TaxTMI 
TaxTMI 
2023 (5) TMI 23
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....he Petitioners have submitted that they belong to poor families and live in Islam Nagar, Hojai, Assam, and are not well-educated youth. In support of their plea, the Petitioners No. 1 and 3 have filed an income certificate dated 13.12.2021 issued by the Office of the Circle Officer, Hojai, Assam, showing an annual income of Rs. 1,00,000/- (Rupees One Lakh). The Petitioners further stated that they are earning their livelihood through agriculture and by selling small quantities of Agarwood. The Petitioners have submitted in the Petition that the goods seized by the Customs Authorities were purchased by them, and the bills were attached to the Reply to the Show Cause Notice. The Petitioners have also stated that the goods seized were wrongly assessed at very high market value, and the penalty has been levied based on an incorrect assessment of the goods. The Petitioners have further submitted that their right of Appeal under Section 129E of the Act cannot be exercised as they are not financially sound and hence, unable to pay the mandatory pre-deposit as required to challenge this levy. Background: 2. The undisputed facts for the purpose of this Petition are as follows: 2.1 ....
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.... conceal the seized goods." 2.5 Aggrieved by the OIO, the Petitioners filed three Appeals on 27.10.2021 before Respondent No. 1 along with an application for exemption/stay qua deposit of the mandatory condition of the pre-deposit of 7.5% of the penalty for filing an Appeal. One such Appeal (of Petitioner No. 2) has been placed before this Court. 2.6 The Superintendent (Appeals) by its letter dated 08.11.2021, returned all three Appeals to the Petitioners, as the mandatory payment of 7.5% of the penalty imposed under Section 129E of the Act was not made. 2.7 This has led to the filing of the present Petition. Submissions of the Petitioners: 3. The Petitioners raised a challenge to the constitutional validity of Section 129E of the Act. As has already been noted in Order dated 27.04.2022 passed by this Court, the Supreme Court, by its Judgment dated 28.02.2022, in the matter titled as Chandra Sekhar Jha V. Union of India & Anr. 2022 SCC OnLine SC 269 has sustained the wholesomeness of this provision. As a matter of fact except for the prayer, no submissions were advanced on the purported unconstitutionality of Section 129E of the Act. Hence, we do not need to advert t....
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....Wildlife Inspector, Wildlife Crime Control Bureau (NR), New Delhi [hereinafter referred to as "the Wildlife Inspector"], which states that on examination of the baggage belonging to the Petitioners, "it was found to contain wooden Chips in assorted sizes and shapes/different grades, of Agar wood (aquilaria malaccensis), 120 kg (Nt. Wt.) and 4.5 kg Agarwood Oil". This report further states that the confiscated species is included in Appendix II of CITES and the export of this species of Agarwood is prohibited for exportation vide DGFT Notification No. 2 (RE-98)/1997-2002 dated 13.04.1998. However, the copy of this notification has not been filed by the Respondents. Case Laws cited: 6. The Counsel for the Petitioners had submitted that the Petitioners are poor, daily wagers, and the impugned provision prevents them from exercising their statutory right to Appeal. The Petitioners have filed submissions/compilations of judgments wherein the Coordinate Benches of this Court have, in rare and deserving circumstances, allowed a waiver of this pre-deposit provision. In this regard, the following judgments have been relied upon: (i) Pioneer Corporation Vs. Union of India 2016....
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....t of Vill- Matikhola, Mouza- Namati, Dist.-Hojai (Assam). There is 0.02 Hectare Land in his name at Vill.-Matikhola, the present govt. value of his land is Rs. 57,680/- (Fifty Seven Thousand Six Hundred Eighty Rupees) Only. He is a daily wage earner. 3) Ikbal Hussain, S/o Moin Uddin is a resident of Vill- Islampur, Mouza- Hojai, Dist.- Hojai (Assam). There is no land in his or his father's name. He is a daily wage earner......." [Emphasis is ours] 7.2 The gist of the aforesaid report is that all the three Petitioners, i.e., Mohammed Akmam Uddin Ahmed, Bahar Uddin, and Ikbal Hussain, are residents of villages in District Hojai, and are daily wage earners with little or no means. Therefore, the poor financial condition of the Petitioners stood confirmed by the aforesaid report. The Statute : 8. For ready reference, Section 129E of the Act is reproduced hereunder: "Section 129-E. Deposit of certain percentage of duty demanded or penalty imposed before filing appeal.- The Tribunal or the Commissioner (Appeals), as the case may be, shall not entertain any appeal,- (i) under sub-section (1) of Section 128, unless the appellant has depos....
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....f the penalty in dispute can be waived in certain circumstances. The Respondents have argued that no waiver can be permitted under the provision of Section 129E of the Act. 9.1 The Petitioners placed reliance on judgments of Coordinate Benches of this Court in Pioneer Corporation case (supra), Narender Yadav case (supra) and Shubh Impex case (supra) to canvas the argument that the Court has in special circumstances, waived the payment of mandatory pre-deposit amount as envisaged in Section 129E of the Act. 9.2 A Coordinate Bench of this Court in Pioneer Corporation case (supra), where the Court, while discussing the amendment made to Section 35F of the Central Excise Act, 1944 [hereinafter referred to as "the CE Act"] (which Section is pari materia to Section 129E of the Act and also requires a pre-deposit in the case of an Appeal), held that prior to the amendment of Section 35F of the CE Act, a discretion was available to the Central Excise and Service Tax Appellate Tribunal [hereinafter referred to as "CESTAT"] to consider financial hardship and accordingly determine the pre-deposit amount post the amendment, a direction of waiver of the pre-deposit would be contrary to th....
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.... Order-in-Original discloses no reason why penalty was imposed upon the petitioner - a salaried employee drawing Rs. 14,500/- per month. In the circumstances, the petitioner's appeal to the Commissioner (Appeals) shall be heard on its merits without insisting upon the requirement of pre-deposit; it is accordingly directed to be waived....." [Emphasis is ours] 9.5 In Shubh Impex case (supra), a direction to make a pre-deposit of Rs. 1.27 crores, being 7.5% of the duty imposed, under Section 129E of the Act was challenged by the Appellant. While discussing the judgment in Pioneer Corporation case (supra), a Coordinate Bench of this Court recognized the existence of the power available to the Court under Article 226 of the Constitution albeit under rare and compelling circumstances. The Court thus directed that a pre-deposit be made in the sum of Rs. 5 Lakhs in addition to the token pre-deposit already made by the Appellant therein. The relevant extract is below: "10. Given the aforesaid facts, while we are inclined to accept the preliminary objection of the respondents on the alternative remedy, we are also inclined to interfere and relax the condition of pre-dep....
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....onstitutional challenge, held that the High Court under Article 226 of the Constitution of India is vested with the jurisdiction in an appropriate case to dispense with the requirement of a pre-deposit. Reliance is placed on the following extract: "8. .... The requirement of a deposit of 10% is in the case of an appeal to the Tribunal against an order of the Commissioner (Appeals). This requirement cannot be regarded or held as being arbitrary or as violative of Article 14. Above all, as the Supreme Court held in Shyam Kishore (supra) the High Court under Article 226 of the Constitution is vested with the jurisdiction in an appropriate case to dispense with the requirement of pre-deposit and the power of the Court under Article 226 is not taken away. This was also held by the Supreme Court in P. Laxmi Devi (supra) in which the Supreme Court observed that recourse to the writ jurisdiction would not be ousted in an appropriate case....." [Emphasis is ours] 10. The Respondent No. 2, in addition to placing reliance on Chander Shekhar Jha case (supra), has also relied on the judgment of a Coordinate Bench of this Court in Dish TV India Ltd. case (supra) as well as a....
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...., what is to be seen is the date of filing of the appeal. If the appeal is filed on or after 6th August 2014 then the condition stipulated in the amended Section 129E of the Act has to be fulfilled for the appeal to be entertained." [Emphasis is ours] 10.4 The decision of the Coordinate Bench of this Court in M/s Diamond Entertainment case (supra), while refusing to permit the petitioner to prosecute its appeal before CESTAT without complying with the conditions of the mandatory pre-deposit did not, in fact, rule out that in exercise of its inherent powers under Article 226 of the Constitution of India. It was held that the Appellant may be allowed to prosecute its appeal without the payment of the pre-deposit amount. Reliance is placed on Paragraph 11 of this judgment which reads as follows: "11. Thought it may be argued that, this Writ Court, in exercise of the inherent powers conferred on it by Article 226 of the Constitution of India in appropriate cases, may allow the appellant to prosecute its appeal before the CESTAT, without requiring to pay the mandatory pre-deposit..." [Emphasis is ours] 10.5 In Nimbus Communications case (supra), a Coordi....
