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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,Page 1 of 13
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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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(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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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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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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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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(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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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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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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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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(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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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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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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