Case Note & Summary
The appellant, Mydream Properties Private Limited, imported a yacht and VSAT equipment, against which the Commissioner of Customs passed an order-in-original on 5 June 2015 confirming differential duty, imposing penalty, and confiscating the goods with an option to redeem them on payment of a redemption fine of Rs. 1,75,00,000 under Section 125 of the Customs Act, 1962. The appellant complied with the mandatory pre-deposit of 7.5% of the duty and penalty under Section 129E and filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). Additionally, the appellant filed an application invoking the Tribunal's inherent jurisdiction seeking stay of the direction to pay the redemption fine or dispensing with its deposit. The Tribunal, by order dated 18 April 2016, rejected the application, holding that it had no jurisdiction to stay the redemption fine. The appellant then filed the present appeal under Section 130 of the Customs Act, which was admitted on a substantial question of law regarding the Tribunal's jurisdiction to entertain a stay application. The High Court examined the provisions of Section 129E, which mandates pre-deposit of duty and penalty in dispute, and Section 125, which provides for redemption fine. It noted that redemption fine is not a duty or penalty but a sum paid in lieu of confiscation, and thus falls outside the ambit of Section 129E. The Court held that the Tribunal retains inherent jurisdiction to grant stay of such directions to prevent hardship and ensure that the appeal is not rendered infructuous. The Court set aside the Tribunal's order and remanded the matter for fresh consideration of the stay application on merits. The appeal was allowed.
Headnote
A) Customs Law - Appellate Tribunal Jurisdiction - Stay of Redemption Fine - Section 129E, Section 125, Customs Act, 1962 - The issue was whether the Appellate Tribunal has inherent jurisdiction to stay the direction for payment of redemption fine pending appeal, despite Section 129E requiring pre-deposit of duty and penalty. The Court held that Section 129E does not apply to redemption fine, and the Tribunal retains inherent power to grant stay of such directions to prevent hardship and ensure effective appeal. (Paras 1-14) B) Customs Law - Redemption Fine - Nature - Section 125, Customs Act, 1962 - Redemption fine is a sum paid in lieu of confiscation, not a duty or penalty. It is not covered by the mandatory pre-deposit requirement under Section 129E. The Tribunal can exercise its inherent jurisdiction to stay or waive such fine pending appeal. (Paras 2-10) C) Customs Law - Inherent Powers of Tribunal - Stay Orders - The Tribunal has inherent powers to grant stay of orders not covered by Section 129E, including redemption fine, to prevent the appeal from becoming infructuous. The impugned order of the Tribunal rejecting the stay application was set aside. (Paras 11-14)
Issue of Consideration
Whether the Customs, Excise and Service Tax Appellate Tribunal has no more jurisdiction to entertain an application for stay of the order impugned before it, specifically the direction to pay redemption fine.
Final Decision
The appeal is allowed. The impugned order of the Appellate Tribunal dated 18 April 2016 is set aside. The application made by the appellant for stay of the direction regarding redemption fine is restored to the file of the Appellate Tribunal for fresh consideration on merits in accordance with law.
Law Points
- Inherent jurisdiction of appellate tribunal
- stay of redemption fine
- Section 129E Customs Act
- 1962
- Section 125 Customs Act
- distinction between duty/penalty and redemption fine
