2008 (1) TMI 541 - HC - Customs

Appeal before the Additional Director Gerneral of Foreign Trade was rejected on account of non-payment of pre-deposit - having regard to the facts and circumstances and the petitioner being agreeable to deposit the remaining amount of the customs duty which has been made notwithstanding that the petitioner had suffered serious losses in his business and was not in a position to meet the various liabilities - petitioner has now come forward with the assurance that the petitioner is in a position to meet its liabilities and would seek an opportunity of hearing before the Joint Director General of Foreign Trade to make out a case for sympathetic consideration insofar as the quantum of penalty is concerned - the interest of justice would be served if the petitioner is afforded such an opportunity. - The matter is remitted to for a re-consideration of the quantum of penalty that may or may not be imposed on the petitioner having regard to the circumstances which the petitioner is to establish before the said authority,

Summary

Issues:
1. Imposition of penalty by respondent no. 1 without affording an opportunity for extension of time to fulfill export obligations under the seventh advance license.
2. Dismissal of appeal by second respondent due to failure to make pre-deposit.
3. Petitioner's request for re-consideration of penalty and opportunity for a hearing before respondent no. 1.
4. Respondent's opposition to the petitioner's plea and argument on the maintainability of the writ petition.
5. Court's decision on the matter and remittance of the case to respondent no. 1 for re-consideration of penalty.

Analysis:
1. The petitioner, engaged in import and export of silk yarn and fabrics, faced challenges in fulfilling export obligations due to various unforeseen circumstances, including misappropriation of goods by a job weaver and personal hardships. The petitioner's properties were attached by the bank, leading to the closure of the business. The petitioner sought an extension of time to fulfill obligations under the seventh advance license, but respondent no. 1 imposed a penalty of Rs. 14 lakhs without prior notice, prompting the petitioner to file a writ petition for relief.

2. The petitioner's appeal before the second respondent under the Foreign Trade Act was summarily dismissed due to failure to make the required pre-deposit. The petitioner argued for a re-consideration of the penalty, highlighting provisions in the Act allowing for sympathetic consideration based on circumstances. The petitioner expressed willingness to deposit the remaining customs duty, subject to a fair hearing before respondent no. 1.

3. The respondent opposed the petitioner's plea, arguing that the writ petition was not maintainable as the appeal dismissal was based on non-compliance with mandatory pre-deposit requirements. The respondent contended that the penalty imposition was lawful and proportional to the value of goods, urging the court to reject the petition to prevent circumvention of legal obligations.

4. Despite the opposition, the court found merit in the petitioner's case, considering the petitioner's willingness to fulfill financial obligations and seeking a fair opportunity for a hearing before respondent no. 1. The court allowed the writ petition, quashed certain annexures, and remitted the matter to respondent no. 1 for re-consideration of the penalty amount. The petitioner was directed to deposit the remaining customs duty within four weeks, emphasizing the importance of a fair and just assessment of the penalty in light of the petitioner's circumstances.