ORDER
D.M. Vasavada, Member (J)
1. The appellant, originally, filed this appeal in Special Bench ‘A’ bearing No. A. No. C/192/88A. Along with filing this appeal, appellant also preferred stay petition bearing No. C/Stay/113/88A. The stay petition was heard by Special Bench ‘A’ and vide Order No. 60/88A dated 20-4-1988 dismissed the stay petition. The stay petition was dismissed because it was observed by the Bench that the appellant should be in a position to deposit the amount of penalty as the appellant had said that he would be able to borrow money from his relatives and deposit the amount with the bank and obtain bank guarantee and provide the same and in that case the appellant can as well deposit the amount in cash with the Government. The Bench also transferred the matter to the North Regional Bench.
2. The appellant did not deposit the amount of penalty.
3. Meantime, the appellant preferred Special Civil Application No. 2535/88 in the High Court of Gujarat under provisions of Article 226 of the Constitution of India wherein he has challenged the vires of Section 111 of the Customs Act, 1962 (hereinafter referred to as the Act) and Clause 11(m) of the Import (Control) Order, 1955 issued under the Import & Export (Control) Act, 1947. The said petition has been admitted and is pending hearing.
4. The appellant also sought interim relief of waiver of the condition of pre-deposit of the penalty amount.
5. The matter was fixed for mention on 17-4-1990. On that date, Ld. Advocate, Sh. Trivedi appeared and produced photostat copy of the order passed by the Hon’ble Gujarat High Court rejecting the prayer for interim relief. So, the appellant was called upon by the Bench to show cause why the appeal should not be dismissed and the matter was fixed for hearing on 14-6-1990.
6. On 14-6-1990, we heard Shri D.G. Trivedi, Ld. Advocate for the appellant and Sh. R.M. Ramchandani, Ld. SDR, for the respondent.
7. Ld. Advocate submitted that in the appeal, the appellant has challenged the confiscation of the motor car and also imposition of penalty. So, the appellant has prayed for two reliefs. So, in effect, this is a composite appeal seeking two reliefs. The requirement of pre-deposit of penalty is only with regard to the order of penalty and as the appellant has not complied with it, appeal for that relief may be liable to be rejected, but the appeal for relief of setting aside the absolute confiscation of the car, cannot be dismissed and the appeal to that extent should be heard on merit and decided. He cited Hussain Haji Harun alias Hussein Kabiju v. U.O.I, and Ors. – AIR 1988 (Gujarat) 218. The Ld. SDR opposed this submission and submitted that the appeal should be dismissed as a whole. He cited Navin Chander Chhotelal v. The Central Board of Excise & Customs – 1981 (8) ELT 679 (S.C.) : AIR 1971 (S.C.) 2280.
8. We have perused the record and citations produced by both the sides and also considered the arguments.
9. To appreciate the legal position and rival contentions, it is necessary to narrate a few facts also. The appellant had reached Amritsar on 2-5-1986 with a Mercedes Car of foreign make valued at Rs. 112926.28 (CIF). After completion of necessary formalities, the appellant was allowed to enter into India alongwith vehicle. The car was covered under carnet issued by the Audit Association Basing Stock, England valid upto 15th April, 1987 and, as stated in the Impugned Adjudication Order, as per the terms and conditions of the Carnet, the passenger should have exported the said vehicle within 180 days. The passenger twice requested for extension of time and they were granted. Third request was turned down by the Ministry of Finance. As the passenger failed to re-export the vehicle during the extended period of time, the vehicle was seized under provisions of Section 110 of the Act alleging that it was liable to confiscation under Section 111 of the Act for contravention of various provisions of Import (Control) Order, 1955 read with Section 11 of the Customs Act. Accordingly, show cause notice was issued and on adjudication, the adjudicating authority ordered absolute confiscation of the vehicle under provisions of Section 111(d) of the Customs Act and imposed personal penalty of Rs. 25,000/- under provisions of Section 112(a) of the Act. The said order has given rise to the present appeal and stay petition.
10. Section 129E of the Customs Act which provides for pre-depositing the amount of penalty, pending the appeal reads as under:
“SECTION 129E. – Deposit, pending appeal, of duty demanded or penalty levied. – Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect or 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 with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.”
11. Interpretating provisions of this Sec. in Hussain Haji Harun alias Hussein Kabiju v. U.O.I. and Ors. (supra), the Hon’ble Gujarat High Court has, in para 7, held as under:
‘The order does not show that it was appreciated by the learned Members that the appeal that they were dismissing on the ground that the penalty amount was not deposited as directed, was a composite appeal inasmuch as the same (sic). The appeal was a composite appeal because the same was for setting aside the penalty and also for setting aside the order of confiscation of the said vessel. It is also to be appreciated that under the order in question, redemption fine was ordered to the extent of Rs. 1,75,000/- in respect of the aforesaid vessel. It is apparent, therefore, that the entire composite appeal could not have been dismissed on the mere ground that there was a failure in depositing the penalty amount as ordered. It would seem that this aspect was not noticed by the learned Members of the Tribunal, when the order dismissing the appeal was passed.”
12. In that case also, the ship in which contraband goods were imported in India, was ordered to be confiscated with an option to pay redemption fine in lieu of confiscation and personal penalty was also imposed on the owner. So, the owner of the vessel had preferred appeal before CEGAT and the appeal was dismissed as the owner (appellant) failed to pre-deposit the amount of penalty. Here also, the motor car, in question, has been ordered to be confiscated absolutely and personal penalty has been imposed on the appellant. Now, if the position that would arise, if ratio of the judgment of the Hon’ble Gujarat High Court is followed, would be that the appeal as far as the order of confiscation of the motor car is concerned, would have to be decided on merits. Assuming for the sake of argument that the Tribunal accepts the appeal, the order of confiscation will have to be set aside. Ld. Advocate, Sh. Trivedi was asked to explain what would be the effect of such a decision on the order of penalty, he replied and quite rightly, that the order of penalty will also have to be set aside. The reason for this is quite simple and logical because penalty is imposed in such cases as a consequence of an order of confiscation under Section 111 of the Customs Act, 1962. This is clear from the wording of Section 112 of the Customs Act which calls for imposition of penalty for any act or omission of the person rendering the goods liable to confiscation under Section 111. In the present case, goods found to have been imported in India and not re-exported in violation of relevant provisions of the relevant legislation. So, penalty is not imposed in isolation or independently of the order of confiscation. So, when the confiscation is set aside, the penalty also will also have to be set aside. So following the Gujarat High Court Judgment, even if the appeal against the order of penalty only is dismissed at this stage, still however indirectly, the appellant will get that relief. If this is possible and if legally permitted, then in future each appellant may prefer appeal only against order of confiscation or after having preferred appeal against order of penalty also may not pre-deposit the amount of penalty and when that appeal is dismissed only as far as order of penalty is concerned but if the appeal, in future, against the order of confiscation is allowed, then, the order imposing penalty will have to be set aside. So, in that manner, such appellant can circumvent the provisions of Section 129E altogether. In our humble opinion this can never be the intention of legislation and provisions of Section 129E should not be interpreted, in this manner. For this, we follow decision of the Hon’ble Supreme Court in Navin Chander Chhotelal case (supra). In that case also, the contraband goods were ordered to be confiscated and personal penalty was imposed. The Hon’ble Supreme Court was concerned with interpretation of provisions of Section 129(1) of the Act as it stood at the relevant time i.e. before the Act was amended by the Finance (2) Act 1980 (44 of 1980). At the relevant time, Section 129 (1) read as under:
“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.”
13. It can be seen from the above that provisions of old Section 129(1) of the Act were pan materia with provisions of Section 129E as it stands at present. So, we humbly believe that in view of the law laid down by the Hon’ble Supreme Court, the appellant has to pre-deposit the amount of penalty before the appeal can be heard on merits. From perusal of the judgment in Hussain Haji Hanin alias Hussein Kabiju case (supra), it appears that judgment in Navin Chander Chhotelal (supra) was not brought to the notice of the Hon’ble High Court.
14. Here, the appellant has failed to deposit. The appellant also does not pray for time, to deposit the amount of penalty. There is no specific provision in Section 129E that in the case where the appellant fails to pre-deposit the amount of penalty, the appeal should be dismissed, but in case of Navin Chander Chhotelal (supra), Hon’ble Supreme Court has held that in such an eventuality, the appellate authority can dismiss the appeal. So, we pass the following final order:
15. The appeal stands dismissed for failure of the appellant to deposit the amount of penalty.