RSI Limited vs Union of India

H.N. Devani, J.—This petition challenges order dated 1st August, 2007 made by the Customs Excise and Service Tax Appellate Tribunal (the Tribunal) and seeks a direction against the Tribunal to hear the petitioner on merits after dispensing with the amount that the petitioner has been directed to deposit.

The facts of the case briefly are that against order dated 29th April, 2005 made by the Commissioner of Customs (Preventive), Jamnagar, the petitioner preferred appeal before the Tribunal. Before the Tribunal reliance was placed upon an order made by the Tribunal in the case of the sister unit in whose case the D.G.F.T. authorities had since granted an extension of the period for fulfillment of export obligation on the basis of which the appeal had been allowed and the matter was remanded to the original adjudicating authority with a direction to rehear the petitioner and thereafter to determine the duty and consequent penal liabilities, if any, only after the extended period was over. Though in the present case extension had not been granted, the learned Counsel for the petitioner had placed on record a letter from the office of the DGFT wherein it was stated that the committee had decided to call for details of import and export for consideration of the request for extension of export obligation period. The Tribunal, vide order dated 7th February, 2006, allowed the appeal and remanded the matter to the original adjudicating authority in the light of the earlier order.

Pursuant to the order passed by the Tribunal, the Commissioner vide order dated 31st January, 2007, confirmed the earlier order passed by him on 29th April, 2005. The Commissioner observed that in the case of the petitioner there was no proof of consideration of its application for extension of export obligation period, let apart the approval of grant of extension of export obligation period, fulfillment of stipulated conditions and expiry of period of extended period. Therefore, since the extension itself had not even been granted the question of waiting for the expiry thereof does not arise. The Commissioner also clarified that the duty had not been demanded for non-fulfillment of the export obligations but had been demanded for the diversion of the goods imported duty-free under the Exemption Notification No. 204/1992-Cus., dated 19-5-1992 into the domestic market. The petitioners challenged the said order by way of appeal before the Tribunal, along with a stay application. The Tribunal after hearing the learned advocates for the parties on the question of stay and waiver of pre-deposit held that the petitioner/appellant had not made out a prima-facie case for total waiver of the duty as confirmed by the Commissioner in his order dated 31st January, 2007 and directed the petitioner to deposit Rs. 2 crore within a period of twelve weeks and to report compliance on 29th October, 2007. The Tribunal further observed that subject to payment of pre-deposit as above, pre-deposit of balance duty and penalty imposed upon the petitioner-Company would stand waived. It was further held that non-payment of pre-deposit would result in dismissal of the appeal without further notice to the petitioner-Company.

Mr. Hardik P, Modh, learned advocate for the petitioner has submitted that Special Civil Application No. 26858 of 2007 and the present petition being interlinked, in the light of the communication dated 4th May, 2010 of the Deputy Director General of Foreign Trade, which has been placed on record of the said petition, till the extended period for fulfillment of export obligation is over in the said case, this petition is also required to be adjourned. Learned advocate for the petitioner has reiterated the grounds stated in the petition and submitted that while considering a stay application u/s 35F of the Act, the Tribunal is required to consider the aspect of financial hardship which is a relevant factor while considering the amount of pre-deposit. In the circumstances the Tribunal was not justified in directing pre-deposit of such a huge amount of Rs. 2 crore overlooking the plea of financial difficulties being faced by it.

Mr. R.M. Chhaya, learned Senior Standing Counsel, for the respondents has opposed the petition and has supported the impugned order made by the Tribunal. It is submitted that the impugned order having been passed in relation to diversion of goods into the domestic market, the extension of period for fulfillment of export obligation had nothing to do with the merits of the present case.

A perusal of the impugned order of the Tribunal indicates that the entire quantity of goods imported duty-free by the petitioner was sold to M/s. Ram Kumar Kishen Kumar, Delhi and M/s. Akansha Enterprises, Delhi, during the period 7-10-1996 to 24-12-1996 under DEEC Scheme and were not utilized for the purposes stipulated in the licence. The Tribunal noted that Commissioner had held that the duty was not being sought for on account of non-fulfillment of the export obligation but on the ground of diversion of imported goods and that petitioner-Company had not informed the Customs Authority about diversion of duty-free goods. It was also noted that the imported goods had been diverted and sold in the market more than a decade back. In the background of the aforesaid facts, the Tribunal, was of the view that this was not a prima-facie case for total waiver of the duty as confirmed by the Commissioner in his order dated 31st January, 2007 and accordingly directed the petitioner to deposit Rs. 2 Crores within a period of twelve weeks and report compliance thereof on 29-10-2007.

From the facts noted herein above, it is apparent that the order made by the adjudicating authority confirming the duty and imposing penalty is in relation to diversion of goods imported without payment of duty into the domestic market and not in relation to non-fulfillment of export obligation. In the circumstances, the request made by the learned advocate to adjourn the matter till the extended period for the purpose of fulfillment of export obligation in the connected case is over, does not merit acceptance as the same has no direct bearing on the main issue involved in the case before the Tribunal.

The Tribunal, in the impugned order, has after referring to the facts of the case, given sufficient reasons for forming the prima-facie opinion that this is not the case for total waiver of duty and has accordingly directed the petitioner to deposit Rs. 2 crores by way of pre-deposit. In the circumstances, it cannot be stated that the Tribunal has not exercised its discretion properly so as to call for any intervention by this Court. It is also pertinent to note that despite the fact that a period of almost three years has elapsed since the passing of the order by the Tribunal, the petitioner is still not ready and willing to deposit the amount directed by the Tribunal.

It is necessary to record that despite opportunity having been granted, learned advocate for the petitioner, under instructions, has stated that the petitioner is not in a position to discharge the liability by making pre-deposit even if extension of time and/or installments are granted.

In light of the aforesaid discussion, no case is made out for interference by this Court. Under the facts and circumstances, the petition fails and is accordingly rejected. Interim relief granted stands vacated. Rule is discharged. No order as to costs.