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Judgments of Supreme Court of India and High Courts

M/S Universal Gems vs Union Of India on 5 January, 2024

NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 16137 of 2023

M/S UNIVERSAL GEMS
Versus
UNION OF INDIA

Appearance:
MR BOMI H SETHNA(5864) for the Petitioner(s) No. 1
for the Respondent(s) No. 1,2

CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA

Date : 05/01/2024
ORAL ORDER

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned Senior Advocate Mr.

N.D.Navati with learned advocate Mr. Bomi

Sethna for the petitioner.

2. By this petition under Article 226 of the

Constitution of India the petitioner has

prayed for the following reliefs:

“(a) That this Hon’ble Court be pleased
to issue a writ in the nature of
Declaration or an appropriate writ,

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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order or direction holding and
declaring that the requirement of
mandatory pre-deposit under Section
129-E of the Act is not applicable in
the facts and circumstances of the
present case and in respect of Appeal
bearing No. 1669 of 2023 pending before
the Respondent No.2;

(b) That this Hon’ble Court be pleased
to issue a Writ of Mandamus or a Writ
in the nature of mandamus, or any other
appropriate Writ, Order or directions
directing the Respondent No.2 its
officers, servants, agents etc to admit
and dispose of the pending Appeal
bearing No. 1669 of 2023 without
insisting for payment of the mandatory
pre-deposit under section 129-E of the
Act;

(c) In the alternate to the prayer
clause (a) and (b) above, that this
Hon’ble Court be pleased to issue a
Writ of Mandamus, or a Writ in the
nature of mandamus, or any other
appropriate Writ, Order of directions,
directing the Respondents its officers,
servants, agents etc to release the
confiscated goods pertaining to
shipping bills no. 4004674 dated
21.05.2021 and 4004784 dated 25.05.2021
without insisting for redemption fine
to enable the petitioner to make the
payment of mandatory pre-deposit under
section 129-E of the Act;

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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(d) That pending the hearing and final
disposal of the present Writ Petition,
this Hon’ble Court be pleased to issue
writ of Mandamus, or a writ in the
nature of mandamus, or any other
appropriate Writ, Order or directions,
directing the Respondents, its
officers, servants, agents etc. to keep
operation of the Impugned order being
Order-in-original bearing No.
32/AKS/ADC/SRT/2022-23 dated 15.12.2022
(Annexure A) in abeyance and not to act
or adopt any action against the
Petitioner in the course of furtherance
of the impugned order.

(e) for ad-interim reliefs in terms of
the prayers above;

(f) for dispensation with the
service of the prior notice to the
respondents;

(g) costs of the petition and orders
thereon; and

(h) such further and other reliefs, as
this Hon’ble Court may deem fit and
proper in the nature and circumstances
of the case, and in the interest of
justice.”

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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3. The petitioner has challenged the Order-

in-Original dated 15.12.2022 passed by the

Additional Commissioner before the

appellate authority.

4. The petitioner obtained an approval from

the competent authority i.e. Development

Commissioner, Surat SEZ, Sachin for

manufacture and export of Cut and polished

lab grown diamonds from rough lab grown

diamonds as per letter of approval dated

15.02.2021.

5. The petitioner was also permitted to

procure rough lab grown diamonds for

manufacture of cut and polished lab grown

diamonds.

6. The petitioner by letter dated 02.03.2021

intimated to the Development Commissioner,

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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Surat SEZ, Sachin, that the petitioner has

commenced business activities from their

unit from 25.02.2021. The Customs

Department withheld two consignments

pertaining to Shipping Bills No. 4004674

dated 21.05.2021 and Shipping Bill No.

4004784 dated 25.02.2021 on 27.05.2021 on

the basis of certain information.

7. Upon investigation it was concluded that

the goods were attempted to be improperly

exported by the petitioner are cut and

polished natural diamonds and not cut and

polished lab grown diamonds. Accordingly,

the total quantity of 58089.13 carats

recovered as against 23301.75 carats

declared on the Shipping Bills

having total value of Rs. 2,04,62,84,341/-

as against value of Rs. 2,93,22,613/-

declared on the shipping bills.

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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8. After issuing a show-cause notice and

giving opportunity of hearing to the

petitioner, the Order-in-Original was

passed by the Additional Commissioner of

Customs, Surat, dated 15.12.2022 as under:

“order

(i) I order confiscation of the seized Cut
and Polished Natural diamonds weighing
57620.01 Carats and Cut and Polished Lab-
grown diamonds, weighing 469.12 Carats,
totally weighing 58089.13 Carats and
valued at Rs. 2,04,62,84,341/- (Rupees Two
Hundred Four and Forty one only) attempted
to be improperly exported by mis-declaring
the quantity, description and value by
M/s. Universal Gems, Surat SEZ, Sachin,
Surat covered under Shipping Bill Nos.
4004674 dated 21.05.2021 and 4004784 dated
25.05.2021 under section 113(h) (I) of
the Customs Act, 1962 read with Sections
21, 22 and 25 of the SEZ Act, 2005 and
Rules 45(1) and 46 of SEZ Rules, 2006.
However, I give an option to the Noticee,
M/s. Universal Gems, Surat SEZ, Sachin,
Surat to pay a redemption fine of Rs.
82,00,00,000/- (Rupees Eighty-Two Crores
Only) in lieu of confiscation under
Section 125 of the Customs Act, 1962.

