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PETITIONER: NAVINCHANDRA CHHOTELAL

       Vs.

RESPONDENT: CENTRAL BOARD OF EXCISE AND CUSTOMS & ORS.

DATE OF JUDGMENT13/01/1971

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. SHELAT, J.M.

CITATION:  1971 AIR 2280            1971 SCR  (3) 357

ACT: Customs  Act (32 of 1962), ss. 128 and 129(1)  and  proviso- Scope of.

HEADNOTE: The  Collector  of Customs and  Excise  confiscated  certain smuggled goods. and levied a personal penalty of Rs. 20,0,00 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  if 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 petition to quash the orders of the first respondent and the Government was dismissed by the High Court. In appeal to this Court, HELD : (1) Section 129(1) makes it obligatory on the  person faling  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   Authority,   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-compliance 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  circumstances. Otherwise, the appeal will have to be kept on file and  such retention  will  serve no purpose,  because,  the  Appellate Authority  cannot dispose of the appeal on merits  when  the requirements  of s. 129(1) are not complied with. [362  F-G; 364 A-C] (2)  The  rejection  of the appeal and revision  would  mean that the appellant was bound by the order of the  Collector, but  that result was brought about only by  the  appellant’s default. [364 D-E]

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JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 105 of 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 appellant. L. M. Singhvi and S. P. Nayar, for the respondents. 358 The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, against  the judgment  and  order dated August 24, 1966  of  the  Circuit Bench  of the Punjab High Court 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  respondents dated December 7, 1965 and April 23, 1966 respectively. 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 for non-compliance  with  the provisions  of  s.129 of the Customs Act, 1962  (Act  32  of 1962) (hereinafter to be referred as the Act) was justified. The point lies within a very 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  Export Control  Act,  1947.  The appellant was called upon  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)  of  the Act.  Similarly another  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 allegations made  against  him. The  third respondent by his order dated July 18, 1964  held that  the ruby stone in question was smuggled into India  by Rodrigues at the instance of the appellant and in  pursuance 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 of the Act  on the ,-round that he was the prime mover  behind  the smuggling  of the ruby stone.  A personal penalty  was  also imposed on Rodrigues who had carried the ruby stone.  It was specifically stated in the order that the penalties  imposed were without prejudice to institution 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  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 beyond  his means  to  deposit  such a large  amount.   Accordingly,  he requested the first respondent to exempt him from making the deposit of the penalty imposed as a preliminary  requirement for hearing the appeal. 359

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                        (Vaidialingam, j.) The  first respondent by his order dated December  7,  1965, rejected  the appeal for non-compliance with the  provisions of S. 129 of the Act.  From the order it is seen that as the appeal had been filed without depositing the penalty  levied by  the third respondent, 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 provisions 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 proceeds  to state that it agreed to consider the appeal  on merits-  provided  a sum of Rs. 10,000/- out  of  the  total penalty levied was deposited.  The appellant was informed 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 and it was acknowledged on October 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 respondent  to deposit  the  sum of Rs. 10,000/- as required by  the  first respondent.  As the appellant again failed to avail  himself of  this  Opportunity, the second respondent  by  its  order dated April. 23, 1966 rejected the revision petition holding that the matter cannot be considered on merits and that  the Government  of  India saw no reason to  interfere  with  the decision  of the Central Board of Excise and  Customs.   The writ petition filed by the appellant to quash the orders  of the first and second respondents was dismissed in limine  by the  High Court and it is the said order that is  challenged before us. It  may  be mentioned at this stage that the  appellant  was prosecuted  under s. 135(a) and (b) of the Act,  before  the District Magistrate, Ernakulam.  The District Magistrate  by his judgment dated February 28, 1966 found the appellant and Rodrigues  not  guilty of the offence with which  they  were charged  and  acquitted  them under s. 258 of  the  Code  of Criminal Produre. Various grounds of attack against the legality of the demand notice for depositing the penalty under s. 129(1) of the Act have  been  taken, both before the High Court  in  the  writ petition  as  also in the petition filed in this  Court  for special  leave.  But only two contentions were urged  before us by Mr. U. N. Trevedi. 360 learned counsel for the appellant, namely, (i) section  129 of  the Act does not give any power to the first  respondent to   dismiss   the  appeal  for  non-compliance   with   the requirements  regarding the deposit of the  penalty  amount; and  (ii) by rejecting the appeal, the first respondent  has approved  the order of the third respondent levying  penalty against  the appellant.  It will be noted that the  validity of s. 129 of the Act is not challenged. 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  with  s.  129.   If   the appellant,  who  was given an opportunity not  only  by  the

