High Court of Punjab and Haryana, Chandigarh
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Royal Industries v. Union of India - CWP-16845-2005  RD-P&H 4527 (20 July 2006)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CWP No.16845 of 2005 (O&M)
Date of decision: 4.7.2006
M/s Royal Industries Ltd. v. Union of India and others
CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL
Present: Mr. Sanjiv Bansal, Advocate.
Ms. Daya Chaudhary, Assistant Solicitor General of India.
This order will dispose of Civil Writ Petition Nos.16844, 16845 and 16846 of 2006.
The petitioners imported raw material without payment of duty.
The adjudicating authority under the Customs Act, 1962, after show cause notice, confirmed demand of duty against the petitioners, apart from other directions, in following terms:-
"1. I hereby confirm Customs duty amounting to Rs.15,90,03,872/- (Rupees Fifteen Crores Ninety lakhs Three Thousands Eight Hundreds and Seventy Two only) on M/s Royal Industries Limited, Chandigarh Road, Ludhiana; under section 28(1) and 72(1) of the Customs Act 1962 read with the Notification and the Bond;
2. I impose interest @ 20% p.a. on M/s Royal Industries Limited, Chandigarh Road, Ludhiana from the dates as specified in the preceding paragraphs till date of payment of duty in terms of condition No.6 of the Notification and the Bond executed by the Noticee and under Section 28AB of the Customs Act 1962;
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3. I confiscate the goods valued at Rs.26,73,04,727/- under Section 111(o) of the Customs Act, 1962. However, since the goods have already been cleared and are therefore not available/traceable, no redemption fine can be imposed for their redemption;
4. I impose penalty of Rs.15,90,03,872/- (Rupees Fifteen Crores Ninety Lakhs Three Thousands Eight Hundreds and seventy Two only) on M/s Royal Industries Limited, Chandigarh Road, Ludhiana under Section 114A of the Customs Act, 1962;
5. I order adjustment of Rs.22,00,000/- (Rupees Twenty Two Lakhs) already deposited by M/s Royal Industries Ltd.
Ludhiana towards payment of Customs Duty;
6. I impose penalty of Rs.15,90,03,872/- (Rupees Fifteen Crores Ninety Lakhs Three Thousands Eight Hundreds and Seventy Two only) on Sh Harbhajan Singh Sandhu, Managing Director of M/s Royal industries Limited, Chandigarh Road, Ludhiana 1202/9, Sardar Nagar, Rahon Road, Ludhiana and M/s Harman Fashioners Pvt. Limited, 1202/10, Sardar Nagar, Rahon Road, Ludhiana under Section 114 A of the Customs Act, 1962;
7. I also impose penalty of Rs.30,00,000/- (Rupees Thirty Lakhs only) on Shri Sushil Kumar Shrma, Assistant Commercial Manager of M/s Royal Industries Limited, Chandigarh Road, Ludhiana son of Shri Chander Mohan Sharma resident of Sarpanch Colony, Ludhiana under Section 112(b) of the Customs Act, 1962;
8. I also impose penalty of Rs.20,00,000/- (Rupees Twenty lakhs only) on M/s Harman Fashioenrs Pvt. Limited, CWP No.16845 of 2005 3
1202/10, Sardar Nagar, Rahon road, Ludhiana under Section 112(b) of the Customs Act, 1962;
9. I also impose penalty of Rs.50,00,000/- (Rupees Fifty Lakhs only) on M/s Shri Vinod Kumar Garg, Proprietor of M/s Annchal Exports, Ludhiana, son of Shri Brij Lal Garg, resident of 64/66-A, Agar Nagar, Ludhiana under Section 112(b) of the Customs Act, 1962;
10. I also impose penalty of Rs.15,00,000/- (Rupees Fifteen lakhs only) on M/s Adinath Textiles Ltd., Chandigarh Road, Ludhiana under Section 112(b) of the Customs Act, 1962;
11. I also impose a penalty of Rs.5000/- (Rupees Five Thousands only) on M/s Jai Bhawani Cargo Carriers, Plot No.63, Transport Nagar, Ludhiana under 112(a) of the Customs Act, 1962; and
12. I also impose penalty of Rs.5000/- (Rupees Five Thousands only) on Sh Ramesh Kumar Jain, Partner, M/s Jai Bhawani Cargo Carriers under 112(a) of the Customs Act, 1962."
