NA VINCHANDRA CHHOTELAL v. CENTRAL BOARD OF EXCISE AND CUSTOMS & Ors.

The Collector of Customs and Excise confiscated certain smuggled i;oods and levied a personal penalty of Rs. 20,000 on the appellant under s. 112 of the Customs Act, 1962. He filed an appeal under s.· 128 before the first respondent and pleaded that the deposit of penalty as required by s. 129 may be waived. The first respondent, after hearing him on the preliminary point regarding waiver, of deposit of penalty ordered that the appeal would be heard on merits l'f a sum of Rs. 10,000 out of, the total penalty was deposited by the appellant; but, since the , appellant failed to deposit even the amount of Rs. 10,000 within the prescribed period, the appeal was rejected. The appellant carried the matter in revision to. the Government. He was given a further opportunity to deposit the sum of Rs. 10,000 but as he again failed to do so, the revision petition was rejected. A writ pelition to quash the orders of the first respondent and the Govern ment was dismissed by the High Court. In appeal to this Court, HELD: (1) Section 129(1) makes it obligatory on the person filing an appeal to deposit the penalty levied pending the disposal of the appeal on merits. The proviso to the section gives power to the Appellate Antho rity, in appropriate cases, to dispense with such deposit unconditionally or subject to such conditions as it may deem fit. Even though the section, does not expressly provide for the rejection of the appeal for non-compli· ance with the requirements regarding deposit or with any order that may be passed under the proviso, the Appellate Authority is competent to reject the appeal in those circumotances. Otherwise, the appeal will have to be kept on file and such retention will Appellate Authority canno'. dispose of the appeal on merits when the re· quirements of s. 129(1) are not complied with. [362 F-G; 364 A-C} serve no purpose, because, (2) The rejection of the appeal and revision would mean appellant was bound by the order of the Collector, but that result was brought about only by the appellant's default. [364 D-EJ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 105 ol.

#1967. Appeal by special leave from the order dated August 24, 1966 of the Punjab High Court. Circuit Bench at Delhi in Civil Writ No. 666-D of 1966. U. M. Trivedi, Swaranjit Sodhi and S. S. Shukla, for the appel- lant. L. M. Singhvi and S. P. Nayar, for the. respondents. 358 SUPREME COURT REPORTS [1971]3 S.C.R. The Judgmeint of the Court was delivered by Vaidfalingam, J. This appeal, against the judgment and order datc:ct. August 24, 1966 of the Circuit Bench of the Punjab High Cotllf at New Delhi dismissing in limine Civil Writ No. 666-D of 1966 filed by the appellant to quash the orders of the first and second r~pondents dated Decem- ber 7, 1965 and April 23, 1966 respectively. by special leave, A B for non.,comp!i3jllce with the provisions of s. 129 of to be The main question that arises for consideration in this appeal is whether the order of the first respondent, Central ·Board of Excise and Customs, New Delhi, rejecting the appeal filed by the · · appellant .the Customs Act, .1962 (Act 32 of 1962) · (hereinafter referred as the Act) was justified .. The point lies within a very C narrow compass and hence it is not necessary to state elaborately the.allegations. made against the appellant for taking action under the Act read With the material provisions of the Import and Ex port Control Act, 194 7. . The appellant was called up0n by the third. respondent, Collector' of Customs and Excise, Cochin, to show cause why he should not be penalised under s. 112(b) of the Act and why he should not be prosecuted under s. 135 (b) D of the Act. Similarly anot1¥:r notice was issued against one Rodrigues, with whom we are not concerned in these proceedings. The appellant made representations against the show cause notice and he was also given an opportunity to contest the allegatio, ns mad~lagainst him. The third respondent by his order dated July 18, A 964 held that th~ ruby stone in question was smuggled into E India by Rodrigues at the instance of the appellant and in pur suance of an agreement entered into between them and that the ruby stone was handed over to Rodrigues by the brother of the appellant at Rangoon. By the said order the third respondent confiscated the ruby stone and levied a · personal penalty of . Rs. 20,000/- on the appellant under s. 112~(if.the Act on the ground that he was the PJ:ime mover behind-Smuggling of the F ruby stone. A perso11al penalty was also imPl'sed on Rodrigues who ·had carried the ruby stone. It was spe<;ifically stated in the order that the.penalties imposed were without:prejuelice to institu-. tion of any action under s. 135 of the Act. . · The appellant filed an appeal on October 7, 1964 before the first respondent under s. 128: After raising his contentions in. G the memorandum of appeal on merits, he pleaded that it will not be possible for him to deposit the penalty amount of Rs. 20,000/- as was necessary under s. 129 of the Act, on the ground that he was innocent and that compliance with the requirement of deposit will result in undue hardship. He further pleaded that it was bevond his means to .deposit such a large amount. Accordingly. H he'. requested the first respondent to exempt him from making the ~eposit of the penalty imposed as a preliminary r~quirement for hearing the appeal. • NAVlNCHANDRA v. EXCISE & CUSTOMS BOARD 35~ tVaidialingam, J.J A B c D It f The first respondent by his mder dat~d Decembe!. 