Mohammed Akmam Uddin Ahmed And Ors vs. Commissioner Appeals Custom And Central Excise & Ors.

Held

The Court upheld the constitutional validity of Section 129E of the Customs Act, 1962, as previously affirmed by the Supreme Court, and thus did not entertain further submissions on this point. Regarding the prohibition of export, the Court noted that the petitioners' argument regarding the policy amendment was not fully developed. However, the primary focus of the judgment was on the valuation and the pre-deposit requirement. The Court found that the valuation of the Agarwood Chips and Agarwood Oil was provisionally assessed at Rs. 5,00,000/- per Kg and Rs. 8,00,000/- per Kg respectively, without adequate supporting documents or discussion in the OIO. The penalty imposed was based on this provisional valuation, which the Court deemed to lack a proper legal basis. Citing precedents like Pioneer Corporation and Shubh Impex, the Court acknowledged its power to waive pre-deposit in rare and deserving cases, especially where the condition is unduly onerous and financial hardship is evident. Given the petitioners' poor financial condition and the prima facie evidence of improper valuation, the Court exercised its discretion to waive the pre-deposit requirement. The Court directed Respondent No. 1 to decide the appeals on merits without insisting on pre-deposit. The Court also granted a six-week window for filing appeals, which would be considered on merits and not dismissed on grounds of limitation.

Facts

The petitioners, identified as poor and uneducated youth from Assam, were apprehended at IGI Airport carrying 120 kg of Agarwood Chips and 4.5 kg of Agarwood Oil, collectively valued at Rs. 6,36,00,000/- by Customs Authorities. They lacked valid export documents, leading to confiscation of the goods under Section 113 of the Customs Act, 1962, and a Show Cause Notice was issued. The Order-in-Original (OIO) dated 13.07.2021 by Respondent No. 2 confirmed the contravention, ordered absolute confiscation of goods and bags, and imposed penalties totaling Rs. 1,15,00,000/- on the petitioners under Section 114 of the Act. Aggrieved, the petitioners filed appeals with Respondent No. 1, seeking exemption from the mandatory pre-deposit of 7.5% of the penalty as per Section 129E of the Act, citing their financial inability. These appeals were returned by the Superintendent (Appeals) for non-compliance with the pre-deposit requirement.

Key Issues

1. Whether Section 129E of the Customs Act, 1962, is constitutionally valid? The petitioners challenged the constitutional validity of Section 129E of the Customs Act, 1962, seeking a direction to admit their appeals without pre-deposit. The respondents relied on the Supreme Court's judgment in Chandra Sekhar Jha V. Union of India & Anr. (2022 SCC OnLine SC 269) which sustained the provision's validity. 2. Whether the export of Agarwood Chips and Agarwood Oil was prohibited at the time of seizure on 20.09.2019? The petitioners argued that the export of cultivated Agarwood was free and not prohibited by Sl. No. 60(b) of Schedule – 2 of the Export Policy, Table – B, Chapter 12, and that the seized products only became prohibited after an amendment to the policy on 29.11.2021. The respondents' contentions on this point are not explicitly recorded. 3. Whether the valuation of the seized Agarwood Chips and Agarwood Oil was correctly assessed by the Customs Authorities? The petitioners contended that the goods were wrongly valued at a very high market value, relying on a Draft Policy for Sustainable Utilisation of Agarwood which suggested a wide range of values. The respondents' arguments on valuation are not detailed, but the OIO relied on a provisional valuation.