of within one year after receiving the statement of facts from CESTAT. The court reserved the right to consider such an application on its merits at that future time. The petition was disposed of with no order as to costs.This detailed judgment from the Bombay High Court addressed the issues of dismissing the case directed by Respondent No.1 and the return of the Bank Guarantee, providing a comprehensive analysis of the legal principles involved and the actions to be taken by the parties involved.