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M/s. Prachi Silks, M/s. Nupur Impex, M/s. Mahalaxmi Silk Trading, Radhey Shyam Rander, M/s. Mahalaxmi Silk Trading Co., Bangalore, M/s. Goyal Enterprises, Hemanth Kumar, M/s. Maharaja Impex, Bangalore Versus The Commissioner of Customs & The Customs, Excise & Service Tax Appellate Tribunal, Chennai

2016 (1) TMI 428 - MADRAS HIGH COURT

Waiver of pre-deposit - undue hardship - validity of order of tribunal granting partial stay - Held that:- It is true that the Proviso to Section 129E of the Customs Act, 1962 empowers the Appellate Commissioner and the Tribunal to dispense with the whole or any part of the pre-deposit amount, if the Appellate Authority is of the opinion that the deposit of duty and interest demanded or penalty levied would cause undue hardship to such persons. But at the same time, while ordering a waiver of pr .....

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that it is not necessary for the appellants before the Tribunal to repeat the very same language used in the Proviso to Section 129E parrotlike, for securing an order for waiver. But at the same time, undue hardship, being a question of fact and being a factor that would vary from case to case and from person to person, an obligation is primarily cast upon any person seeking waiver to specifically plead the circumstances, in which, he is placed. But unfortunately, none of the appellants fulfill .....

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ty is levied together with penalty, the Tribunal has rounded off the duty amount to the next higher or lower figure and directed the said amount to be deposited.

Therefore, we see no reason to interfere with the order of the Tribunal - Accordingly, all the civil miscellaneous appeals are dismissed - Decided against the appellants. - CMA.Nos.2110 to CMA.No.2116/2015 - Dated:- 27-10-2015 - MR. V.RAMASUBRAMANIAN AND MR. T.MATHIVANAN, JJ For the Petitioner : Mr. V.T. Gopalan, SC for Mr.S. .....

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Counsel appearing for the appellants and Mr. V. Sundareswaran, learned Senior Panel Counsel appearing for the first respondent. 3. It appears that in the course of an investigation, it was found out that imports of mulberry raw silk/silk yarn of 27,020.93 Kgs valued at ₹ 3,36,10,640/- were made duty free, using three advance authorisations of one M/s.Kalp Impex of Surat by one Ramanand Surekha, owner of Goyal Enterprises of Bangalore. It was claimed that by diverting the goods to Bangalor .....

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d by the common order in original passed on 27.3.2014 against various persons, 21 independent appeals came to be filed before the Customs, Excise and Service Tax Appellate Tribunal. The appeals were accompanied by applications for waiver of pre-deposit condition and also for stay of enforcement of the order in original pending disposal of the appeals. 5. The miscellaneous petitions for waiver and stay were disposed of by the South Zonal Bench at Chennai of the Customs, Excise and Service Tax App .....

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filed by Kalpesh Patel, one was filed by Swapnil Patel, two were filed by Dipal J.Shah, two were filed by Prachi Silks, one was by Mahalaxmi Silk Trading, one was filed by Masterstroke Freight Forwarders Private Limited, another was filed by Meticulor Forwarders, yet another appeal was filed by Ramanand Surekha, one appeal each was filed by Radhey Shyam Rander, Goyal Enterprises, Hemanth Kumar, Super Shipping Services, Nupur Impex and Manjunatha Shipping Services Private Limited. 7. The amount .....

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00/- 4,00,000/- 4 C/S/41873/2014 in C/41623/2014 Kalpesh Patel 2,00,000/- 50,000/- 5 C/S/41874/2014 in C/41624/2014 Kalpesh Patel 2,00,000/- 50,000/- 6 C/S/41875/2014 in C/41625/2014 Swapnil Patel 3,00,000/- 50,000/- 7 C/S/41876/2014 in C/41626/2014 Kalpesh Patel 1,03,78,016/- 26,00,000/- NIL 8 C/S/41662/2014 in C/41376/2014 Dipal J.Shah 3,00,000/- 50,000/- 9 C/S/41663/2014 in C/41377/2014 Dipal J.Shah 2,00,000/- 30,000/- 10 C/S/41366/2014 in C/41142/2014 Masterstroke Freight Forwarders P.Ltd. 4 .....

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,000/- 50,00,000/- 17 C/S/41850/2014 in C/41592/2014 Radhey Shyam Rander 5,00,000/- 5,00,000/- 18 C/S/41852/2014 in C/41593/2014 Goyal Enterprises 1,49,24,031/- 25,00,000/- 1,50,00,000/- 19 C/S/41854/2014 in C/41594/2014 Hemanth Kumar 5,00,000/- 5,00,000/- 20 C/COD/42026/2014, C/S/42025/2014 in C/41738/2014 Super Shipping Services 10,00,000/- 7,00,000/- 21 C/COD/42028/2014, C/S/41027/2014 in C/41739/2014 Manjunatha Shipping Services Pvt.Ltd. 5,00,000/- 3,00,000/- 8. Out of the appellants in Col. .....

