1. The brief factual background relevant for the purpose of the above applications for waiver of pre-deposit and stay of recovery is that during the period December, 1978 to April, 1979, applicant No. 1 imported RBD Palm Oil and cleared the same on 10 Bills of Entry Visit by the Central Excise officers to the factory premises of one M/s.
Steel and Metal Works, Sahibabad in July, 1979, in pursuance of intelligence, resulted in their noticing huge stocks of empty drums painted in red; that some of the drums were converted into sheets by flattening the drum bodies after cutting and separating the tops and bottoms; that the drums belong to applicant No. 1 (hereinafter referred to as importers); and that some of the converted sheets of the drums was sent to other companies for re-rolling. On further intelligence the Central Excise officers visited the factory premises of the importer and found huge stocks of empty magnetic and non-magnetic drums, top and bottoms similar to those found at the Ghaziabad units. All the drums were found to be of stainless steel and as stainless steel was a canalised item and the importers were not permitted to import the same, they were seized by the officers under the reasonable belief that they had been smuggled into India. All the drums were co-related to import made by the importers. Show cause notice dated 21/01/1980 proposing confiscation of the seized goods and imposition of penalty was issued under Section 124 of the Customs Act, 1962 and 9 less charge demands under Section 28, collectively covering an amount of duty of Rs. 55,77,333/- on the ground that the importers failed to declare the nature of the packing material and that the value of each SS drum was Rs. 260/- CIF, higher than the value of normal packing metals of MS drums and accordingly SS drums were liable to duty as per provisions of Notification 104 dated 02/08/1976, were also issued. The legality of the less charge demands and the notice was challenged by the importers by filing Writ Petition No. 158/1980 before he Hon'ble Delhi High Court, which vide its order dated 22/08/1980 set aside the less charge demand with a direction to return the seized goods to the importers.
The Union of India preferred Special Leave Petition / Civil Appeal No.2360/1980 before the Hon'ble Supreme Court and the SLP/Civil Appeal was dismissed by the Supreme Court. Thereafter a Review Petition was filed and by order dated 08/08/1996 the Supreme Court allowed the appeal. The Supreme Court set aside the Delhi High Court judgment and directed continuance of proceedings pursuant to the show cause notice under Section 28 and 124 and that the drums shall remain in seizure but in the premises of the importers. As the notices could not be adjudicated, the importers filed an interim application for directions before the Supreme Court, which vide its order dated 23/04/2001 directed disposal of the adjudication pending before the Commissioner of Customs, Bombay within three months. Noticees demanded supply of relied upon documents and of all that were available, only part of the relied upon documents could be supplied and in the meanwhile the time limit fixed for the completion of the adjudication expired and therefore by order dated 26/08/2002 further directions were given by the Supreme Court as under: "The Complaint of the Applicant in this appeal is that the copies of the documents on which the department want to rely have not been supplied to the applicants. On the contrary learned counsel for the original appellants submits that the copies of the documents have been supplied along with show cause notice. We make it clear that if any copy of the documents based on which the department is presenting it case is not supplied to the applicants then no reliance shall be placed on such documents".
2. Since the adjudication could not be completed even after the above directions a fresh order was passed by the Supreme Court on 25/08/2003 which reads as under: "Learned counsel for the Union of India submits that it will rely only on those documents which are annexed to the Writ Petition and not on any fresh documents. Learned counsel for the respondents has no objection to the same. The learned counsel further submits that appropriate orders will be passed by the authorities within three months." 3. Subsequently the notices were adjudicated by the Commissioner who, vide the impugned order, confirmed the demand as set out above, confiscated the drums with option to redeem on payment of fine of Rs. 10 lakhs and imposed penalty of Rs. 25 lakhs on the importers and Rs. 5 lakhs each on the other two applicants, who are Directors of the importers, in terms of Section 1.12(a) of the Customs Act, 1962; hence these applications.
4. We have heard Shri Harish Chander, learned Sr. Counsel for the applicants and Shri Shukla, "learned SDR for the Revenue. Both sides confirm that the goods are still in the custody of the customs authorities as the option for redemption has not been exercised by the importers. The learned Counsel for the importers also undertakes not to redeem the goods during the pendency of these appeals. On the basis of the above our order is confined to pre-deposit of penalties, in the light of the language of Section 129E of the Customs Act, 1962, which provides that "Wherein any appeal under this Chapter, the decision or order appealed against relates to any duty and interest demanded in respect of 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 and interest demanded or the penalty levied".
5. The first plea of the applicants that the order is bad in law as the goods were cleared through Bombay Port under Section 47 of the Customs Act, 1962 and therefore the clearance could not be reviewed by the Commissioner, is prima facie not tenable in view of the learned SDR's submission that what was covered by the out of charge order / order of clearance under Section 47, was the RBD Palm Oil and not the packing drums which were found to be of stainless steel only later, namely, after the goods were cleared, and at the time of clearance the drums had been painted red to avoid detection of the fact that they were made of stainless steel. Further the submission of the applicants that the order suffers from the vice of contravention of principles of natural justice is also not tenable prima facie in view of the Supreme Court order dated 25/08/2003 and also noting that no grievance has been made by the applicant that the Commissioner has relied upon any documents, copies of which were not furnished to the applicants. The next contention of the applicants is that the goods were packing material eligible to the benefit of exemption from duty under Notification 184-Cus dated 02/08/1976 and that the adjudicating authority has wrongly held that the notification required the importers to make a declaration about the nature of the packing material, namely, that the packages are normally used in trade for packing the goods therein, that the packages are not of permanent character and accordingly strong enough to be suitable for repeated use and that their value is included in the value for which the goods contained therein have been invoiced.
Our attention is drawn to Public Notice No, 90 dated 06/09/1979, which for the first time, enjoined upon the importers to file such declaration along with bill of entry in order to avail of the benefit of the exemption. This contention is also debatable in view of the fact that (a) the value of the packing material worked out to be more than 50% of the value of the goods which appears to be abnormally high and therefore cannot be prima facie accepted as having been included in the value of the Palm Oils imported; (b) that the stainless steel drums are of permanent character and suitable for repeated use; and (c) that the evidence on record showed stainless steel drums prima facie were not packing material for palm oil as seen from the examination of other regular importers of palm oil, who stated that they had been importing palm oil in drums made of mild steel or other than that of stainless steel and from the fact that the importers in the present case had always been importing palm oil only in mild steel drums and tins made of tin plates until the imports covered by the present order. In any event since the pre-deposit of duty is not required for the reason that the goods are still in the custody of the customs the aspect of eligibility of the notification is not relevant at this stage and what is relevant is whether the goods are liable to confiscation as being prohibited goods, so as to give rise to penal liability against the applicants, and the goods are prima facie prohibited goods.
6. In view of the above discussion we hold that a strong prima facie case for waiver has not been made out by the importers. Taking into account the plea of financial hardship as evidenced by the order of the BIFR and AAIFR and the balance sheet for the year ending 31/03/2003 we direct pre-deposit of Rs. 3 lakhs towards the penalty by Applicant No.1 within a period of eight weeks from today and on such deposit pre-deposit of balance penalty shall stand waived and recovery thereof stayed pending the appeal and compliance to be reported on 26^th July, 2004. Failure to comply with this direction shall result in vacation of stay and dismissal of appeal without prior notice.
7. We waive pre-deposit of the penalty imposed on the other two applicants as prima facie the order does not disclose what part they played in the import of stainless steel drums in the guise of packing material in order to circumvent restrictions imposed on their import.