S.B Sinha, J.— Leave granted.
2. Interpretation of the provisions of Section 129-E of the Customs Act, 1962 (for short “the Act”) is in question in this appeal which arises out of a judgment and order dated 4-10-2004 passed by a Division Bench of the High Court of Gujarat at Ahmedabad in Special Civil Application No. 9569 of 2004.
3. An adjudication proceeding was initiated against the appellant. Assessment of customs duty was made. An appeal was preferred thereagainst. The said appeal was dismissed for failure to pre-deposit a sum of Rs 3,30,00,000 as directed by the court of appeal.
4. We may notice that in the earlier round of litigation when a statement was made before the High Court that the Tribunal may hear the appeal on merit without asking the appellant to make any pre-deposit, it was asked to make that prayer before the Tribunal. Pursuant thereto an application was filed. The Tribunal in terms of its order dated 14-1-2004 opined:
“We accordingly order that the appellant Company deposit Rs 3 crores out of the total duty demand. Upon such deposit further deposit of duty and penalty imposed on the Company is waived and recovery thereof stayed. We further order that the Director of the Company, Shri R.C Agarwal deposit Rs 20 lakhs and the power-of-attorney holder of the Company, Shri H.R Agarwal deposit Rs 10 lakhs within 12 weeks of the date of the order. Compliance on 26-4-2004. Appeal is liable to be rejected for non-compliance without further notice.”
5. A writ application filed by the appellants questioning the correctness of the said order has been dismissed by reason of the impugned judgment.
6. Mr C.N Sreekumar, learned counsel appearing on behalf of the appellants, in support of this appeal, inter alia, would submit:
(i) The High Court committed a manifest error insofar as it failed to take into consideration the ingredients of Section 129-E of the Act.
(ii) Section 129-E, if construed properly, would not give rise to a conclusion that in absence of any provision made in that behalf, non-compliance with the order of pre-deposit itself would lead to automatic dismissal of the appeal.
(iii) A right of appeal conferred upon a suitor having been provided for in a statute, the provision for pre-deposit must receive strict interpretation.
(iv) Provisions for payment of court fee and power to grant stay having been conferred on the Tribunal, the impugned judgment could not have been passed, particularly when Section 129-E of the Act does not provide for any consequence arising out of non-compliance with the order of pre-deposit.
7. Mr Vikas Singh, learned Additional Solicitor General appearing on behalf of the Union of India, on the other hand, would submit that interpretation of Section 129-E of the Act is concluded by a decision of this Court in Vijay Prakash D. Mehta v. Collector of Customs (Preventive) (1988) 4 SCC 402.
8. The Act was enacted to consolidate and amend the law relating to customs. It provides for assessing an order of customs duty. It also provides for seizure of goods. Penalty may also be levied by the adjudicating authorities. Chapter XV of the Act provides for appeals to the Commissioner from any decision passed by an officer of Customs lower in rank than the said authority. Section 128-A provides for the procedure therefor.
9. Section 129 provides for the constitution of the Appellate Tribunal wherefor procedures have also been laid down. Proviso appended to Section 129-A enumerates the cases in respect whereof jurisdiction of the Appellate Tribunal is barred. Sub-section (6) of Section 129-A envisages payment of court fee. Sub-section (2-A) of Section 129-B specifies a period of three years during which the appeal may be disposed of. The Tribunal is also empowered to grant stay. Section 129-E, however, mandates pre-deposit of any duty and interest in appeal which is preferred in respect of the goods which are not under the control of the Customs Authorities or any penalty levied under the Act. Proviso appended thereto, however, empowers the Commissioner of Appeals or the Appellate Tribunal to dispense with such deposit if it comes to the conclusion that the deposit of duty and interest would cause undue hardship to the appellant.
10. A right of appeal is not a fundamental right. It is a statutory right. As a right of appeal is a statutory right, it may also be hedged by conditions. It is, however, trite that conditions imposed may not be such which may for all intent and purport take away a vested right of appeal. (See Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. (2007) 6 SCC 528, (2007) 5 Scale 452)
11. We, however, having regard to the facts and circumstances of this case are of the opinion that the larger question viz. interpretation of Section 129-E of the Act need not be gone into.
