# NA VINCHANDRA CHHOTELAL v. CENTRAL BOARD OF EXCISE AND CUSTOMS & ORS

- **Citation:** [1971] 3 S.C.R. 357
- **Court:** Supreme Court of India
- **Decided:** 1971-01-13
- **Case number:** Civil Writ No. 666-D of 1966
- **Bench:** J. M. Sh 0Elat, C. A. Vaidialingam
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/na-vinchandra-chhotelal-v-central-board-of-excise-and-customs-ors-5207
- **Pages:** 8

## Headnote

Customs Act (32 of 1962), ss. 128 and 129(1) and provis<>-Scope of.
The Collector of Customs and Excise confiscated certain smuggled
i;oods and levied a personal penalty of Rs. 20,000 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 l'f 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 pelition 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 filing
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 Anthority, 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-compli·
ance 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 circumotances. Otherwise, the appeal will have to be
kept on file and such retention will serve no purpose, because, the
Appellate Authority canno'. dispose of the appeal on merits when the re·
quirements 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-EJ

## Text

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357
NA VINCHANDRA CHHOTELAL
v.
CENTRAL BOARD OF EXCISE AND CUSTOMS & ORS.
January 13, 1971
[J. M. SH
0ELAT AND C. A. VAIDIALINGAM, JJ.]
Customs Act (32 of 1962), ss. 128 and 129(1) and provis<>-Scope of.
The Collector of Customs and Excise confiscated certain smuggled
i;oods and levied a personal penalty of Rs. 20,000 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 l'f 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 pelition 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 filing
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 Anthority, 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-compli·
ance 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 circumotances. Otherwise, the appeal will have to be
kept on file and such retention will serve no purpose, because, the
Appellate Authority canno'. dispose of the appeal on merits when the re·
quirements 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-EJ
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 105 ol.
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.
ff
U. M. Trivedi, Swaranjit Sodhi and S. S. Shukla, for the appellant.
L. M. Singhvi and S. P. Nayar, for the. respondents.
358
SUPREME COURT REPORTS
[1971]3 S.C.R.
The Judgmeint of the Court was delivered by
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Vaidfalingam, J. This
appeal,
by special
leave,
is
against the judgment and order datc:ct.August 24, 1966 of the
Circuit Bench of the Punjab High Cotllf 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 r~pondents dated December 7, 1965 and April 23, 1966 respectively.
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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.,comp!i3jllce with the provisions of s. 129 of
.the Customs Act, .1962 (Act 32 of 1962) · (hereinafter to be
referred as the Act) was justified .. The point lies within a very
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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, 194 7. . The appellant was called up0n 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)
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of the Act.
Similarly anot1¥:r
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 allegatio,ns
mad~lagainst him. The third respondent by his order dated July
18, A 964 held that th~ ruby stone in question was smuggled into
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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~(if.the Act on the
ground that he was the PJ:ime mover behind-Smuggling of the F
ruby stone. A perso11al penalty was also imPl'sed on Rodrigues
who ·had carried the ruby stone. It was spe<;ifically stated in the
order that the.penalties imposed were without:prejuelice to institu-.
tion 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. G
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
bevond his means to .deposit such a large amount. Accordingly.
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he'. requested the first respondent to exempt him from making the
~eposit of the penalty imposed as a preliminary r~quirement for
hearing the appeal.
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NAVlNCHANDRA v. EXCISE & CUSTOMS BOARD
35~
tVaidialingam, J.J
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The first respondent by his mder dat~d Decembe!. 7, ~9,65,
rejected the appeal for non-compliance with the proviSlons P,f s.
129 of the Act. From the order it is seen that as the appea~ 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
B 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
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on behalf of the appellant, the order of the first respondent pro~
ceeds 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 infotmed 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 unserved, a communication was sent to the appellant's
D lawyer, who was on record arid. jt was acknowledged on Oct?ber
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.
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The appellant carried the matter in revision before the second
respondent under s. 130 of the_ Act. . The appellant was given a
It further opportunity by the. second re5pondent to deposit the • sum
of Rs. l~,000/- as required by the first respondent. As the appellant again failed to avail, himself of this opportunity, the second
r~spon~n.t by' its .prder ~ated April 23, 1966 rejected the revision petl(J<>n hold111g that the matter cannot be considered on
.merits and ~at the Goveylunent of India saw no reason to interf
· fere with the decision ¢ the Central Board of Excise and Customs.
The writ petition filed by the appellant to quash the orders of the
fir~ and second respondent{ wa,s dismissed in /imine by the High
Court and it is the said order \hat Js challenged beforjl 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
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Magistrate, Ernakulam. The District Magistrate by his judgment
da!ed February 28. 1966 found the appellant and Rodrigues not
gmlty of the offence with which they were charged and acquitted
them under s. 258 of the Code of Criminal Produre.
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_Yarious gro':1~ds of attack against the legality of the demand
notice for deposit mg the penalty under s. 129 ( 1) of the Act have
been. taken, h?!h before. the. High Court in the writ petition as