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....understanding that after passing of the Amendment Act on 06.08.2014, the amended Section 129E of the Act and also Section 35F of the CE Act shall be applicable in those cases where the Appeal has been filed after 06.08.2014. 12.1 However, as discussed above, the Coordinate Benches of this Court have exercised and, thus, preserved the power as available under Article 226 of Constitution of India, 1950 to either waive the pre-deposit condition or to grant the right to appeal subject to a part deposit or security. The power, albeit, has been exercised only in rare and exceptional cases. 12.2 It was held by the Allahabad High Court, speaking through Dr. D.Y. Chandrachud, Chief Justice (as his Lordship then was) in the Ganesh Yadav case (supra) that: "8. .... Whether the writ jurisdiction under Article 226 should be exercised, having due regard to the discipline which has been laid down under Section 35F of the Act, is a separate matter altogether but it is important to note that the power under Section 226 [sic : Article 226] has not been, as it cannot be, abridged." [Emphasis is ours] 12.3 The question that, therefore, arises is whether the present case is a....
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....aragraph 20 of the OIO in fact concludes that the seized goods are prohibited/restricted goods without going into the 'species' or 'grades' of the Agarwood Chips seized. This is important as without going into the 'grade' and 'species' of Agarwood Chips and Oil, it is not possible to ascertain its valuation. Discussion on Valuation and Prices: 14. It is noticed that the report of the Wildlife Inspector referred to in Paragraph 5.1 above is a "preliminary examination report". This report was made after the examination of the baggage of the Petitioners at IGI Airport, Delhi at the time of seizure of the goods on 20.09.2019. The report does not set forth any price/value or grade of the goods seized but identifies the seized goods as "Agarwood assorted size and shape/different grades of aquilaria malaccensis". The OIO does not refer to any "Final Report" or further examination of the seized goods after 20.09.2019. 14.1 The penalty imposed on the Petitioners has been based on the price and valuation by the Respondents No.1 and 2 of the goods seized. The Petitioners have stated that they had purchased the goods seized from the local market of Hojai, Assam. The Petitioners have s....
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....the rate of Rs. 8 lakh per Kg) approx were seized by the customs officer under the provisions of section 110 of the Customs Act, 1962." [Emphasis is ours] 15.2 Three separate Orders passed under Section 110(1) of the Act [Seizure Memos], each dated 20.09.2019 also identically value the Agarwood Chips and Agarwood Oil in terms of the Panchnama at Rs.5 Lakhs per Kg for Agarwood Chips and Rs. 8 Lakhs per Kg for Agarwood Oil. 15.3 As stated above, the SCN adopts the same "provisional international market value" as stated in the Panchnama/Seizure Memos. No clue is provided in the SCN as to the basis of valuation assigned to Agarwood Chips and Agarwood Oil. 16. Although the OIO references the report of the Wildlife Inspector, which sets out that chips of different grades were recovered, there is no reference to the prices assigned to each different grade of Agarwood in the OIO. The same value has been assigned to the entire 120 Kgs seized. The SCN sets forth the valuation of the seized goods and the penalty imposed on each of the Petitioners, based on this "provisional international market value". The OIO only reproduces the valuation as set forth in the SCN, the Panchn....
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..../- to 2800/- per tola (Boha) and Rs. 6000/- to 12000/- per tola (Khara 1st Jal) in the North East Market (i.e. 11.66 gram = 1 Tola and 86 Tola = 1 Kg). However, in the international market, the value of first grade Agarwood Oil is extremely more than two times high like prices range from few US dollar per kilo for the lowest quality to over thirty thousand dollars for top quality oil and resinous wood. The Agarwood chips is also a high value starting from Rs. 15,000/- to Rs. 2,50,000/- per kg called as Jura, Muri, Challa, Sisor, etc." Conclusion: 18. From the aforegoing discussions, it is clear that the price and valuation of Agarwood Chips and Agarwood Oil varies hugely depending on its grade and variety. 18.1 The prices relied upon by the Petitioners are not the same as those stated in the Agarwood Policy. These are also very different from the valuation relied upon by Respondent No. 1 and 2 to impose the penalty under the Act. 18.2 As discussed above, the "provisional" valuation appears to be taken verbatim from the Panchnama and the seizure memos dated 20.09.2019. The SCN adopts the same valuation for the goods seized and the OIO only reproduces this valuation. 1....