7, ~9,65, rejected the appeal for non-compliance with the proviSlons P,f s. 129 of the Act. From the order it is seen that as the appea~ had been filed without depositing the penalty levied by the third res pondent, the appellant was called upon on November 23, 1964 to deposit the same within 15 days and he was also further. informed that his failure to deposit the penalty amount would render his appeal liable. to be rejected for non-compliance with·. the provi sions of s. 129. The appeal was heard on this preliminary point regarding waiver of the deposit under the said section. After considering the various grounds that appear to have been pressed on behalf of the appellant, the order of the first respondent pro~ ceeds to state that it agreed to consider the appeal on merits pro vided a sum of Rs. 10,000/- out of the total penalty levied was deposited. The appellant was infotmed on August 17, 1965 about this requirement by registered letter and\ was called upon to deposit the same within 14 days. As the registered letter was returned unserved, a communication was sent to the appellant's lawyer, who was on record arid. jt was acknowledged on Oct?ber 18, 1965. But as the amount of Rs. 10,000/- was not deposited, the appeal was rejected for non-compliance, with the provisions of s. 129 of the Act. - The appellant carried the matter in revision before the second respondent under s. 130 of the_ Act. . The appellant was given a further opportunity by the. second re5pondent to deposit the • sum of Rs. l~,000/- as required by the first respondent. As the appel lant again failed to avail, himself of this opportunity, the second r~spon~n.t by' its .prder ~ated April 23, 1966 rejected the revi sion petl(J<>n hold111g that the matter cannot be considered on .merits and ~at the Goveylunent of India saw no reason to inter- · fere with the decision ¢ the Central Board of Excise and Customs. The writ petition filed by the appellant to quash the orders of the fir~ and second respondent{ wa,s dismissed in /imine by the High Court and it is the said order \hat Js challenged beforjl us. cuted under s. 135(a) and (b) of the Act, before It may be mentioned at this stage that the appellant was prose the District G Magistrate, Ernakulam. The District Magistrate by his judgment da!ed February 28. 1966 found the appellant and Rodrigues not gmlty of the offence with which they were charged and acquitted them under s. 258 of the Code of Criminal Produre. H _Yarious gro':1~ds of attack against the legality of the demand notice for deposit mg the penalty under s. 129 ( 1) of the Act have been. taken, h?!h before. the. High Court in the writ petition as also m the ~hhon filed m this Court for special leave. But only· two contentrons were urged before us by Mr. U. N. Trevedi . .. 360 SUPRllME COURT REPORTS [1971]3 s.c.R. learned counsel for the appellant, namely, (i) section 129 of the A Act does not give any power to the first respondent to dismiss the ap~J for non-compliance with the requirements regarding the deposit of the penalty amount; and (Ii) by rejecting the appeal, the ~ respondent ~as approved the order of the third respondent It will be noted that the levy~g penalty agamst the appellant. vahd1ty of s. 129 of the Act is not challenged. B Dr. L. M. Singhvi, learned counsel for the respondents, on the other hand, urged that the first respondent has acted strictly according to law when it passed the order rejecting the appeal for non-compliance withs. 129. If the appellant, who was given an opportunity not only by the first respondent but also by the c second respondent to deposit the half amount of penalty, cjid not avail himself of the said opportunity, he was entirely to blame for bringing on him the consequences of the rejection of his arpeal. In view of the contentions taken before us on behalf of the appellant, it is ulljllecessary for us to consider in great detail the D decisions referred to by Mr. Trevedi. In Hoosein Kasam Dada (India) Ltd. v. T~e State of Madhya Pradesh and others(') the question that atose for 7onsi deration was whether s. 22( 1) of the Central Provinces and Berar Sales Tax Act, 194 7, requiring the deposit of the penalty along with tl1e appeal applied to an appeal filed against an order E of assessment on the ba~is of return filed on date when tht> c.iginal s. 22( 1) was in force. This Court held that it was only s. 22(1) as it stood on the date of filing of the return that applied