Navinchandra Chhotelal Vs. Central
Board of Excise and Customs & Ors  INSC 11 (13 January 1971)
CITATION: 1971 AIR 2280 1971 SCR (3) 357
Customs Act (32 of 1962), ss. 128 and 129(1)
and proviso- Scope of.
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 falling 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]
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
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
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 (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 unnerved,
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
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 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
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) S.C.R.987. (2) 
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 :
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
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
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
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 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
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 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.