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B. Hima Bindu, D/o V.V. Rama Rao Versus Commissioner, Customs, CE and Service Tax, Hyderabad

2016 (4) TMI 12 - ANDHRA PRADESH HIGH COURT

Waiver of pre-deposit of entire amount of differential duty, not covered by the bank guarantees, interest and penalty - Import of dense wavelength division multiplex equipment (DWDM), and certain imported CDs allegedly used for its functioning - Scope of Section 129-E of the Customs Act and its proviso - Appellant's claimed of financial hardship - Held that:- for balance of convenience and irreparable loss, the Tribunal should consider the necessity to safeguard the interests of revenue, and sho .....

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the special knowledge of the applicant, and must be established by him. A mere assertion of undue hardship would not suffice. The expression undue hardship is, ordinarily, related to economic hardship. The Tribunal is required to consider the question whether or not a direction to deposit the amount would cause undue hardship. Without considering the said question, it cannot go into the merits of the appeal itself. - The other aspect, which relates to safeguarding the interests of Revenue, .....

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be borne in mind while considering applications for stay, or for dispensing with the requirement of pre-deposit, under Section 35F of the Central Excise Act or under Section 129E of the Customs Act, or other similar provisions. - As the prima facie findings recorded by the CESTAT, in the order under appeal, disclose a systematic fraud having been committed by several companies and individuals, both within the country and abroad, to evade customs duty; the elaborate steps taken to disguise t .....

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he order of the CESTAT give rise to a substantial question of law - Held that:- the discretion exercised by CESTAT, to restrict waiver only to the penalty imposed, that too partially, is on a detailed analysis of the evidence on record, and for just and valid reasons. Whether the Tribunal should have exercised its jurisdiction differently is not a substantial question of law justifying interference. While no substantial question of law would arise even if one of the two possible views appeal to .....

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question of law necessitating interference in an appeal under Section 130 of the Customs Act. - Whether failure by the appellant to comply with the order passed under the proviso to Section 129-E of the Customs Act, would result in dismissal of the appeal filed before the CESTAT - Held that:- it is necessary, in the first instance, to note the legal regime prevalent before sub-section 2-A was inserted to Section 129-B of the Customs Act and Section 35-C of the Central Excise Act. Section 12 .....

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2. Accepting the contention, that Section 129-E of the Customs Act did not give any power to the CESTAT to dismiss the appeal for non-compliance with the requirements regarding deposit of duty, interest or penalty, would have meant that the appeal would have to be kept on file for ever, even when the requirements of Section 129-E was not complied with. Retention of such an appeal on the file would have served no purpose for, unless Section 129-E was complied with, the CESTAT could not have proce .....

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ppeal for non-deposit of duty or penalty, yet it made it obligatory on the appellant to deposit the duty or penalty, pending the appeal, failing which the Appellate Tribunal was fully competent to reject the appeal. - So, it is clear that the provisions of Section 129(1)ibid, Section 129-E ibid and its provisos were inserted thereto, as a result, failure to deposit the whole of the duty, interest and penalty, or such part thereof, within the time stipulated by CESTAT would result in dismissa .....

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r Counsel for Sri Ch. Pushyam Kiran, Learned Counsel For the Respondent : Sri V. Gopalakrishna Gokhaley. ORDER ( Per Hon ble Sri Justice Ramesh Ranganathan) These appeals, under Section 130 of the Customs Act, 1952, are preferred against the miscellaneous orders passed by the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench at Bangalore (CESTAT for short) in Miscellaneous Order Nos.27769-27781/2013 dated 3.7.2014 and 27.10.2014. The dispute, in the appeals filed before the .....

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e software is embedded in the equipment itself, and not supplied separately, the value of such embedded software is included in determining the assessable value of the equipment and it is only if the software is not embedded, and is supplied separately, can it not be included in the value of the equipment. On the ground that embedded software was shown separately as customised software only to evade customs duty, the adjudicating authorities, besides demanding differential duty on the value attr .....

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, filed against the orders passed by the adjudicating authorities, the CESTAT was mainly called upon to examine whether PISL and VMCL had deliberately shown the software, embedded in the system imported by them and supplied to BSNL, as separately imported customised software only to evade payment of customs duty on the software portion of the imported equipment. In the applications filed by the appellants herein, seeking waiver of pre-deposit of duty, interest and penalty pending disposal of the .....

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irected to deposit 1% of the penalty. The Judicial Member, however, differed with the opinion of the technical member only with regards partial waiver of pre-deposit of penalty. He was of the, prima facie, view that there was material available to show the alleged evasion of duty by the companies which would be examined at length at the time of hearing of the appeal; and, in such circumstances, the predeposit of 10%, 5% and 1% of the aggregate penalty should be replaced by 50%, 25% and 25% respe .....

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terest payable from the department, and pay the same; the department was permitted to encash the bank guarantees; the other appellants were directed to pre-deposit 10%, 5% and 1% of the penalty imposed by the adjudicating authorities; and, in so far as PCL was concerned, pre- deposit of penalty was waived. In its subsequent order dated 27.10.2014 the CESTAT, after taking note of the submission urged on behalf of the appellants, extended the time limit for payment of the dues by 8 weeks from the .....

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disposal of the appeals by the CESTAT; and, even otherwise, failure to deposit the amount, as directed by the CESTAT, would not result in dismissal of the appeals. Learned Senior Counsel, while referring to the judgment of the Calcutta High Court in Promising Exports Ltd v Union of India (2009) 243 ELT 3 in this regard, would fairly state that the said judgment has been overruled by a Division bench of the Calcutta High Court in Commissioner of Central Excise v Shree Gobinddeo Glass Works (2011) .....

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CESTAT, would result in dismissal of the appeals; it is only on compliance with the condition of deposit of customs duty, interest and penalty, is the CESTAT empowered to hear the appeal filed by the desiring assessee; the appeals, preferred by the appellants, are not maintainable as no substantial question of law arises for consideration; and, as the CESTAT is the final Court of fact, the factual findings recorded, in the orders under appeal, do not necessitate interference. Learned Standing Co .....

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cts, and the prima facie findings, recorded by the CESTAT in the miscellaneous orders under appeal. Dense Wavelength Division Multiplexing Equipment (DWDM) is the core technology in an optical transport network. The source, a solid-state laser, is required to provide stable light within a specific narrow bandwidth that carries the digital data modulated as an analog signal. The DWDM systems employ multiplexers to combine the signals. The inherent loss, associated with multiplexing and demultiple .....

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on longer spans; and (iii) on the receiver side, photo detectors and optical de-multiplexers using thin film filters or diffractive elements. This equipment is used by all major communication service providers all over the world, and HTCL is one of the leading manufacturers of DWDM equipment. BSNL called for tenders in the years 2006 and 2007 for supply of DWDM equipment of two types, namely 2.5G, 32 channel and 10G, 40 channel, to be sourced only from domestic manufacturers. The bidders were a .....

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d in determining the assessable value of the equipment; the General Manager of VMCL had admitted that the software received by them was embedded in the equipment, they had imported blank CDs mis-declaring them as customized software only to reduce their customs duty liability, and they were forced to resort to this modus operandi because of stiff competition in the tendering process of BSNL; the Senior Manager of VMCL had admitted that the software in the system was already loaded by the supplie .....

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and PISL used to receive useless blank CDs/CDs with 70 KB data describing them as customized software on CD for DWDM, around 19,000 CDs containing useless data were burnt by them just to show that they were supplying software in the CDs, whatever software was required to run the DWDM equipment was already loaded in the hardware, and blank CDs were imported only to facilitate splitting up the equipment; the Director of VMCL had also admitted that the software, allegedly imported by VMCL, was alre .....

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had stated that the software, supplied with the equipment, was not customised software but was embedded in the equipment and, because of the specific request made to them, they had issued separate invoices; the Chief Executive Officer of HTICPL had admitted that what was supplied was embedded software; the Senior Product Manager of HTICPL had admitted that the equipment supplied by them was in a ready to use condition, and there was no need to load any software; the Chairperson of PISL had admit .....

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by the statement that more than 16,000 CDs were burnt by the appellants; under the agreement between HTCL and the importer, the software was defined only as embedded software; the software was imported through one port, and the hardware through another; and the appellants had planned and conspired to avoid customs duty. After extracting the contents of the test report, the CESTAT further observed that the hardware equipment contained embedded software; the software in the CDs was not required fo .....

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ware could have been recorded into the equipment since the equipment did not have any such system. I. THE SCOPE OF SECTION 129-E OF THE CUSTOMS ACT AND ITS PROVISO: In considering the appellants claim that they should be permitted to deposit an additional sum of ₹ 10 Crores and the balance disputed customs duty, interest thereon and part of the penalty, not waived by the CESTAT, should be waived, it is necessary to examine the scope of Section 129-E of the Customs Act and the circumstances .....

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hese provisions in juxta-position with each other. Section 129 of the Customs Act 1952 prior to substitution of Chapter XV by the Finance Act, 1980 Section 129E of the Customs Act, 1952 after substitution of Chapter XV by the Finance Act, 1980 Section 35F of the Central Excise Act prior to its substitution by Act 25 of 2014 with effect from 6.8.2014 129 (1) Where the decision or order appealed against related to any duty demanded in respect of goods which are not under the control of customs aut .....

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may deem fit. Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied : Provided that where in any particular case, the Collector (Appeals) or the Appellate Tribunal is .....

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authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied. Provided that where in any particular case, the Commissioner Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner(Appeals) or, as the case may be, the Appellate Tribunal, .....

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9; Seth Nand Lal v. State of Haryana AIR 1980 SC 2097). The right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right, and can be circumscribed by the conditions in the grant. (Vijay Prakash D. Mehta v. Collector of Customs (Preventive) Bombay AIR 1988 SC 2010 ). Section 129(1) of the Customs Act, 1952, prior to the substitution of Chapter XV .....

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e duty or penalty pending the appeal. There was no provision therein by which the appellate authority could waive the requirement regarding deposit of the entire amount of duty or penalty. But, by the proviso to sub-section (1) of Section 129, discretion was given to the appellate authority to either waive deposit of the entire amount of penalty or duty, or reduce the quantum to be so deposited if the appellate authority was of the opinion that the requirement, regarding deposit of the full amou .....

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. If the Statute gives a right to appeal upon certain conditions, it is upon fulfilment of these conditions that the right becomes vested in, and exercisable by, the appellant. The proviso gives a discretion to the authority to dispense with the obligation to deposit in case of "undue hardship". It is a discretion vested in an obligation to act judicially and property. That discretion must be exercised on relevant material, honestly, bonafide and objectively. Once that position is esta .....

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interests of revenue" if the demand "would cause undue hardship". The question of dispensing with pre- deposit would arise only when the duty demanded, or the penalty levied, would cause undue hardship to the appellants, and not otherwise. Any order to dispense with pre-deposit must, necessarily, be subject to certain conditions which should be imposed to safeguard the interests of revenue. The interests of revenue must be kept in mind while exercising the power to dispense with .....

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demand. (Indu Nissan Oxo Chemicals Industries Limited v. Union of India (2007) 13 SCC 487; M/s. Sri Chaitanya Educational Committee, Poranki, Vijayawada (Judgment of A.P. High Court Division Bench in CEA No.301 of 2010 dated 19.01.2011)). A mere prima facie case does not justify an interim order of protection being passed. But if, on a cursory glance, it appears that the demand raised has no legs to stand, it would be undesirable to require the appellant to pay the full or a substantial part of .....

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ed. (Benara Valves Ltd. v. Commissioner of Central Excise [2009] 20 VST 297 (SC) = (2006) 13 SCC 347; M/s. Sri Chaitanya Educational Committee, Poranki, Vijayawada (Judgment of A.P. High Court Division Bench in CEA No.301 of 2010 dated 19.01.2011)). Besides focusing on the aspects of a prima facie case, balance of convenience and irreparable loss, the Tribunal should also consider the necessity to safeguard the interests of revenue, and should impose such conditions as may be required in this re .....

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. While considering the application, seeking waiver of pre-deposit, these twin requirements should be kept in view. Use of the word undue would mean something more than just hardship. It means an excessive hardship or a hardship greater than the circumstances warrant. Undue means something which is not merited by the conduct of the claimant, or is disproportionate to it. For a hardship to be undue it must be shown that the burden to observe or to perform is out of proportion to the nature of the .....

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nto the merits of the appeal itself. (Bhavya Apparels (P) Ltd. v. Union of India [2007] 10 SCC 129 ; M/s. Sri Chaitanya Educational Committee, Poranki, Vijayawada (Judgment of A.P. High Court Division Bench in CEA No.301 of 2010 dated 19.01.2011)). The other aspect, which relates to safeguarding the interests of Revenue, is a matter which the Tribunal should focus upon, while considering whether pre-deposit should be waived either wholly or partially. It is for the Tribunal to impose such condit .....

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rectorate [2008] 12 SCC 359; M/s. Sri Chaitanya Educational Committee, Poranki, Vijayawada (Judgment of A.P. High Court Division Bench in CEA No.301 of 2010 dated 19.01.2011)). The following principles should be borne in mind while considering applications for stay, or for dispensing with the requirement of pre-deposit, under Section 35F of the Central Excise Act or under Section 129E of the Customs Act, or other similar provisions: (1) the applications for stay should not be disposed of in a ro .....

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and there should not be the slightest indication of a likelihood of prejudice to the interest of public revenue; (5) while dealing with such applications, the twin considerations are the undue hardship which the applicant would suffer if his request for waiver (either wholly or partially) of pre-deposit of duty, interest and penalty is not acceded to, and the need to safeguard the interests of revenue (6) when the Tribunal decides to grant full or partial stay, it is imperative that it imposes s .....

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he entire amount of differential duty, not covered by the bank guarantees, within twelve weeks from the date of receipt of the order, and report compliance by 27.10.2014; they were directed to pay the principal, ascertain the interest payable from the department, and pay the same; the department was permitted to encash the bank guarantees; the other appellants were directed to pre-deposit 10%, 5% and 1% of the penalty imposed by the adjudicating authorities; and, in so far as PCL was concerned, .....

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orm of customs duty, can it be said that the order of CESTAT suffers from such an illegality as to necessitate interference in appeal by this Court? II. INTERFERENCE BY THE HIGH COURT, IN THE EXERCISE OF ITS APPELLATE JURISDICTION UNDER SECTION 129- B OF THE CUSTOMS ACT, IS PERMISSIBLE ONLY IF THE ORDER OF THE CESTAT GIVE RISE TO A SUBSTANTIAL QUESTION OF LAW? An appeal is a proceeding undertaken to have a decision reconsidered by bringing it to a higher authority. An appeal, strictly so called, .....

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nst the order of CESTAT. It is useful to read these two provisions in juxta-position with each other:- Section 35G of the Central Excise Act Section 130 of the Customs Act Appeal to High Court: (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for pu .....

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involves a substantial question of law. The right of appeal to the High Court against the order of the CESTAT, under Section 130 of the Customs Act, 1952, is available only if a substantial question of law arises for consideration. The word substantial, as qualifying a question of law, meansof having substance, essential, real, of sound worth, important or considerable. It is to be understood as something in contra-distinction withtechnical, of no substance or consequence. In enacting Section 1 .....

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. To be substantial, a question of law must be debatable, not previously settled by the law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, in so far as the rights of the parties before it are concerned. It will depend on the facts and circumstance of each case whether a question of law is a substantial one, the paramount overall consideration being the need for striking a judicious balance between the indispensable obliga .....

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sion based on no evidence, not only refers to cases where there is total dearth of evidence, but also refers to any case where the evidence, taken as a whole, is not reasonably capable of supporting the finding. (Boodireddy Chandraiah (2007) 8 SCC 155). The proper test to determine whether a question of law raised in the case is substantial would be whether it directly and substantially affects the rights of the parties and, if so, whether it is either an open question in the sense that it is no .....

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ered by any specific provision of law or settled legal principles emerging from binding precedents, and involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the Court/Tribunal below has decided the matter, either ignoring or acting contrary to such legal principles. In the second type of cases, the substantial question of law arises not .....

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by the decision of the highest Court, or if the general principles to be applied in determining the question are well settled and the only question is of applying those principles to the particular facts of the case, it would not be a substantial question of law. (Boodireddy Chandraiah (2007) 8 SCC 155; Chunilal V. Mehta AIR 1962 SC 1314; Rimmalapudi Subba Rao v. Noony Veeraju AIR 1951 Mad 969). Where it is found that the Tribunal has assumed jurisdiction which did not vest in it, the same can .....

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, Guntur v. Commissioner of Customs & Central Excise, Tirupati 2006(2) ALT 523 (DB). It is not even contended before us that the prima facie findings of the CESTAT are perverse or are based on no evidence. The only contention urged by Sri S. Ravi, Learned Senior Counsel, in this regard is that the CESTAT did not consider the appellants plea of financial hardship. This contention does not merit acceptance as, on the appellants claim that they were in serious financial difficulties as BSNL did .....

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s could have easily recovered the duty paid by them since, according to the tender documents, it could have been shown separately and collected; the appellants had put themselves in a situation where they had committed an offence, to reduce their customs duty liability, in their anxiety to become the lowest bidder; it would not be appropriate to lend them a helping hand waiving the requirement of pre-deposit of duty which, prima facie, they were liable to pay at the time of importation; the supp .....

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nking the authorities concerned into believing that the imported equipment did not contain software, and that customised software for such equipment was being imported separately. This elaborate ruse, the CESTAT prima facie held, involved several players both within the country and abroad including all the appellants herein. The facts, as noted in the order of the CESTAT, show that, though the software was embedded in the imported equipment, blank and useless CDs were imported in huge quantities .....

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annot be held to give rise to a substantial question of law. Where the Tribunal is shown to have exercised its discretion in a judicial manner, it cannot be termed to be an error either of law or of procedure requiring interference. (Crane Betel Nut Powder Works, Guntur 2006(2) ALT 523 (DB). As the direction to pre-deposit customs duty and interest thereon by the CESTAT represents the amounts due to the Revenue, which the appellants have allegedly evaded payment of, the orders impugned in these .....

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hin the prescribed parameters, honestly and bonafide, the fact that another authority, be it the Supreme Court or the High Court, may have a different perspective of that question would not give rise to a substantial question of law. (Crane Betel Nut Powder Works, Guntur 2006(2) ALT 523 (DB); Collector of Customs, Bombay v. Swastic Woolens (P) Ltd. 1988 Supp. SCC 796). The High Court cannot substitute its opinion, for the opinion of the Tribunal, unless it is found that the conclusions drawn wer .....

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ion exercised by CESTAT, to restrict waiver only to the penalty imposed, that too partially, is on a detailed analysis of the evidence on record, and for just and valid reasons. Whether the Tribunal should have exercised its jurisdiction differently is not a substantial question of law justifying interference. (Boodireddy Chandraiah (2007) 8 SCC 155; Reserve Bank of India v. Ramkrishna Govind Morey 1976(1) SCC 803 ; Kondiba Dagadu Kadam (1999) 3 SCC 722). While no substantial question of law wou .....

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along with interest, and has waived a substantial part of the penalty for some of the appellants, and in its entirety for a few others, the orders under appeal cannot be said to suffer from a patent illegality giving rise to a substantial question of law necessitating interference in an appeal under Section 130 of the Customs Act. III. FAILURE BY THE APPELLANT TO COMPLY WITH THE ORDER, PASSED UNDER THE PROVISO TO SECTION 129- E OF THE CUSTOMS ACT, WOULD RESULT IN DISMISSAL OF THE APPEAL FILED BE .....

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applicable in view of the insertion of sub-section (2-A) to Section 129-B of the Customs Act, 1952 (similar to Section 35-C (2-A) of the Central Excise Act). It is necessary, in the first instance, to note the legal regime prevalent before sub-section 2-A was inserted to Section 129-B of the Customs Act and Section 35-C of the Central Excise Act. Section 129-E did not expressly provide for rejection of the appeal for non-compliance with the requirement regarding the deposit of penalty or duty bu .....

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nce with the requirements regarding deposit of duty, interest or penalty, would have meant that the appeal would have to be kept on file for ever, even when the requirements of Section 129-E was not complied with. Retention of such an appeal on the file would have served no purpose for, unless Section 129-E was complied with, the CESTAT could not have proceeded to hear an appeal on merits. The logical consequence of failure to comply with Section 129-E was rejection of the appeal on that ground. .....

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or penalty, pending the appeal, failing which the Appellate Tribunal was fully competent to reject the appeal. (Vijay Prakash D. Mehta AIR 1988 SC 2010 ). On the question whether the insertion of sub-section (2-A) to Section 129-B of the Customs Act and Section 35-C of the Central Excise Act has brought a change to the law declared by the Supreme Court earlier, in Navin Chandra Chottelal AIR 1971 SC 2280 and Vijay Prakash D. Mehta AIR 1988 SC 2010 , it is necessary to read Section 35-C (2A) of t .....

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al within a period of one hundred and eighty days from the date of such order: Provided further that if such appeal is not disposed of within the period specified in the first proviso, the stay order shall, on the expiry of that period, stand vacated. Provided also that where such appeal is not disposed of within the period specified in the first proviso, the Appellate Tribunal may, on an application made in this behalf by a party and on being satisfied that the delay in disposing of the delay i .....

