K.P. Abdul Majeed vs CEGAT

Srinivasan, J.—This appeal is against the order dismissing the writ petition filed by the appellant, challenging an order passed by the Tribunal,

the 1st respondent herein, refusing to waive the deposit required u/s 129-E of the customs Act, 1962 in entirety, by reducing the said deposit to a

sum of Rs. 5 lakhs as against Rs. 20 lakhs. According to the appellant, the entire deposit should have been waived by the Tribunal, in view of the

fact that no opportunity was given to him for personal hearing. Learned counsel submits that u/s 124 of the Customs Act, a show cause notice

should have been issued and again a reasonable opportunity of being heard in the matter should also be given. Thus, according to the appellant,

two opportunities are provided in this Section, viz. one by giving a show cause notice and another, by giving a reasonable opportunity of being

heard in the matter.

On facts of the case admittedly, a show cause notice was issued, but no reply was given by the appellant. The argument of learned counsel

before the Tribunal was that the notice was incomplete and there was no necessity for him to send a reply. The Collector taking into consideration

the circumstances of the case and the failure to reply to the notice as well as the absence of any request by the appellant for personal hearing in the

matter, produced to pass the order. It is contended that even in such cases, the collector should have given another notice for hearing. At present it

is unnecessary to consider this contention.

The Tribunal was concerned only with the question whether there could be waiver of the deposit required u/s 129(E) of the Customs Act. The

Proviso to that section is to the effect that where in any particular case, the Collector (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 Collector (Appeals) or as the case may be, the

Appellate Tribunal may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of

revenue. This language of the proviso is very significant. The dispensing with the deposit of amount is not automatic. It is a matter of dispensing left

to the Tribunal for decision. The Tribunal has to consider on the one hand whether the deposit of the duty demanded and the penalty levied would

cause undue hardship to the appellant and on the other hand, the Tribunal has also got to take into account the interests of the revenue and impose

such conditions, as it may deem fit to safeguard the interests of the revenue.

Learned counsel for the appellant contends that while considering the question of undue hardship, the Tribunal has to decide whether there is a

prima facie case in favour of the appellant and all relevant factors have to be taken into account before any order is passed on the application for

waiver of deposit. Reliance is placed on the judgment of the Supreme Court in Vijay Prakash D. Mehta and Another Vs. Collector of Customs

(Preventive), Bombay, . The Court said in that case that Section 129-E of the Customs Act makes it obligatory on the appellant to deposit the

duty or penalty, pending an appeal, failing which the Appellate Tribunal is fully competent to reject the appeal. The Court observed that the proviso

gives power to the appellate Authority to dispense with such deposit unconditional or subject to such conditions in cases of undue hardship and

that it is a matter of judicial discretion of the Appellate Authority and that discretion must be exercised on relevant materials, honestly, bona fide

and objectively. It is also pointed out that once that position is established, it cannot be contended that there is any improper exercise of the

jurisdiction by the Appellate Authority. In other words, the Supreme Court pointed out that if the discretion of the Appellate Authority is exercised

on relevant materials, honestly, bona fide and objectively, there is no question of interfering with that discretion under Article 226 of the

Constitution of India on the ground of any improper exercise of the jurisdiction by the Appellate Authority.

Learned counsel, however, placed reliance on the following passage in that judgment found in para 14

In the facts and circumstances of the case and all the relevant factors, namely, the probability of the prima facie case of the appellant, the conduct

of the parties, have been taken into consideration by the Tribunal. The purpose of the Section is to act in terrorem to make the people comply with

the provisions of the law.

The very passage shows that the observations made therein were based on the facts and circumstances available in that case. It does not mean

that as a rule in every case, the Appellate Authority has to decide whether a prima facie case has been made out by the party and if a prima facie

case is made out, the deposit should be waived. It does not follow that as and when an appellant makes out a prima facie case, there should be

waiver of deposit. A prima facie case is only one of the factors to be taken into account by the Appellate Authority while considering the waiver of

deposit under the proviso to Section 129E of the Act.

On the facts of this case, it is fond by the Tribunal that the appellant has not chosen to reply to the show cause notice and he has shown scant

respect thereto. The Tribunal has also found that the appellant has not made out a prima facie case, as contended by him. It is argued by learned

counsel now that the order of the Collector of Customs is a nullity inasmuch as no opportunity was given to him for a personal hearing and the

Tribunal ought to have taken that circumstance into consideration. We are unable to accept this contention. Even assuming that the appellant did

not have an opportunity of being heard, personally before the Collector, it cannot be said that the order is a nullity. The question will have to be

decided on the facts and circumstances of the case, particularly in view of the fact that the appellant has not chosen to send a reply to the show

cause notice and failed to ask for a personal hearing.

A perusal of the order of the Tribunal shows that it has taken into account all the relevant facts in this case, including the financial hardship of the

appellant. Thereafter, the Tribunal has come to the conclusion that the interest of the revenue will be safeguarded by directing the appellant to

deposit a sum of Rs. 5 lakhs instead of Rs. 20 lakhs.

Learned Single Judge has rightly found that the Tribunal has referred to the balance of convenience and passed a just order, on the facts and

circumstances of the case. Learned single Judge has therefore rightly refused to exercise the jurisdiction under Article 226 of the Constitution of

India, particularly, when the matter is one of discretion exercised by the Appellate Tribunal.

In the circumstances, we are not convinced with the argument that the order of the Collector of Customs is a nullity and therefore, the Tribunal

ought to have waived in entirety the deposit. Consequently the appeal fails and is dismissed.