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PETITIONER: VIJAY PRAKASH D. MEHTA & ANR.

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS (PREVENTIVE),  BOMBAY

DATE OF JUDGMENT16/08/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 2010            1988 SCR  Supl. (2) 434  1988 SCC  (4) 402        JT 1988 (3)   435  1988 SCALE  (2)367  CITATOR INFO :  RF         1992 SC2279  (30,35)

ACT:     Customs  Act, 1962: ss. 130E(b) & 129E-Statutory   right of  appeal-Neither  an absolute right nor an  ingredient  of natural  justice-Can be circumscribed by the  conditions  in the  grant-Held-Obligatory on appellants to deposit duty  or penalty levied pending the appeal.

HEADNOTE:     Section  129A of the Customs Act, 1962 confers right  of appeal to the Appellate Tribunal. Where, however, the  order appealed  against  relates to duty demanded  in  respect  of goods  which  are  not  under the  control  of  the  customs authorities  or  any penalty levied under the Act,  s.  129E requires  the  aggrieved person to deposit with  the  proper officer the duty demanded or the penalty levied, pending the appeal. The proviso thereto, however, empowers the Appellate Authority  to  dispense with such deposit in case  of  under hardship.     The  appellants, Indian citizens based in Hong Kong  and Singapore  respectively, were caught red-handed, while on  a visit to India, with huge amounts of foreign exchange.  They admitted their part in systematic illegal export of  foreign exchange  from the country over the past several  years.  In proceedings  under  ss. 111 to 114 and 118 of  the  Act  the Addl.  Collector of Customs imposed a penalty  of Ks.3  lacs on  each  of them. They preferred appeals to  the  Appellate Tribunal under s. 129A. In an application made under s. 129E the  Tribunal reduced the amount of penalty to be  deposited to Rs. 1 lac for each of them. The appellants sought further reduction. Their case was that they had not gone out of  the country  and  had no assets in India. Their  passports  were impounded at the time of arrest. Their visas had lapsed  and could  not  be  renewed. They had no money  and  that  in  a situation of this type the condition for deposit of  penalty was bad as it whittled down the appellants’ right of appeal. The Tribunal after considering the relevant factors declined to  reduce the penalty further and dismissed the appeal  for non-compliance with the provisions of s. 129E.     Dismissing  the appeals under s. 130E(b) of the  Customs

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Act.     HELD:  Right to appeal is neither an absolute right  nor an  ingredient  of natural justice the principles  of  which                                                   PG NO 434                                                   PG NO 435 must   be  followed  in  all  judicial  and   quasi-judicial adjudications. The right to appeal is a statutory right  and it  can  be circumscribed by the conditions  in  the  grant. [439A-B]     2.   It  is  not the law  that  adjudication  by  itself following the rules of natural justice would be violative of any right, constitutional or statutory, without any right of appeal,  as such. If a statute gives a right to appeal  upon certain   conditions,  it  is  upon  fulfilment   of   those conditions that the right becomes vested and exercisable  to the appellant. [440C]     3.  The purpose of s. 129E of the Customs Act is to  act in terrorem to make the people comply with the provisions of law.  The right of appeal provided therein is a  conditional one. The petitioner could obtain stay of realisation of  tax levied  or  penalty  imposed in an  appeal  subject  to  the limitations contemplated therein. Although the section  does not  expressly provide for rejection of the appeal for  non- deposit of duty or penalty yet it makes it obligatory on the appellant  to deposit the same pending the  appeal?  failing which  the Appellate Tribunal is fully competent  to  reject the  appeal. The proviso thereto gives a discretion  to  the authority  in  cases  of  undue  hardships  to  condone  the obligation  to deposit or reduce. It is a discretion  vested in  an  obligation to act judicially  and  properly.  [440E, 439F, 437G, 440C]     In  the  instant  case, the order of  the  Tribunal  was passed honestly, bona fide and having regafd to the plea  of ‘undue  hardship’  as canvassed by the appellants.  All  the relevant factors, namely, the probability of the prima facie case  of the appellants and the conduct of the parties  were taken  into  consideration. The Tribunal noted  the  several abortive  and  defective attempts made to get  extension  of time  to  deposit the security. Firstly, the prayer  was  to accept  Rs.35,000 and secondly to accept Rs. 60,000  in  two months . It also noted the fact that the appeals were  filed two  years ago. It could not therefore, be said  that  there was any improper exercise of jurisdiction or misdirection by the Appellate Authority. [439H,440A,D,438C]     Navin  Chandra  Chhotelal v. Central Board of  Excise  & Customs & Ors., [1971] 3 SCR 357, referred to.     Hoosein  Kasam Dada (India) Ltd. v. The State of  Madhya Pradesh  & Ors., [1953] SCR 987 and Collector of  Customs  & Excise,  Cochin  &  Ors.  v. A.S. Bava,  [1968]  1  SCR  82, distinguished.                                                   PG NO 436

