Departmental Appeal Without Stay Cannot Excuse Non-Compliance With Customs Appellate Orders: Bombay High Court
1. Background and Context
The Bombay High Court, in the connected writ petitions filed by Himgiri Buildcon & Industries Limited and Agsons Agencies (I) Private Limited against Union of India and Others, delivered an important ruling on 8 February 2021 reaffirming a foundational principle of administrative and judicial discipline in indirect tax administration: an appellate order passed by a superior Customs authority remains fully binding on subordinate officers unless and until its operation is expressly stayed by a competent forum. The mere filing of a departmental appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), unaccompanied by any stay order, provides no legal cover for refusing to implement directions issued by the Commissioner of Customs (Appeals).
2. Facts Leading to the Dispute
Himgiri Buildcon & Industries Limited, a company incorporated under the Companies Act, 1956, carried on the business of importing and trading ferrous and non-ferrous metals including copper, nickel, and aluminium. The company had procured copper wire rods from M/s. Union Copper Rod LLC, Dubai, and had agreed to sell the consignments to M/s. S. R. Enterprises under a high seas sale arrangement. Pursuant to that arrangement, M/s. S. R. Enterprises, as the high seas buyer, filed bills of entry bearing Nos. 6050166, 6049455 (both dated 12.12.2019) and 6089890, 6088119, 6091844, 6092308 (all dated 16.12.2019).
A dispute subsequently arose between Himgiri Buildcon and the high seas buyer, resulting in cancellation of the high seas sale agreement. Following that cancellation, Agsons Agencies (I) Private Limited filed an application on 30 December 2019 before the Customs authorities seeking amendment of the bills of entry to substitute its name as the importer in place of M/s. S. R. Enterprises, along with clearance of the imported goods against payment of applicable Customs duty. Rather than processing this request, the authorities detained and thereafter seized the goods.
3. Earlier Round of Litigation
The matter had previously come before the Bombay High Court in Writ Petition No. 862 of 2020. While disposing of that petition by order dated 27.02.2020, the Court recorded the petitioner's statement that an application for provisional release of goods under Section 110A of the Customs Act, 1962 had been filed, and the respondents' assurance that such application would be decided in accordance with law within two weeks.
Despite this assurance, the Joint Commissioner of Customs, by order dated 17.03.2020, rejected the petitioner's request for provisional release of the seized goods. The petitioner then challenged this rejection before the Commissioner of Customs (Appeals), Mumbai-II.
4. The Appellate Order of 18 September 2020
The Commissioner of Customs (Appeals), Mumbai-II, by order-in-appeal dated 18.09.2020, ruled in favour of the petitioner. The operative portion of that order reads as follows: