Customs authorities issue Penalty Order despite Interim order of Division Bench not to take Coercive steps: Madras HC sets aside Penalty Order

In a recent ruling, a Single Bench of the Madras High Court has set aside the penalty order imposed by the Customs Authorities against the petitioner despite the interim order of the Division Bench.

The bench of Justice P.B. Balaji acknowledged that impugned orders were a clear violation of the direction of the earlier orders passed by the division bench.

The Petitioner Big Bags International Pvt. Ltd is engaged in the manufacture of Flexible Intermediate Bulk Container Bags, which are designed for storing and transporting dry and flowable products, such as sand, fertilizer and granules.

The first respondent had issued an Order-in-Original dated 21.02.2011, confirming the proposal of recovery of drawback and imposed a penalty of a sum of Rs.2,50,00,000 under Section 114(iii) of the Customs Act, 1962.

The Petitioner filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal. Pursuant to the dismissal of the above Appeal, the petitioner filed a Petition for rectification of mistake under Section 129B(2) of the Customs Act, 1962 before the Tribunal.

Further, challenging the same, the petitioner has filed a Civil Miscellaneous Appeal before the Division Bench of this Court. The Division bench of this court directed the respondents Department not to take any coercive steps for recovery of demand raised on account of the issue.

Despite the interim order passed by the division bench of this court, the respondent authorities attached the bank account of the petitioner which violated the direction of the court.

The bench observed that the respondent authorities asked the petitioner to pay the penalty amount of Rs.2,50,00,000 within 7 days from the date of receipt of the notice and informed that in case of failure, action will be initiated against the petitioner in accordance with the provisions of Section 142(1)(c)(iii) of the Customs Act, 1962.

Further, the bench allowed the appeal and stated that the interim orders passed by the Division Bench of this Court shall be respected by the respondents.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates