Gunjan Sharma vs Commissioner of Customs

Issue notice. Mr. Kamal Nijhawan, Sr. Standing Counsel accepts notice. The appellant is aggrieved by the impugned order of the CESTAT directing him to deposit Rs. 20 lakhs as a pre-condition for the consideration of her appeal.

The facts of the case are that the appellant is the proprietor of Customs House Agency (CHA) which had filed a bill of entry of the M/s. Planet Oversees in respect of consignment of toys imported from China. Upon receipt of information, investigations were carried out by the respondents who discovered the mis-declaration and that the consignment carried large quantity of prohibited fire crackers and explosives. Accordingly, notice was issued to the consignee. In the adjudication proceedings it was held that the consignee was a fake enterprise which did not respond or participate in the proceedings. The appellant was also held to be negligent in the performance of its responsibility as CHA agent inasmuch as he allegedly did not follow the Know Your Customer (KYC) norms and regulations applicable in that regard. The order-in-original accordingly inter alia directed the appellant to pay penalty to the tune of Rs. 30 lakhs. The appellant approached the CESTAT arguing that he could not be so made responsible for the consignment and held liable for penalty. The Tribunal as a pre-condition for the hearing of its appeal directed deposit of Rs. 20 lakhs.

It is argued by the appellant that the direction to pay such a substantial amount causes undue hardship since as CHA she could not be expected to know the real intention of the consignee or the actual truth about the consignment. It is further argued that the direction to pre-deposit almost 2/3rd of the entire amount and that too of penalty is in the circumstances extremely unjust.

Counsel for the Revenue argues that the appellant was clearly negligent in his responsibility and that the consignment could not have been even permitted.

This Court has considered the submissions. Whilst the requirement of pre-deposit for an appeal is undisputed in terms of the provisions of the Customs Act, yet the Court has to be aware of the circumstances of each case. In the present case, the appellant was not the consignee; as CHA it merely facilitated the filing of the bill of entry and other documents. As to whether it was negligent in the observance of the KYC Regulations is a matter it would have gone into in the appeal. At the same time, it does not appear from the record nor it was so argued by the Revenue that the CHA has been penalized under independent regulations for the performance of its duties. In the circumstances, the direction to deposit Rs. 20 lakhs, in the peculiar circumstances of the case appears to be excessive and harsh. Accordingly, the impugned order is modified; instead of Rs. 20 lakhs, the appellant is directed to deposit Rs. 5 lakhs or furnish bank guarantee or appropriate security in lieu thereof as a pre-condition of hearing of the appeal, within four weeks. The impugned order is modified to the above extent.

The appeal is partly allowed in the above terms. It goes without saying that nothing mentioned herein shall be construed as an expression on the merits. All rights and contentions of the parties are kept open.