12. Section 129-E of the Act would be attracted where the goods in question are not in the custody of the Revenue. The said provision, therefore, would be attracted only when the ingredients thereof exist.
13. The learned Additional Solicitor General very fairly submits that a part of the goods is in custody of the respondents. If that be so, in our opinion, it was obligatory on the part of the Tribunal to take that factor into consideration in making the order of pre-deposit. Furthermore, while exercising its jurisdiction, the Tribunal was also required to apply its mind in regard to the question of undue hardship on the part of the appellants upon considering existence of a prima facie case. Merit of the case ordinarily should not otherwise be gone into unless the question on the face of it appears to be concluded.
14. The Tribunal while imposing the condition of pre-deposit was required to apply its mind in regard to the existence or otherwise of the conditions laid down in the statute.
15. In Vijay Prakash D. Mehta (1988) 4 SCC 402 applicability or interpretation of Section 129-E of the Act came up for consideration before this Court wherein it was held:(, 11 & 13)
“9. Right to appeal is neither an absolute right nor an ingredient of natural justice the principles of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant.
11. These observations cannot be applied to the facts of this case. Here we are concerned with the right given under Section 129-A of the Act as controlled by Section 129-E of the Act, and that right is with a condition and thus a conditional right. The petitioner in this case has no absolute right of stay. He could obtain stay of realisation of tax levied or penalty imposed in an appeal subject to the limitations of Section 129-E. The proviso gives a discretion to the authority to dispense with the obligation to deposit in case of ‘undue hardships’. That discretion must be exercised on relevant material, honestly, bona fide and objectively. Once that position is established it cannot be contended that there was any improper exercise of the jurisdiction by the appellate authority. In this case it is manifest that the order of the Tribunal was passed honestly, bona fide and having regard to the plea of ‘undue hardship’ as canvassed by the appellant. There was no error of jurisdiction or misdirection.
13. It is not the law that adjudication by itself following the rules of natural justice would be violative of any right—constitutional or statutory without any right of appeal, as such. If the statute gives a right to appeal upon certain conditions, it is upon fulfilment of those conditions that the right becomes vested and exercisable to the appellant. The proviso to Section 129-E of the Act gives a discretion to the Tribunal in cases of undue hardships to condone the obligation to deposit or to reduce. It is a discretion vested in an obligation to act judicially and properly.”
16. Mr Sreekumar, however, submits that inter alia having regard to the decision of the Madhya Pradesh High Court in Kishori Pujari Granite (P) Ltd. v. Union of India (2005) 184 ELT 225 (MP) and the decision of the Kerala High Court in Ashoka Rubber Products v. CCE (1989) 43 ELT 605 (Ker), the matter requires reconsideration. As at present advised, we are not inclined to do so.
17. We are satisfied that in a case of this nature, where a part of the goods which is the subject-matter of the proceedings under the Act is in possession of the Revenue, proviso appended to Section 129-E of the Act should have been invoked.
18. Justification for enacting such a provision has been considered by a Constitution Bench of this Court in Mardia Chemicals Ltd. v. Union of India (2004) 4 SCC 311 wherein it was held:( & 354, paras 56-57 & 64)
“56. The contention of the petitioners is that in the first place such an oppressive provision should not have been made at all. It works as a deterrent or as a disabling provision impeding access to a forum which is meant for redressal of the grievance of a borrower. It is submitted where the possession of the secured assets has already been taken over or the management of the secured assets of the borrower including the right to transfer the same, in that event it would not at all be necessary to burden the borrower doubly with deposit of 75% of the demand amount. In a situation where the possession of the secured assets has already been taken over or its management, it is highly unreasonable further to ask for 75% of the amount claimed before entertaining the grievance of the borrower.
