BHAGWATI INTERNATIONAL Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) BY these applications, the applicants have prayed for modification/ Rectification of Mistake of the interim order, under Section 129B of the Customs Act, 1962. By the interim stay order dated 17.4.06, having regard to the facts and circumstances of the case, it was directed that the applicants should deposit 50% of the amount of penalty imposed on them in each case, failing which the appeal of the defaulting party will stand dismissed. The compliance was required to be made on 6.6.06. Admittedly, no pre -deposits have been made and the condition of interim stay order has not been fulfilled, as a result of which the appeals have stood dismissed. However, since these applications were presented on 2.6.06, i.e. before the last date for compliance and could not be heard before that date, we have considered the applications.

(2.) THESE applications are purported to have been filed under Section 129B(2), which by its nature cannot be invoked for rectification of mistake in interim order, because, Section 129B(2) has reference to Section 129B(1), which contemplates final orders in appeals. Section 129B(2) cannot be invoked in the context of Section 129E of the Act. We have, however, considered these applications at the request of the learned Counsel for invoking our inherent powers.

(3.) THE main contention of the learned Counsel for the applicants is on the basis of paragraph 7 of the stay order. He submitted that in Para 7 of the stay order, it was stated that 'regarding the plea of the applicants that the goods are still with the department and these are security for the penalty, the Tribunal, prima -facie do not find any force in the argument as the goods would remain security for duty.' It was submitted that the goods were in the custody of the department and, therefore, no question of pre -deposit could arise. It was further submitted that the observations in paragraph 7 of the stay order that 'once the goods have been confiscated and the appellants have failed to exercise the option to redeem within the prescribed period, then the property vests in the central government under Section 126 of the Customs Act', cannot come in the way of the applicants, because, even if the property vests in the central government under Section 126 of the Act, the issue would be open during the pendency of the appeal, and there would be no irreversible vesting of the property in the government. It was submitted that if the order of confiscation is set aside in appeal, the question of property vesting by virtue of confiscation cannot survive. Therefore, the goods in the custody of the department should be treated as under its control for the purpose of Section 129E of the Act and no condition of pre -deposit could be imposed. The said condition was, therefore, required to be removed from the stay order. It was also argued that there was no duty imposed on the present goods under the impugned order and therefore, the question of goods remaining as the security for duty, could not arise. The learned Counsel cited the following decisions in support of his contentions: