Court sets aside interim directions, stresses statutory compliance under Customs Act. Disputed facts to be resolved by Assistant Collector. Bank Guarantee not enforceable.

The appeals were allowed, and the interim directions issued by the learned Single Judge were set aside. The court emphasized the importance of complying with statutory requirements under the Customs Act, particularly regarding the deposit of duty demanded or penalty levied before an appeal can be heard. The court clarified that disputed questions of fact should be determined by the Assistant Collector of Customs and not by the court under Article 226. The orders of the learned Single Judge were otherwise left undisturbed, with the Bank Guarantee furnished by the respondents not to be enforced until the Assistant Collector's decision.

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Issues Involved:

1. Determination of entitlement to exemption under Notification No. 160/88 and Notification No. 88/88.
2. Legality of interim orders extending beyond the date of judgment.
3. Jurisdiction of the High Court under Articles 226 and 227 of the Constitution.
4. Disputed questions of fact to be determined by the Assistant Collector of Customs.
5. Compliance with Section 129E of the Customs Act, 1962 regarding deposit of duty demanded or penalty levied.

Issue-Wise Detailed Analysis:

1. Determination of Entitlement to Exemption:
The petitioners sought declarations that their imported goods were exempt from auxiliary duty under Notification No. 160/88 and Notification No. 88/88. They also sought directions for the release and clearance of their consignments without excessive duty. The learned Single Judge concluded that the entitlement to exemption involved factual determinations, which must be decided by the Assistant Collector of Customs. The court emphasized that "unless conclusions are drawn on questions of fact this Court will not be in a position to appreciate the matter in a correct perspective."

2. Legality of Interim Orders Extending Beyond Judgment:
The learned Single Judge issued interim orders allowing the petitioners to remove the goods subject to furnishing a Bank Guarantee, effective until the proceedings before the CEGAT concluded. The respondents contended that such directions were impermissible under Sections 128, 129A, 129E, and 130E of the Customs Act. The court held that interim directions should not circumvent the statutory provisions governing appeals and deposits. It was stated, "the direction of the nature issued by the learned Single Judge, takes away the jurisdiction of the Appellate Collector and the CEGAT."

3. Jurisdiction of the High Court under Articles 226 and 227:
The respondents argued that the High Court could issue interim directions under Articles 226 and 227 to protect the petitioners' interests until the matter reached CEGAT. The court, however, noted that such directions must align with the statutory framework and cannot override specific provisions of the Customs Act. The court cited the Supreme Court's ruling in State of Orissa v. Madan Gopal, which held that interim relief under Article 226 cannot extend beyond the final judgment if it circumvents statutory requirements.

4. Disputed Questions of Fact:
The court reiterated that it is not appropriate for it to resolve disputed questions of fact under Article 226. These should be determined by the fact-finding authority, in this case, the Assistant Collector of Customs. The court stated, "In such cases, the Court declines to exercise jurisdiction and directs the authority which is empowered under the Act, to determine the facts necessary for the purpose of the reliefs sought."

5. Compliance with Section 129E of the Customs Act:
The court emphasized that the statutory requirement under Section 129E for depositing the duty demanded or penalty levied before an appeal can be heard must be adhered to. It was held that the directions issued by the learned Single Judge circumvented these statutory requirements, which was impermissible. The court stated, "the appellant cannot avail the right of appeal unless he complies with the proviso to Section 129E or satisfies the Collector or the Appellate Tribunal."

Conclusion:
The appeals were allowed, and the interim directions issued by the learned Single Judge were set aside. The orders of the learned Single Judge were otherwise undisturbed. The court recorded the submission that the Bank Guarantee furnished by the respondents would not be enforced until the Assistant Collector decided the case.

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