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal  Nos.  1219- 20(NM) of 1987.     From  the  Judgment and Order dated 17.3.  1987  of  the Customs,  Excise  & Gold (Control) Appellate  Tribunal,  New Delhi in Appeal No. CD/BOM 398 & 399 of 1984.     M.S. Ganesh for the Appellants.     The Judgment of the Court was delivered by     SABYASACHI  MUKHARJI,  J. These two  appeals  are  under Section 130E(b) of the Customs Act, 1962 (hereinafter called the  Act)  from the orders passed by the Customs,  Excise  &

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Gold  (Control) Appellate Tribunal (hereinafter called  ‘the CEGAT).  The  questions involved in these  two  appeals  are identical. The appellants’ claim to be the citizens of India is  not  disputed. At the material time in  1983  they  were based in Hong Kong and Singapore respectively.     In  February, 1993, when the appellants came  to  India, they  were charged with alleged offences under Sections  112 and 114 of the Act and also simultaneously with the  alleged offences  under  the Foreign Exchange Regulation  Act,  1973 (hereinafter called ‘the FERA’).The Enforcement  authorities recorded  under  Section  40 of  the  FERA  the  appellants’ statements  at the time of their arrest. It is alleged  that these  statements  were obtained under duress and  by  using third  degree  methods  against them,  who  soon  thereafter retracted  their  statements. No statements  were,  however. recorded by the Customs authorities under the  corresponding Section  108  of  the  Act. In  the  FERA  proceedings.  the Enforcement  Directorate, it is stated, applied  that  there was  no evidence against the appellant-Vijay  Prakash  Mehta and  the  Directorate  had no objection  to  his  discharge. Accordingly,   by   an  order  dated  29.10.1985,   of   the Additional   Chief  Metropolitan  Magistrate,   8th   Court, Esplanade,  Bombay, has was discharged and his bailbond  was cancelled.     So far as the appellant J.D. Mehta is concerned, he  had replied  to the show-cause notice issued by the  Enforcement Directorate  and the mater is pending adjudication.  In  the meantime the proceedings under Sections 111 to 114 & 118  of the  Act resulted in the order dated 19.1.1984 of the  Addl. Collector of Customs (Preventive) Bombay, whereby he imposed a penalty of Rs. 3,00,000 on each of the appellants. It  may be mentioned that each of the appellants was alleged to have                                                   PG NO 437 been caught red-handed with the foreign exchange to the tune of Rs. 11,90,648. The appellants had admitted their part  in the systematic illegal export of foreign exchange from India during the past several years. Against the said order  dated 19.1.  1984,  the  appellants  preferred  their   respective appeals to the Appellate Tribunal under Section 129A of  the Act.  The  Tribunal  reduced the amount  of  penalty  to  be deposited, in an application made under Section 129E of  the Act.  pending hearing of the appeal, to Rs. 1 lakh for  each of the appellants.     It is alleged that since neither of the appellants  were in  any financial position to deposit even Rs. 1 lakh,  they sought  further  reduction. The  Appellate  Tribunal,  after considering  the  facts and circumstances of  the  case  and taking:  into consideration all the relevant material  facts and  factors,  by  its  order  dated  17th  February,  1987, declined  to  do  so  and dismissed  the  appeals  for  non- compliance  with the provisions of Section 129E of the  Act. Aggrieved  thereby  the  appellants have  appealed  to  this Court. Section 129E of the Act provides as follows.     "Where in any appeal under this Chapter, the decision or order  appealed  against  relates to any  duty  demanded  in respect  of  goods which are not under the  control  of  the customs  authorities or any penalty levied under  this  Act. the  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 Collector (Appeals) or the Appellate Tribunal is of  opinion that  the deposit of duty demanded or penalty  levied  would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may  dispense

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with such deposit subject to such conditions as he or it may deem   fit  to impose so as to safeguard  the  interests  of revenue."     The  aforesaid Section provides a conditional  right  of appeal in respect of an appeal against the duty demanded  or penalty  levied.  Although the Section  does  not  expressly provide for rejection of the appeal for non-deposit of  duty or  penalty, yet it makes it obligatory on the appellant  to deposit  the  duty or penalty, pending the  appeal,  failing which  the Appellate Tribunal is fully competent  to  reject the  appeal.  See, in this connection, the  observations  of this  Court in respect of Section 129 prior to  substitution                                                   PG NO 438 of  Chapter  XV by the Finance Act, 1980  in  Navin  Chandra Chhotelal  v.  Central  Board of Excise  &  Customs  &  Ors. [1971]  3 SCR 357. The proviso, however,gives power  to  the Appellate   Authority   to  dispense   with   such   deposit unconditionally  or subject to such conditions in  cases  of undue  hardships. It is a matter of judicial  discretion  of the Appellate Authority.     The  case of the appellants was that they had  not  gone out  of  India and had no assets in India.  Their  passports were impounded at  the time of arrest. Their visa had lapsed and  could  not be renewed. They had no  money,  hence,  the right of appeal could be illusory unless they are  permitted to  deposit only Rs.60,000 each which they contend they  are able to procure with the assistance of their father.     In  the  impugned order the Tribunal noted  the  several abortive  and  defective attempts made to get  extension  of time  to  deposit the security. Firstly. the prayer  was  to accept the deposit of Rs.35,000 and secondly, to accept  the deposit  of  Rs.60,000 in 2 months. The Tribunal  took  into account  the  probability  of the prima facie  case  of  the appellants. The appeals  were  filed two  years  ago.  After taking  into  consideration  these  factors,  the   Tribunal rejected  the  prayer for reduction. It was  contended  that this  was wrong Shri M. S. Ganesh. learned advocate for  the petitioners.  pleaded that in a situation of this  type  the condition for deposit of penalty was bad as it whittled down the  appellants  right of appeal. This, in  our  opinion  is incorrect   Shri Ganesh tried to contend that the  right  of appeal  is being whittled down by the procedure followed  in this case, He drew our attention to certain observations  of this  Court in Hoosein Kasam Dada (India) Ltd. V. The  State of  Madhya Pradesh & Ors., [1953] SCR 987. There this  Court held  that  when the right to appeal vests,  change  of  law after  initiation  of proceedings in lower court  would  not divest  the  vested rights of the appellant.  The  right  of appeal  is  a matter of substantive right and not  merely  a matter  of  procedure, and this right becomes  vested  in  a party  when  the  proceedings are first  initiated  in,  and before a decision is given by the inferior court and such  a right  cannot be taken away except by express  enactment  or necessary intendment.     The  aforesaid  observations, in our  opinion.  have  no application  to  the instant case. Here the right  that  was granted,  w  as a right held with a condition. There  was  o question  of change of that right. In the instant  case  the only   substantive   right  is  the  right  of   appeal   as contemplated  under  Sections 129A and 129E of the  Act  and that  right is a conditional one and the Legislature in  its wisdom has imposed that condition. No question of  whittling                                                   PG NO 439 down  that  right by an  alteration of procedure  arises  in this case.