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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(ii)I order confiscation of the seized
rough rejection (mix) of natural diamonds
totally weighing 3676.15 carats valued at
Rs. 74,823/- (Rupees Seventy Four Thousand
Eight Hundred and Twenty Three only),
unauthorisedly procured/stored in the
factory premise, under section 111(d) and
111(o) of the Customs Act, 1962 read with
Section 21, 22 and 25 of the SEZ Act,2005
and Rule 27 of SEZ Rules, 2006. However, I
give an option to the Noticee, M/s.
Universal Gems, Surat SEZ, Sachin, Surat
to pay a redemption fine of Rs. 29000/-
(Rupees Twenty-Nine Thousand Only) in lieu
of confiscation under section 125 of the
Customs Act, 1962.

(iii) I impose a penalty of Rs.
82,00,00,000/- (Rupees Eighty-Two Crores
Only) upon the Noticee, M/s. Universal
Gems, Surat SEZ, Sachin, Surat under
Section 114(iii) of the Customs Act,1962.

(iv) I impose a penalty of Rs. 29,000/-
(Rupees Twenty Nine Thousand) upon the
Noticee, M/s. Universal Gems, Surat SEZ,
Sachin, Surat under section 112(a)(i) of
the Customs Act, 1962.

(v) I impose a penalty of Rs.

1,00,00,00,000/- (Rupees One Hundred
Crores) upon the Noticee, M/s. Universal
Gems, Surat SEZ, Sachin, Surat under
Section 114AA of the Customs Act,1962.”

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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9. The petitioner being aggrieved has

preferred Statutory Appeal No. 1669/2023

under section 128 of the Customs Act,1962

before the Commissioner of Customs

(Appeals).

10. The petitioner is also required to make

mandatory pre-deposit being 7.5% of the

penalties imposed to the tune of Rs.

1,82,00,29,000/- in total, and for

admission of the appeal maximum amount of

Rs. 10 crores be deposited.

11. As the petitioner has no source of income/

profit and not in financial position to

arrange for Rs. 10 crores for the purpose

of pre-deposit, the petitioner has prayed

to approach this Court under Article 226

of the Constitution of India with the

aforesaid prayers.

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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12. We have not gone into merits of the matter

and hence, the facts are not required to

be considered in detail as it would amount

to considering the same on merits.

13. Learned Senior Advocate Mr. N.D.Nanavati

for the petitioner has prayed for

direction and declaring that requirement

of mandatory pre-deposit under section

129-E of the Customs Act,1962 is not

applicable in the facts and circumstances

of the case for considering the Appeal No.

1669/2023 pending before the respondent

No.2 in view of the very weak financial

condition of the petitioner as narrated in

the memo of the petition. Learned Senior

Advocate Mr. Nanavati therefore prayed

that the petitioner may be exempted from

payment of the pre-deposit considering the

facts of the case.

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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14. Section 129E of the Customs Act which is

amended w.e.f. 2014, reads as under:

[129E. Deposit of certain percentage
of duty demanded or penalty imposed
before filing appeal.–The Tribunal or
the Commissioner (Appeals), as the
case may be, shall not entertain any
appeal,–

(i) under sub-section(1) of section
128, unless the appellant has
deposited seven and a half per cent.
of the duty, in case where duty or
duty and penalty are in dispute, or
penalty, where such penalty is in
dispute, in pursuance of a decision or
an order passed by an officer of
customs lower in rank than the
Principal Commissioner of Customs or
Commissioner of Customs;

(ii) against the decision or order
referred to in clause (a)of sub-
section(1)of section 129A, unless the
appellant has deposited seven and a
half per cent. of the duty, in case
where duty or duty and penalty are in
dispute, or penalty, where such
penalty is in dispute, in pursuance of
the decision or order appealed
against;

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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(iii) against the decision or order
referred to in clause(b)of sub-
section(1) of section 129A, unless the
appellant has deposited ten per cent.
of the duty, in case where duty or
duty and penalty are in dispute, or
penalty, where such penalty is in
dispute, in pursuance of the decision
or order appealed against:

PROVIDED that the amount required to
be deposited under this section shall
not exceed rupees ten crores:

PROVIDED FURTHER that the provisions
of this section shall not apply to the
stay applications and appeals pending
before any appellate authority prior
to the commencement of the Finance
(No. 2) Act, 2014.”

15. On perusal of the aforesaid provision, it

is clear that it is mandatory for the

person being aggrieved by the order passed

by the authority to deposit 7.5% or 10%,

as the case may be, of the total demand as

pre-condition and pre-deposit towards

preferring appeal before the appellate

authority. This mandatory provisions are

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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required to be adhered to by the

petitioner. We are of the opinion that

the same cannot be declared to be

inapplicable in the facts of the case as

it is mandatory requirement for the

petitioner to pre-deposit requisite amount

so as to enable the appellate authority to

consider the appeal on merits.

16. It is made clear that we have not

considered the merits of the matter or

prima face case of the petitioner in view

of the mandatory provision requiring the

petitioner to pre-deposit requisite amount

as per section 129E of the Customs Act.

The petitioner would be entitled to raise

all the contentions raised in this

petition before the appropriate authority.

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NEUTRAL CITATION

C/SCA/16137/2023 ORDER DATED: 05/01/2024

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17. In view of the above, the petition, being

devoid of any merit, is accordingly

dismissed. No order as to costs.

(BHARGAV D. KARIA, J)

(NIRAL R. MEHTA,J)
JYOTI V. JANI

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