The petitioners preferred appeals. The petitioners also applied for waiver of deposit of the amount as a condition for entertainment of appeals under section 129E of the Customs Act. The Tribunal considered the appeals as well as the said applications by common order and while holding that case for grant of unconditional waiver was not made out, direction for deposit of Rs.5 crores, Rs.2.5 crores and Rs.2 crores respectively in the cases of the petitioners was issued as a condition for hearing of the appeals. However, the appeals were also simultaneously taken up and allowed and it was held that since the petitioners had not been given full opportunity, they were entitled to remand of the matter for a fresh adjudication. It was observed that if deposits were not made, appeals will stand dismissed.
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Learned counsel for the petitioners submits that financial hardship pleaded by the petitioners has not been gone into by the Tribunal.
It is also submitted that since the matter has been remanded, no demand stands against the petitioners as on date and in these circumstances, requirement of deposit as a pre-condition for hearing the appeals was not justified.
Learned counsel for the respondent custom authorities submitted that the decision about declining of waiver of condition of pre- deposit was justified in the facts and circumstances of the case as it was observed that import of raw material was under fake documents and that in spite of several opportunities, the petitioners could not furnish valid explanation. It was contended that in these circumstances, even though, there may be no discussion about financial hardship pleaded by the petitioners, the petitioners were not entitled to waiver of condition of pre- deposit. It was also submitted that in case, order of the Tribunal is to be set aside on account of non-consideration of submissions made on behalf of the petitioners, the order of remand was also liable to be set aside, particularly when finding recorded for remand that the petitioners had not been given opportunity of hearing, was contradicted by the finding recorded in the earlier part of the order that several opportunities were given to the petitioners but the petitioners could not furnish the explanation.
After hearing learned counsel for the parties and perusing the impugned order, we find that the findings recorded in the impugned order are contradictory. While it has been observed that several opportunities were given to the petitioner, case has been remanded by observing that the petitioners were entitled to further opportunities. We find that there is no discussion about the plea of financial hardship for claiming waiver of condition of pre-deposit. In case, the Tribunal is of the view that condition of pre-deposit was to be imposed, the appeals ought not to have been decided without securing compliance of the condition of pre-deposit. The relevant observations of the Tribunal are:- "14........There is finding by the adjudicating authority that the export documents showing export of goods made out of imported raw material are fake. Regarding this CWP No.16845 of 2005 5
finding there is no explanation given by the applicant.
There is also shortage of raw material in the premises of applicants regarding which no explanation is given by them. Further, we find that adjudicating authority granted several opportunities to applicants for personal hearing but applicants asked for adjournment each time. In these circumstances, we find it is not a fit case for total waiver of duty. The applicants M/S royal industries is directed to deposit Rs.5 Crores and Punjab Exports is directed to deposit an amount of Rs.2.5 crores. The applicant Sh.Harbhajan Singh Sandhu is directed to deposit an amount of Rs.2 crores for hearing of the appeals." "16. As the impugned order has been passed ex party and applicants are claiming benefit of notification No.2/95- CE. The applicant also claimed that they had purchased the raw material locally which attracts less duty these facts requires verification by the adjudicating authority.
The claim of the applicant under notification No.2/95 has not been considered by the adjudicating authority while passing the impugned order. In these circumstances, we find that these are fit cases for reconsideration for these purposes and for cross examination of witness. In these circumstances, the matter is remanded to the adjudicating authority after setting aside the impugned orders for deciding afresh after affording an opportunity of hearing to the applicant and on showing the deposit of the above mentioned amounts. It is, however, made it clear that in case the above-mentioned amounts are not deposited within eight weeks, the appeals shall stand dismissed." In view of the above, we set aside the order of the Tribunal and remand the matter to the Tribunal for fresh decision on merits in accordance with law. The Tribunal will be at liberty to pass a fresh order on the question of requirement of pre-deposit as well as on merits of the appeals.
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The parties will appear before the Tribunal for further proceedings on August 7, 2006.
The writ petitions are disposed of accordingly.
(Adarsh Kumar Goel)
July 4, 2006 Judge
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