Delhi High Court Allows Appeal Of Poor Daily Wage Earners Against Seizure Of Goods Without Pre-Deposit

The Delhi High Court has allowed the appeals of poor daily wage earners against the seizure of goods without insisting on the requirement of pre-deposit.

The bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju has observed that the statute may, at times, impose conditions as a requirement of filing an appeal. However, a condition that is unduly onerous will render the right to appeal null and void.

The petitioners belong to poor families, live in Islam Nagar, Hojai, Assam, and are not well-educated youth. The petitioners earn their livelihood through agriculture and by selling small quantities of agarwood. The petitioners have submitted in the petition that the goods seized by the customs authorities were purchased by them, and the bills were attached to the reply to the show cause notice.

The petitioners stated that the goods seized were wrongly assessed at a very high market value, and the penalty has been levied based on an incorrect assessment of the goods. The petitioners submitted that their right of appeal under Section 129E cannot be exercised as they are not financially sound and, hence, unable to pay the mandatory pre-deposit as required to challenge the levy.

The petitioners have challenged the constitutional validity of Section 129E.

The petitioners contended that the export of cultivated varieties of agarwood chips and agarwood oil is free and not prohibited. The petitioners relied on Notification No. 45/2015-2020 dated November 29, 2021, on the Amendment in the Export Policy of Agarwood Oil and Agarwood Chips and Powder, stating that it is only by the amendment of the policy that the seized products have become prohibited. However, at the time of the seizure by the customs authorities on September 20, 2019, the policy was not in force.

The department contended that agarwood is an endangered species and is covered under Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora. The department relied on the preliminary examination report dated September 20, 2019, which was given by the Wildlife Inspector. The report stated that the confiscated species is included in Appendix II of CITES, and the export of the species of agarwood is prohibited.

As per the District Magistrate’s Report, the petitioners do not have the financial wherewithal to make a pre-deposit as is required under Section 129E of the Customs Act.

The court has held that the department has not placed on record any document in support of the value or price of the agarwood chips and agarwood oil, which were "provisionally" valued at Rs. 5,00,000 per kg and Rs. 8,00,000 per kg, respectively, to levy the penalty on the petitioners. The order arrived at the valuation without any discussion on the price. The order also relied on the report of the wildlife inspector, which also does not mention any price but clearly mentions that there were different grades of agarwood chips seized. No final report on the value or price of the variety of agarwood chips and agarwood oil seized is placed on record or even relied upon by the respondents.

The court noted that the valuation of the goods seized is also not in terms of the prices as set forth in the Government of Assam’s Agarwood Policy. No proper calculation has been made for the penalty levied. The penalty imposed on the petitioners has been imposed based on a provisional valuation. The penalty imposed is therefore without any legal basis and cannot be sustained.

"Therefore, given the financial position and the wherewithal of the Petitioners, an opportunity needs to be given to them to contest the valuation so imposed by the Respondents, which otherwise cannot be contested by them. Thus, we consider the case of the petitioners to be an appropriate case to exercise our discretion in the matter concerning waiver of pre-deposit of penalty," the court said.

Case Title: Mohammed Akmam Uddin Ahmed & Ors. Versus Commissioner Appeals Customs And Central Excise

Citation: 2023 LiveLaw (Del) 357

Case No.: W.P.(C) 1242/2022 & CM APPL. 3625/2022

Date: 28.04.2023

Counsel For Petitioner: Riya Soni

Counsel For Respondent: Akshay Amritanshu

Click Here To Read The Order