57. Secondly, it is submitted that, it would not be possible for a borrower to raise funds to make deposit of the huge amount of 75% of the demand, once he is deprived of the possession/management of the property, namely, the secured assets. Therefore, the condition of deposit is a condition of impossibility which renders the remedy made available before DRT as nugatory and illusory. The learned Attorney General refutes the aforesaid contention. It is further submitted that such a condition of pre-deposit has been held to be valid by this Court earlier and a reference has been made to SCC at p. 202 in Anant Mills Co. Ltd. v. State of Gujarat (1975) 2 SCC 175 to submit that such a provision is made to regulate the exercise of the right of an appeal conferred upon a person. The purpose is that right of appeal may not be abused by any recalcitrant party and there may not be any difficulty in enforcing the order appealed against if ultimately it is dismissed and there may be speedy recovery of the amount of tax due to the Corporation.
64. The condition of pre-deposit in the present case is bad rendering the remedy illusory on the grounds that: (i) it is imposed while approaching the adjudicating authority of the first instance, not in appeal, (ii) there is no determination of the amount due as yet, (iii) the secured assets or their management with transferable interest is already taken over and under control of the secured creditor, (iv) no special reason for double security in respect of an amount yet to be determined and settled, (v) 75% of the amount claimed by no means would be a meagre amount, and (vi) it will leave the borrower in a position where it would not be possible for him to raise any funds to make deposit of 75% of the undetermined demand. Such conditions are not alone onerous and oppressive but also unreasonable and arbitrary. Therefore, in our view, sub-section (2) of Section 17 of the Act is unreasonable, arbitrary and violative of Article 14 of the Constitution.”
19. The Constitution Bench, therefore, was of the opinion that such a condition would be onerous and, thus, arbitrary if a suitor is required to deposit such an amount at the initial stage and not at the appellate stage.
20. We are not oblivious that the taxing statute must be strictly construed. (See Manish Maheshwari v. Asstt. CIT (2007) 3 SCC 794, (2007) 3 Scale 627 and Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector and ETIO (2007) 5 SCC 447, (2007) 7 Scale 392.)
21. We are also not oblivious of the fact that only because the word “shall” is used, the same may not be construed to be imperative in character.
22. In Pandiyan Roadways Corpn. Ltd. v. N. Balakrishnan (2007) 9 SCC 755, (2007) 7 Scale 758 this Court observed:
“11. … On a plain reading of the said provision and particularly in view of the fact that the word “shall” has been used, prima facie it would be construed to be imperative in character. It may, however, be held to be directory in certain situation. While construing a statute of this nature, the context plays an important role. Interpretation of a statute would also depend upon the fact situation obtaining in the case. There are, however, certain exceptions to the said rule. The question came up for consideration before this Court in U.P SEB v. Shiv Mohan Singh (2004) 8 SCC 402 wherein it was, inter alia, noticed:
“96. Ordinarily, although the word “shall” is considered to be imperative in nature but it has to be interpreted as directory if the context or the intention otherwise demands. (See Sainik Motors v. State of Rajasthan AIR 1961 SC 1480, AIR para 12.)
97. It is important to note that in Crawford on Statutory Construction at p. 539, it is stated:
‘271. Miscellaneous implied exceptions from the requirements of mandatory statutes, in general.—Even where a statute is clearly mandatory or prohibitory, yet, in many instances, the courts will regard certain conduct beyond the prohibition of the statute through the use of various devices or principles. Most, if not all of these devices find their justification in considerations of justice. It is a well-known fact that often to enforce the law to its letter produces manifest injustice, for frequently equitable and humane considerations, and other considerations of a closely related nature, would seem to be of a sufficient calibre to excuse or justify a technical violation of the law.”’ ”
23. In view of our findings aforementioned, the matter, in our opinion, requires reconsideration at the hands of the Tribunal. The Tribunal failed to take into consideration the limitation of its jurisdiction under Section 129-E which emanates from the custody of the goods and as a part of the goods is in the custody of the Revenue and furthermore in view of the fact that the High Court instead of considering the question as to whether direction to deposit the amount would cause undue hardship or not has gone into the merit of the matter, the interest of justice would be subserved if the impugned judgments are set aside and the matter is remitted to the Tribunal for consideration of the matter afresh. We direct accordingly. We would request the Tribunal to consider the desirability of disposing of the matter as early as possible.
24. The appeal is allowed to the aforementioned extent. No costs.