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   Right  to  appeal is neither an absolute  right  nor  an ingredient  of natural justice the principles of which  must be    followed   in   all   judicial   and    quasi-judicial adjudications. The right to appeal is a statutory right  and it can be circumscribed by the conditions in the grant.     Counsel  referred  us to the decision of this  Court  in Collector  of Customs & Excise, Cochin & Ors. v. A.S.  Bava, [l968]  1 SCR 82. There this Court found that Section 35  of the  Central Excises & Salt Act, 1944 (Excises Act)  gave  a right  to appeal. Under Section 12 of the Act,  the  Central Government  was  authorised to apply to  appeals  under  the Excises  Act  the provisions of the Sea  Customs  Act,  1878 dealing with the procedure relating to appeals. In  exercise of that power the provisions of Section 129 of the Act  were made  applicable  to  appeals under  the  Excises  Act.  The Section  required  an  appellant  to  deposit,  pending  the appeal,  the  duty  or penalty imposed,  and  empowered  the Appellate  Authority,  in his discretion, to  dispense  with such deposit pending the appeal in any particular case.  The respondent therein filed an appeal against the duty  imposed on him under the Excises Act and prayed for dispensation  of the deposit. The Collector, who was the appellate authority, rejected the prayer and when no deposit was made within  the time  fixed,  dismissed the appeal. The respondent  filed  a petition  in  the  High Court which  was  allowed,  and  the Collector  was directed to hear the appeal on  merits.  This Court  held that Section 35 of the Excises Act gave a  right of  appeal  and Section 129 of the Act  whittled  down  that substantive  right  and, as such, Section 129 could  not  be regarded  as "Procedure relating to appeals" within  Section 12 of the Excises Act.     These  observations  cannot be applied to the  facts  of this case. Here we are concerned with the right given  under Section  129 A of the Act as controlled by Section  129E  of the  Act,  and  that right is with a condition  and  thus  a conditional  right.  The  petitioner in  this  case  has  no absolute right of stay. He could obtain stay of  realisation of tax levied or penalty imposed in an appeal subject to the limitation  of Section 129E. The proviso gives a  discretion to the authority to dispense with the obligation to  deposit in  case  of  "undue hardships".  That  discretion  must  be exercised  on  relevant materials, honestly, bona  fide  and objectively. Once that position is established it cannot  be contended  that  there  was any  improper  exercise  of  the jurisdiction by the Appellate Authority. In this case it  is manifest that the order of the Tribunal was passed honestly,                                                   PG NO 440 bona fide and having regard to the plea of "undue  hardship’ as  canvassed  by  the  appellant. There  was  no  error  of jurisdiction or misdirection.     Though in a different context the public policy involved in  not  granting interim stay has been  explained  by  this Court  in Asstt. Collector of Central Excise West Bengal  v. Dunlop India Ltd., [1985] 19 ELT 22.     It is not the law that adjudication by itself  following the  rules  of  natural justice would be  violative  of  any right-  constitutional  or statutory, without any  right  of appeal, as such. If the statute gives a right to appeal upon certain   conditions,  it  is  upon  fulfilment   of   those conditions that the right becomes vested and exercisable  to the appellant. The proviso to Section l29E of the Act  gives a discretion to the Tribunal in cases of undue hardships  to condone  the  obligation to deposit or to reduce.  It  is  a discretion  vested  in an obligation to act  judicially  and properly.

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   In  the facts and circumstances of the case and all  the relevant factors, namely, the probability of the prima facie case  of  the appellants, the conduct of the  parties,  have been  taken into consideration by the Tribunal. The  purpose of  the  Section is to act in terrorem to  make  the  people comply with the provisions of law.     In that view of the matter, we are unable to accept  the submission  that  there  was  improper  rejection  and  non- consideration of material and relevant facts. If that is the position then the appeals have no merit and are  accordingly rejected. P.S.S..                                   Appeals dismissed.