Court upholds order restraining transfer of imported machinery, modifies ruling, parties bear own costs

The court upheld the Customs, Excise and Service Tax Appellate Tribunal's decision to restrain the petitioner from alienating or transferring imported machinery, attaching it in favor of the Assistant Collector of Customs & Excise. The petitioner was made responsible for the machinery's upkeep and maintenance, located in Village Surajpur, Noida. The machinery could be disposed of based on the appeal outcome or Appellate Authority's direction. The court modified the Tribunal's order accordingly, disposing of the writ petition and leaving parties to bear their own costs.

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Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal regarding pre-deposit requirement under Article 226-227 of the Constitution of India.

Analysis:
The petition challenged an order by the Customs, Excise and Service Tax Appellate Tribunal directing the appellant to make a pre-deposit of Rs. 35 lakhs within 8 weeks, with balance duty and penalty waived and recovery stayed during the appeal. The petitioner had not complied with the order, citing financial constraints due to the unit being closed since April 1, 2003, and significant losses suffered. The petitioner also argued that the show cause notice issued was time-barred, questioning the validity of the proceedings.

During the hearing, the respondents contended that despite the financial difficulties faced by the petitioner, the interest of the Revenue Department needed protection. They highlighted that the machinery imported by the petitioner for a 100% export unit had not met export targets by nearly Rs. 3.8 crores. To safeguard the Revenue Department's interest, it was proposed that the machinery be attached, with the petitioner restrained from alienating or transferring it.

The court, after considering the arguments, decided to protect the Revenue Department's interest by restraining the petitioner from alienating or transferring the imported machinery, which was to be attached in favor of the Assistant Collector of Customs & Excise. The machinery's upkeep and maintenance became the petitioner's liability, with the location specified as Village Surajpur, Noida. It was clarified that the machinery could be disposed of if the appeal outcome was against the appellant or as directed by the Appellate Authority. The court modified the Appellate Tribunal's order to reflect these terms, disposing of the writ petition accordingly and leaving the parties to bear their own costs.

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