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fect from 11.5.2002. The third proviso was inserted by Act 17 of 2013 w.e.f.10.5.2013. Section 129 B of the Customs Act (2A) The Appellate Tribunal shall, where it is possible to do so, hear and decide every appeal within a period of three years from the date on which such appeal is filed: Provided that where an order of stay is made in any proceedings relating to an appeal filed under sub- section (1) of section 129A, the Appellate Tribunal shall dispose of the appeal within a period of one hun .....

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not attributable to such party, extend the period of stay to such further period, as it thinks fit, not exceeding one hundred and eighty-five days, and in case the appeal is not so disposed of within the total period of three hundred and sixty five days from the date of order referred to in the first proviso, the stay order shall, on the expiry of the said period, stand vacated. Note: Sub-Section (2A) and the first two provisos were inserted by Act 20 of 2002 with effect from 11.5.2002. The thir .....

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tomatic vacation of the order of stay, if the appeal was not disposed of within a period of one hundred and eighty days; there was no question of extension of an order of stay; in a case where the order of stay, passed by the Tribunal, was automatically vacated there were no fetters on the Revenue, in order to safeguard public revenue, from recovering the sum due; after vacation of the order of stay, it was the appeal which remained; in that case the Tribunal should, where it is possible to do s .....

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s, 1982 (for short the 'Rules'); if a direction is issued by the Tribunal for pre-deposit of duty or penalty and, if deposit is made, an appeal would be treated to be ready for hearing; the newly introduced sub -section (2A) to Section 35C has a bearing on Section 35F; since the proviso to Section 35F speaks of, in case of "undue hardship", dispensing with the deposit of duty demanded or penalty levied on certain conditions "pending appeal", it is certainly a proceedi .....

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visions contained in the newly inserted Sub-section (2A) to Section 35C otiose; in view of the insertion of Sub-Section (2A) to Section 35C of the Central Excise Act, the law laid down, in Navin Chandra Chottelal AIR 1971 SC 2280 and Vijay Prakash D. Mehta AIR 1988 SC 2010, stand impliedly diluted; once an application, for dispensing with the pre- deposit, is disposed of what remains on record is the appeal; Rule 19 requires the appellant to be heard on the day fixed for hearing of the appeal; s .....

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to the requirements under the Rule; and, after applications for stay are disposed of, the Rules postulate either for an appeal to be dismissed for non -appearance of the petitioner, or for it to be decided on merits on the day fixed for hearing of the appeal. The judgment rendered in Promising Exports Ltd1, by the Learned Single Judge of the Calcutta High Court was overruled by the Division bench of the Calcutta High Court in Shree Gobinddeo Glass Works Ltd. (2011) 263 ELT 178). The Division ben .....

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rovided earlier; the three year period therein was substituted with 180 days whenever any interim order of stay is granted in an appeal; the second proviso of the said Subsection provides that, if for any reason the appeal is not disposed of where interim order of stay is granted, then the stay order shall, on the expiry of that period, stand vacated; the provision has nothing to do with the provision for pre -deposit pending hearing of the appeal; the provision for pre -deposit is an independen .....

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e does not apply any provision of law in a truncated manner; even in the situation, subsequent to the amendment of Section 35C by way of insertion of Sub -section (2A), the decision of the Supreme Court, in the aforesaid two cases, have full force; Section 35F is an independent provision, and its language is mandatory; the rules framed under the Act can neither provide for any additional right, nor can it be read as inconsistent with the provisions of the Act itself; the effect of insertion of S .....

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ub-section (2A) of Section 35C of the Central Excise Act, 1944. The CEGAT had held that the amendment did not affect the stay orders passed prior to the date of coming into force of the amendment, and the amendment did not curtail the powers of the Tribunal to grant stay exceeding six months. A similar view was taken by a larger bench of the CEGAT in IPCL v. Commissioner of Central Excise, Vadodara (2004) 169 ELT 267. It is in this context that the Supreme Court held that the Sub-Section (i.e., .....

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the impugned order, and as expressed in the Larger Bench in IPCL (2004) 169 ELT 267, could not be faulted. The Supreme Court made it clear that they should not be understood as holding that any latitude was being given to the Tribunal to extend the period of stay, except on good cause and only if it is satisfied that the matter could not be heard and disposed of by reason of the fault of the Tribunal for reasons not attributable to the assessee. After the judgment of the Supreme Court, in Kumar .....

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