and not the amended section. In Himmatlal Harilal Mehta v. The State df Madhya Pradesh F and others( 2 ) the question 'related to the right of a p<. rty. to ap proach the High Court under Art. 226 of the Consptution without availing himself of the other remedies provided under the Central Provinces and Berar Sales Tax Act, 194 7. This Court held that by the me[\! fact that a remedy was available under the said Act, .an assessee was not disentitled to relief under Art. 226 when he G comes with an allegation that his fundamental right is sougl!t to be infringed. In Collector of Customs and Excise, Cochin and others v. A. S. Bava(') the point that arose for consideration was whether s. 129 of the Act governed an appeal filed under the Central Excise and Salt Act, 1944, by virtue of the notification dated H 0) [1953] S.C.R. 987. (J) [1968] 1S.C.R.82. (2) [1954] S.C.R.1122. NAVINCHANDRA V. EXCISE & CUSTOMS BOARD 361 ( Vaidialingam, J.) A May 4, 1963 issued by the Central Government under s. 12 of the· said Act. This Court held that s. f29 of the Act was not attracted. B c D E F G H None ~f the above decisions have any bearing on the conten tions raised by Mr. Trevedi. In order to appreciate the contentions of the learned counsel for the appellant, it is now necessary to refer to ss. 128 and 129 relating to appeals and deposit of penalty or duty pending appeal. "128(1) Any person aggrieved by any decision or order passed under this Act may, within three months from the date of the communication to him of such de cision or orelet- (a) where the .decision or order has been passed by a Collector of Customs, appeal to the Board; (b) where the decision or order has been passed by an officer of customs lower in rank than a Col lector of Customs, app(:lll to the Appellate Col lector of Customs; Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months. (2) The Appellate Authority may, after giving an opportunity to the appellant to be heard, if he so desires, and making such further inquiry as may be necessary, pass such order as it thinks fit, confirming, modifying or annulling the decisions or order app~aled against : Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value shall not be passed- ( a) by an Appellate Collector of Customs; (b) by the Board unless the appellant has been given reasonable opportunity of showing cause a against the proposed order; Provided further that where the Appellate Authority is of opinion that any duty of customs has been short levied, no order enhancing the duty shall be passed un less the appellant is given notice within thi;. lime-limit specified in section 128 to show cause against the pro posed order. 36~ SUPREME COURT REPORTS (1971]3 S.C.R. 129 ( 1) Where the decision or order appealed against related to any duty demanded in respect of goods which are not un~er the control of customs authorities ur any penalt~ levied under this Act, any person desirous of appealmg ·against such decision or order shall, pending the appeal, deposit with the proper officer the dutv de- manded or the penalty levied; . Provided that where in any particular case the appel late authority is of opinion that the deposit of duty de manded or penalty levied will cause undue hardship to the appellant, it may in its discretion dispense with such deposit, either unconditionally or subject to such conditions as it may deem fit. (2) If upon any such appeal it is decided that the whole or any portion of such duty or penalty was not leviable, the proper officer shall return to the appellant such amount of duty or penalty as was not leviable." A c D· E From the provisions extracted above it is to be seen that s. 128 gives a right of appeal against the decision or order passed by the It also specifies the authorities to authorities mentioned therein. whom and the period within which the appeal is to be filed. The proviso to sub-section (1) of s. 128 gives rower to the Appellate Authority on sufficient cause being shown to extend the period for filing the appeal by a further period not exceeding three months. Sub-section (2) provides for an opportunity being given to the appellant to be heard, if he so desires, and the Appellate Authorities passing such orders by way of confirming, modifying or annulling the decision or order app:!aled against, subject to two provisos contained therein. Section 129(1) makes it obligatory on the person filing ap appeal to deposit, pending the appeal, with F the proper officer the duty demanded or penalty levied where the order or decision appealed against relates to any duty demanded in respect of goods, which are not under the control of Custom Authorities or of penalty levied under the Act. The proviso gives power to the Appellate Authority in particular cases to dis pense with such deposit either unconditionally or subject to such conditions, as it may deem fit, when it is of the opinion that the deposit of duty demanded or penalty levied will cause undu~ har~­ ship to the appellant. Under s. 129(1) the appellant, in this case, when he filed the appeal to the first respondent against the order of the Collector of Customs levying penalty had to normally deposit the entire amount of penalty, namely,. Rs .. 