Moon Light Exim Pvt. Ltd. vs Union of India

Instant petition is directed against the orders passed by the authority dated 18-4-2012 & 1-11-2012. As alleged in the writ petition, the petitioner company is 100% export oriented unit (EOU) and was engaged in manufacture of recycled non-ferrous & ferrous metals and after the letter of permission (dated 20-12-2000) was granted to work as 100% EOU (Export Oriented Unit) by the competent authority, the petitioner company started commercial production w.e.f. 9-3-2001 - 9-12-2003 and during the said period the petitioner company imported mixed metal scrap which was processed/segregated, out of which recycled copper scrap/bras crap/iron scrap etc. was extracted and bills of entry were imported under Notification 53/97-Customs, dated 3-6-1997. As has been further alleged in the writ petition that the unit was entitled to seek exemption from import of inputs subject to fulfilment of the conditions of notification wherein the requirement was to export the goods in lieu of foreign currency and if permitted to sell the goods not appropriate for export in the Domestic Tariff Area (DTA) on payment of duly. In disobedience of LOP made physical exports to the tune of Rs. 43.26 Lacs and sold to other EOUs to the extent of Rs. 37.84 Lacs.

According to the petitioner no central excise duty was payable and exemption from import of customs duty was valid and as such the petitioner company was entitled for exemption from import on customs duty. However, the authority served a show cause notice dated 22-10-2008 demanding amount of approx. Rs. 2.06 crores towards customs duty for violation of condition of Notification 53/97-Customs, dated 3-6-1997 and after the opportunity being afforded, the assessing authority passed order on 22-11-2011 u/s 28 of the Customs Act in terms of Notification 53/97, dated 3-6-1997 and demand of customs duty amounting to Rs. 2,05,59,822/- was ordered to be recovered along with interest in terms of Section 28AB of the Customs Act, 1962 and apart from it, further sum of Rs. 25,00,000/- shall be liable to pay in terms of Section 125 of the Act and also imposed penalty u/s 112(a) of the Customs Act, 1962, of the same amount to be recovered from the assessee petitioner herein.

Against the order of the Assessing Authority, remedy, in the ordinary course, has been provided of filing appeal to the Appellate Tribunal. However, to provide effective right of appeal, discretion has been left with the Tribunal to exercise judicious discretion granting exemption from pre-deposit which is otherwise the requirement of law u/s 129E of the Customs Act. Along with the appeal preferred by the petitioner, a separate application was filed seeking exemption from pre-deposit u/s 129E of the Customs Act, 1962. The learned Tribunal examined the application seeking exemption from condition of pre-deposit and taking note of the material which came on record, in para 18 of its order observed that if the petitioner complies with the pre-condition of depositing Rs. 1.25 crores within eight weeks from the date of order as a pre-condition for admission of appeal, there shall be a waiver of balance dues arising from the impugned order and stay on collection of such dues.

As it reveals from the record that the petitioner company filed rectification application primarily on the premise that the goods which were cleared into DTA as observed by the Tribunal on payment of concessional rate of duty the petitioner deposited what was prescribed and this according to him was not properly looked into by the Tribunal and the application for rectification as evident from the order dated 8-10-2012 taking note of the submissions made re-examined the financial hardship of the petitioner and observed in detail in para 6 of the order that a person who indulges in such operation makes sure that the profits earned or not reflected in the balance sheet and the Tribunal was of the view that he also will operate with hardly any assets making it easy for doing the vanishing trick and he has already achieved his plan substantially, a full waiver of pre-deposit will only help him to achieve his plan to the full end smoothly as prayed for, even the financial statements placed by the petitioner on record didn''t convince the Tribunal and the Tribunal was of the view that any further relaxation, if given, in making the pre-deposit will be detrimental to the interest of revenue and all the paramount considerations were kept in view and taking note thereof, the rectification application tiled by the petitioner also came to be rejected vide order dated 8-10-2012.

The main thrust of submissions of counsel for petitioner is the same what was contended before the Tribunal to be more specific at the stage when he moved rectification application and his total emphasis is that the goods imported by the petitioner into DTA availing partial exemption and dues deposited by the petitioner was not taken note of and the observation made by the Tribunal that what is being contended by the petitioner could be looked into at the time of final hearing of the matter, according to him was required to be considered by the Tribunal at the stage when application filed by him was being considered and that is apparent error which the Tribunal committed in passing of order impugned.

The submission made is wholly bereft of merit for the reason that the Tribunal was supposed to look into in totality taking note of the financial status of the petitioner and so also the ancillary facts that what is being reflected from prima facie look of the order impugned. However, what is being deposited in complying with the condition of pre-deposit is always subject to outcome of the appeal. At the same time, the Tribunal is supposed to keep the paramount consideration that the condition of pre-deposit may not become that stringent which leaves the appellant remediless or being deprived to avail statutory remedy which is contemplated under the law.

However, in the instant case, the Tribunal after taking note of the financial status of the petitioner company which was given at the stage when rectification application was filed and also taking note of the submissions made the Tribunal was of the view that the appellant requires no indulgence for exemption regarding condition of pre-deposit and accordingly considered it appropriate to review the customs duty to be deposited at the stage for maintaining the appeal and observed that rest of the duty and penalty & other charges levied by the assessing authority shall remain stayed and be looked into at the time of hearing.

After going through the order impugned of the learned Tribunal, we do not find that there is at all any manifest error being committed while passing order impugned exercising judicious discretion which may require interference by this Court under its limited scope of judicial review under Articles 226 & 227 of the Constitution. Consequently, the petition is devoid of merit & accordingly stands dismissed. However, it is made clear that since this Court considered the matter at the stage of invoking condition of pre-deposit u/s 129E of the Customs Act, if the petitioner complies with the condition within four weeks the appeal may be heard on merits and the authority may decide the dispute independently without being inhibited or influenced by the observations made by this Court, referred to supra, in accordance with law.