also m the ~hhon filed m this Court for special leave. But only·
two contentrons were urged before us by Mr. U. N. Trevedi .
..
360
SUPRllME COURT REPORTS
[1971]3 s.c.R.
learned counsel for the appellant, namely, (i) section 129 of the
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Act does not give any power to the first respondent to dismiss
the ap~J for non-compliance with the requirements regarding
the deposit of the penalty amount; and (Ii) by rejecting the appeal,
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respondent ~as approved the order of the third respondent
levy~g penalty agamst the appellant. It will be noted that the
vahd1ty of s. 129 of the Act is not challenged.
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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 withs. 129. If the appellant, who was given
an opportunity not only by the first respondent but also by the c
second respondent to deposit the half amount of penalty, cjid not
avail himself of the said opportunity, he was entirely to blame
for bringing on him the consequences of the rejection of his
arpeal.
In view of the contentions taken before us on behalf of the
appellant, it is ulljllecessary for us to consider in great detail the
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decisions referred to by Mr. Trevedi.
In Hoosein Kasam Dada (India) Ltd. v.
T~e State of
Madhya Pradesh and others(') the question that atose for 7onsideration was whether s. 22( 1) of the Central Provinces and
Berar Sales Tax Act, 194 7, requiring the deposit of the penalty
along with tl1e appeal applied to an appeal filed against an order E
of assessment on the ba~is of return filed on date when tht> c.iginal
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 df Madhya Pradesh
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and others( 2 ) the question 'related to the right of a p<. rty. to approach the High Court under Art. 226 of the Consptution without
availing himself of the other remedies provided under the Central
Provinces and Berar Sales Tax Act, 194 7. This Court held that
by the me[\! fact that a remedy was available under the said Act,
.an assessee was not disentitled to relief under Art. 226 when he
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comes with an allegation that his fundamental right is sougl!t to
be infringed.
In Collector of Customs and Excise, Cochin and others v.
A. S. Bava(') 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
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0) [1953] S.C.R. 987.
(2) [1954] S.C.R.1122.
(J) [1968] 1S.C.R.82.
NAVINCHANDRA V. EXCISE & CUSTOMS BOARD
361
( Vaidialingam, J.)
A May 4, 1963 issued by the Central Government under s. 12 of
the· said Act. This Court held that s. f29 of the Act was not
attracted.
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None ~f the above decisions have any bearing on the contentions 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 orelet-
(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, app(:lll 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 app~aled 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 order;
Provided further that where the Appellate Authority
is of opinion that any duty of customs has been shortlevied, no order enhancing the duty shall be passed unless the appellant is given notice within thi;. lime-limit
specified in section 128 to show cause against the proposed order.
36~
SUPREME COURT REPORTS
(1971]3 S.C.R.
129 ( 1) Where the decision or order appealed against
related to any duty demanded in respect of goods which
are not un~er the control of customs authorities ur any
penalt~ levied under this Act, any person desirous of
appealmg ·against such decision or order shall, pending
the appeal, deposit with the proper officer the dutv 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 that s. 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 rower 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
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or annulling the decision or order app:!aled against, subject to two
provisos contained therein.
Section 129(1) makes it obligatory
on the person filing ap appeal to deposit, pending the appeal, with
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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 undu~ har~
ship 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 .. 20,00~/-, but
as the appellant had made a request for dispensmg w1!h such
'deposit, the first respondent heard him on that point and ultnnately.
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as m~ntioned earlier. reduced the amount of penalty to be deposit-
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NAVINCHANDRA v. EXCISE & CUSTOMS BOARD
353·
( 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 respondellt.
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(!). 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 appe~l.
There was no provision therein by which the. appellate authonty
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
grounds 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 representatioas 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 levi.~d 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. 10,0001-, but he failed to avail himself of this further
opportunity afforded to him by the second respondent and hence
his revision was rejected.
364
SUPREME COURT REPORTS
[1971]3 s.c.R.
No doubt s. 129 does not expressly provide for the rejection A
of the appeal for non-compliilnce with the requirement regarding
the deposit of penalty or duty, but when sul1-seccion (1) of s. 129
makes it obligatory on an appellant to dep0sit 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 passectunder the
proviso, the appellate authority is fully competent to reject the
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appeal for non-compliance with the provisions of s.
129(1).
That is exactly wli.at 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 . c
section 129(1) is complied with; the appellate authority cannot
proceed to hear an appeal on merits. Therefore, the logical con-
.sequence of failure to comply with s. 129 ( 1) is the rejection of
appeal on that ground.
No douqt, the rejection of the appeal by .the first respondent
will mean that the appellant is bound by the order of the third
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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 responc\ent 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.
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~n the result the appeal fails and is dismissed with costs.
V.P.S.
Appeal dismissed.
•