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make a pre-deposit, is wholly illegal, since the appellants were neither the importers nor the owners of the goods (ii) that instead of deciding the question of waiver of pre-deposit, on the parameters of undue hardship, as stipulated in Section 129E, the Tribunal laid focus on prima facie case and arrived at a wrong conclusion (iii) that the Tribunal erred in taking the interests of the Revenue alone to be the only criterian for deciding the applications for waiver and deposit and (iv) that by .....

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on that the deposit of duty and interest demanded or penalty levied would cause undue hardship to such persons. But at the same time, while ordering a waiver of pre-deposit, the Appellate Authority is entitled to impose such conditions as it may deem fit to impose, so as to safeguard the interests of the Revenue. 12. Therefore, the exercise of power to dispense with the pre-deposit condition is controlled by two guiding factors namely (a) undue hardship to the appellants and (ii) safeguarding th .....

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rameters of prima facie case into the issue of undue hardship. 14. In Vijay Prakash D.Mehta Vs. Collector of Customs [AIR 1988 SC 2010], the Supreme Court indicated that all relevant factors such as the probability of a prima facie case for the appellants, the conduct of the parties, etc., can be taken into account, while deciding the question of undue hardship. At the same time, the Supreme Court cautioned in Benara Volves Vs. C.C.E. [2006 (13) SCC 347], that merely upon the establishment of a .....

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ng the existence of a prima facie case. But, the Court cautioned that merits of the case should not otherwise be ordinarily gone into, unless the question on the face of it appears to be concluded. 16. Keeping in mind these parameters, if we come back to the case on hand, it is seen that the Tribunal went only into the question of prima facie case from paragraphs 22.1 upto 22.5 of its order. The Tribunal did not go into the question of undue hardship at all. 17. Therefore, it is vehemently conte .....

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nal could not have gone into that question in the absence of any specific pleading. 19. In the light of the submissions made by the learned Senior Panel Counsel for the Department, we directed the learned counsel for the appellants on record to file copies of the waiver applications made by the appellants before the Tribunal. The applications for waiver, filed by all the appellants herein, have been filed before us. 20. It is seen from the applications for waiver filed by the appellants that the .....

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being a factor that would vary from case to case and from person to person, an obligation is primarily cast upon any person seeking waiver to specifically plead the circumstances, in which, he is placed. But unfortunately, none of the appellants fulfilled this most fundamental requirement, in their application for waiver. 22. As a matter of fact, all the applications for waiver filed by the appellants herein contained six paragraphs. The first paragraph gave details of the duty levied and the p .....

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llows : "Under the said circumstances, the appellants submit that calling upon them to pre-deposit any amounts towards hearing of the captioned appeal would be an onerous one, particularly when the balance of convenience and prima facie case is in favour of the applicants. The applicants further submit that they are going through a deep financial crisis, particularly because goods worth over ₹ 2 Crores sold by them on high seas sales to M/s.Ravi Enterprises, Surat are lying at Chennai .....

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id circumstances, the applicants submit that calling upon them to pre-deposit any amounts towards hearing of the captioned appeal would be an onerous one, particularly when the balance of convenience and prima facie case is in favour of the applicants. The applicants further submit that they are going through a deep financial crisis and are not in a position to come up with any amount for pre-deposit, despite they having an excellent case on merits." 24. Therefore, the Senior Panel Counsel .....

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cation orders above, prima facie reveals that advance authorisations were obtained by Vishal Agarwal in the name of his binamidar employees without any plant or machinery installed at the premises falsely declared to be the place of manufacture. Such authorisations were lent to the importers of Bangalore to import silk yarn duty free. They pretended to be high sea sellers on the basis of fabricated documents. Upon clearance of the duty free goods in Chennai Port, those were transported to Bangal .....

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s. Such money parked in different bank accounts maintained in the name of benamidars, some of whom were holders of advance authorisation. Such money again reverted back as sales consideration of imported goods to the original importers pretending to be high seas sellers. High seas sale was nothing but a cloak and the importers masqueraded as high seas sellers. Ultimate beneficiary of fraud was importers and Vishal Agarwal. The advance authorisation agreements executed by benamidars were no man o .....

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onduits also acted to cause detriment to the interest of revenue and evasion of customs duty of high scale was made by the racket. 22.4 Further, the plea that in earlier occasion, appeals were remanded has no logical sense when the apparent is not real and prima facie the case reveals that Revenue has been prejudiced. Also there is no question of time bar when apparent fraud from record suggests that the appellant should be dealt in the jaws of the law. It is settled principles of law that when .....

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e, it was contended by Mr.V.T.Gopalan, learned Senior Counsel that the Tribunal has given waiver ranging from 0% to 100% in those 21 appeals before it, without even giving any reasons as to why the appellants came to be treated differently from one another. 28. But, we do not think that the said contention is correct. A careful look at the table extracted in paragraph 7 above would show that the Tribunal decided the cases into two categories namely (i) those, in which, a duty was levied together .....

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