20,00~/-, but as the appellant had made a request for dispensmg w1!h such 'deposit, the first respondent heard him on that point and ultnnately. as m~ntioned earlier. reduced the amount of penalty to be deposit- G H A B c D E F G H NAVINCHANDRA v. EXCISE & CUSTOMS BOARD 353· ( Vaidialingam, J.) ed to Rs. 10,000/-. But as the appellant did not comply with the said requirement, his appeal was rejected without going into respondent merits for non-compliance of s. 129. The second also when it was moved in revision gave the appellant further time to deposit the sum of Rs. 10,000/-, but as the appellant failed to avail himself of that opportunity, the Government of India declined to interfere with the order of the first respondellt. Section 128 no doubt gives a right of appeal. But it is fol lowed by s. 129(1) regarding making of deposit pending appeal. It must also be noted that so far as the deposit of duty is concerned, the requirement regarding the deposit will come into force only if the goods in respect of which duty is demanded are not under the control of Customs Authorities. Though sub section ( 1) of s. 129 may appear to make it necessary that an appellant should deposit the duty or penalty before his appeal could be heard on merits, the proviso whittles down the rigour of In this connection it is to be noted that under s. sub-section(!). 189 of the Sea. Customs Act, 1878, it was obligatory on the part of an. appellant to deposit the duty or penalty pending the appe~l. There was no provision therein by which the. appellate authonty could waive the requirement regarding the deposit of the entire amount of duty or penalty. But in the Act by the proviso to sub section ( 1) of s. 129, which has been quoted above, discretion has been given to the appellate authority to either waive the deposit of the entire amount of penalty or duty or reduce the quantum to be so deposited if the appellate authority is of the opinion that the requirement regarding the deposit of the full amount of penalty or duty will cause undue hardship to an appellant. We have already pointed out that the appellant did make a request to •the first respondent to exempt him from the require ment regarding the deposit of the penalty levied against him. The grounds pleaded by him in this behalf were he was innocent and that it was not possible for him to deposit the penalty amount. The appellant was heard initially on his request for exempting him from depositing the penalty and having regard to the repre sentatioas made by him, the first respondent reduced the amount of penalty to be deposited to Rs. 10,000/- that is half the amount of the penalty levi.~d by the Collector. The appellant did not comply with this requirement and therefore his appeal was re jected for non-compliance with the provisions of s. 129 ( 1). The appellant availed himself of his right to challenge this order revision under s. 130 of the Act, before the second respondent. The appellant was given a further opportunity to deposit the sum further of Rs. 10,0001-, but he failed to avail himself of this opportunity afforded to him by the second respondent and hence his revision was rejected. 364 SUPREME COURT REPORTS [1971]3 s.c.R. No doubt s. 129 does not expressly provide for the rejection A of the appeal for non-compliilnce with the requirement regarding the deposit of penalty or duty, but when sul1-seccion (1) of s. 129 makes it obligatory on an appellant to dep0sit the duty or penalty pending the appeal and if a party does not comply either with the main sub-section or with any order that may be passectunder the proviso, the appellate authority is fully competent to reject the B appeal for non-compliance with the provisions of s. 129(1). That is exactly wli.at the first respondent has done in this case. Accepting the contention of Mr. Trevedi will mean that the appeal will have to be kept on file for ever even when the requirement of s. 129(1) has not been complied with. Retention of such an appeal on file will serve no purpose whatsoever because unless . c section 129(1) is complied with; the appellate authority cannot proceed to hear an appeal on merits. Therefore, the logical con .sequence of failure to comply with s. 129 ( 1) is the rejection of appeal on that ground. No douqt, the rejection of the appeal by .the first respondent will mean that the appellant is bound by the order of the third D respondent levying penalty. Such a result has been brought about only by the default of the appellant in complying with the order of the first responc\ent to deposit half the amount of penalty. Therefore, it follows that the rejection of the appeal by the first respondent was legal and the order of the High Court. dismissing the writ petition is valid. E ~n the result the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed. •