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first  respondent  but  also by  the  second  respondent  to deposit the half amount of penalty, did not avail himself of the said opportunity, he was entirely to blame for  bringing on him the consequences of the rejection of his ,appeal. In view of the contentions taken before us on behalf of  the appellant,  it  is unnecessary for us to consider  in  great detail the decisions referred to by Mr. Trevedi. In  Hoosein Kasam Dada (India) Ltd. v. The State  of  Madhya Pradesh  and  others(1) the question that arose  for  consi- deration  was whether s. 22(1) of the Central Provinces  and Berar  Sales  Tax Act, 1947, requiring the  deposit  of  the penalty  along  with the appeal applied to an  appeal  filed against an order ,of assessment on the basis of return filed on  date  when the original 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 of  Madhya  Pradesh and  others(1) the question related to the right of a  party to   approach  the  High  Court  under  Art.  226   of   the Constitution without availing himself of the other  remedies provided  under  the Central Provinces and Berar  Sales  Tax Act,  1947.   This Court held that by the mere fact  that  a remedy was available under the said Act, an assessee was not disentitled  to relief under Art. 226 when he comes with  an allegation  that  his  fundamental right  is  sought  to  be infringed. In Collector of Customs and Excise, Cochin and others V.  A. S. Bava   (3)  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 (1) [1953]S.C.R.987.    (2) [1954] S.C.R. 1122. (3)  [1968]1S.C.R.82. 361 (Vaidialingam, J.) May 4, 1963 issued by the Central Government under S. 12  of the  said Act.  This Court held that S. 129 of the  Act  was not attracted. None of 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 decision or order-               (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  Collector of Customs, appeal  to  the               Appellate Collector 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 appealed against :

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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 a reasonable opportunity of showing               cause 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 unless  the               appellant  is  given notice within  the  time-               limit  specified in section 128 to show  cause               against the proposed order.               362               129(1)  Where the decision or  order  appealed               against  related  to  any  duty  demanded   in               respect  of  goods  which are  not  under  the               control of customs authorities or any  penalty               levied under this Act. any person desirous, of               appealing  against  such  decision  or   order               shall,  pending the appeal, deposit  with  the               proper  officer  the  duty  demanded  or   the               penalty levied;               Provided that where in any particular case the               appellate  authority  is of opinion  that  the               deposit  of  duty demanded 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." 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  authorities  mentioned  therein.   It  also specifies  the  authorities to whom and  the  period  within which the appeal is to be filed.  The proviso to sub-section (1)  of  s. 128 gives power 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 appealed against, subject to two provisos contained therein. Section  129(1) makes it obligatory on the person filing  an appeal  to  deposit,  pending the appeal,  with  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  dispense  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 undue hardship 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. 20,000/-, but  as the  appellant had made a request for dispensing  with  such

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deposit,  the first respondent heard him on that  point  and ultimately.  as  mentioned earlier, reduced  the  amount  of penalty to be deposit- 3 63 (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 merits for non-compliance of S. 129.  The  second respondent  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 respondent. Section  128  no doubt gives a right of appeal.  But  it  is followed by S. 129 (1 ) regarding making of deposit  pending the  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 subsection (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 sub-section  (1).   In this  connection it is to be noted that under s. 189 of  the Sea  Customs Act, 1878, it was obligatory on the part of  an appellant to deposit the duty or penalty pending the appeal. There  was  no  provision therein  by  which  the  appellate authority could waive the requirement regarding the  deposit of the entire amount of duty or penalty.  But in the Act  by the  proviso  to subsection (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 requirement  regarding  the deposit of  the  penalty  levied against  him.  The ,(,rounds 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 representations 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  levied  by the Collector.  The  appellant  did  not comply  with this requirement and therefore his  appeal  was rejected  for non-compliance with the provisions of  s.  129 (1).   The  appellant  availed  himself  of  his  right   to challenge  this order in revision under S. 130 of  the  Act, before  the  second respondent.  The appellant was  given  a further opportunity to deposit the sum of Rs. 10,000/-,  but he  failed  to  avail himself of  this  further  opportunity afforded  to  him  by the second respondent  and  hence  his revision was rejected. 364 No doubt S. 129 does not expressly provide for the rejection ,of  the  appeal  for non-compliance  with  the  requirement regarding the  deposit of penalty or duty, but  when  sub- section (1) of s. 129 makes it obligatory on an appellant to deposit  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 passed under the  proviso,  the appellate authority is fully competent to reject the  appeal

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for  non-compliance with the provisions of S. 129(1).   That is exactly what 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 section 129(1) is complied  with, the appellate authority cannot proceed to hear an appeal  on merits.   Therefore, the logical consequence of  failure  to comply  with  s. 129(1) is the rejection of appeal  on  that ground. No  doubt,  the  rejection  of  the  appeal  by  the   first respondent  will  mean that the appellant is  bound  by  the order  of  the  third 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 respondent   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. In the result the appeal fails and is dismissed with costs. V.P.S.                                                Appeal dismissed. 365