Court Sets Aside Penalty Demand, Emphasizes Respect for Interim Orders in Customs Act Case.

The High Court (HC) allowed the writ petition filed by the petitioner, a manufacturer of Flexible Intermediate Bulk Container Bags, who challenged a penalty of Rs.2,50,00,000/- imposed under Section 114(iii) of the Customs Act 1962. The HC found that the respondents violated interim orders by taking coercive steps, such as attaching the petitioner's bank account, and issuing a communication demanding payment. The HC set aside the impugned communication, emphasizing the need to respect interim orders previously issued by the Division Bench.

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Issues involved:
The issues involved in the judgment include challenging the penalty imposed under Section 114(iii) of the Customs Act 1962, violation of interim orders by the respondents, and the issuance of an impugned communication demanding payment of the penalty amount.

Challenging Penalty Imposed:
The petitioner, engaged in manufacturing Flexible Intermediate Bulk Container Bags, challenged the penalty of Rs.2,50,00,000/- imposed under Section 114(iii) of the Customs Act 1962. The petitioner filed an Appeal before the Customs, Excise and Service Tax Appellate Tribunal, Chennai, and subsequently a Petition for rectification of mistake under Section 129 B(2) of the Customs Act, 1962. The Tribunal confirmed the penalty, leading to the filing of a Civil Miscellaneous Appeal No.735 of 2020 before the Division Bench of the High Court.

Violation of Interim Orders:
Despite interim orders directing the Department not to take coercive steps for recovery of the demand, actions were taken against the petitioner. This led to the petitioner approaching the Division Bench of the High Court, which observed that attaching the petitioner's bank account was a violation of the earlier interim order. The Division Bench directed the respondents to raise the order of attachment.

Impugned Communication Demanding Payment:
The second respondent issued a communication dated 03.05.2023, demanding the petitioner to pay the penalty amount of Rs.2,50,00,000/- within 7 days, failing which action would be initiated under Section 142(1)(c)(iii) of the Customs Act, 1962. The High Court found that despite existing interim orders, there was no justification for issuing the impugned letter. The Court allowed the writ petition, setting aside the impugned letter as it was in violation of earlier orders passed by the Division Bench. The High Court emphasized that the interim orders passed by the Division Bench should be respected by the respondents.

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