Bombay High Court: Writ Petition Against ₹83.18 Crore Customs Duty Demand Dismissed— “Statutory Appeal Before CESTAT Must Be Exhausted, Mere Allegation of Perversity Cannot Justify Bypassing Alternative Remedy”

Court’s Decision:

The Bombay High Court dismissed the writ petition challenging the Order-in-Original (OIO) issued by the Commissioner of Customs, Mumbai, which imposed a customs duty demand of ₹83.18 crores on the petitioner. The court held that:

• The writ petition was not maintainable as the petitioner had an alternative statutory remedy before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).
• There were no exceptional circumstances to justify bypassing this statutory remedy.
• The petitioner should seek redress through an appeal before CESTAT instead of invoking the extraordinary jurisdiction of the High Court under Article 226 of the Constitution.

Key Ruling:

“The usual practice of requiring parties to exhaust the alternate statutory remedies cannot be bypassed merely by styling findings as perverse.”

Facts of the Case:

1. Customs Order Against Petitioner:
   • The petitioner, engaged in import and export of gold, challenged the Order-in-Original (OIO) dated August 24, 2023, issued by the Commissioner of Customs (II), Airport Special Cargo, Andheri (E), Mumbai.
   • The customs department alleged that 259 gold consignments imported by the petitioner were suspect and liable for customs duty.
   • The demand for ₹83.18 crores was based on the assumption that these 259 consignments were part of a fraudulent import operation.
2. Petitioner’s Argument Against Customs Order:
   • The customs authority relied on four consignments where irregularities were found and wrongly extended those findings to the remaining 259 consignments.
   • The petitioner challenged the customs findings as “perverse” and based on no evidence.
   • An appeal before CESTAT requires a pre-deposit of 7.5% of the demanded duty, which the petitioner claimed it could not afford.
   • Instead of filing an appeal, the petitioner directly approached the High Court under Article 226, claiming that there was no other effective remedy.
3. Respondent’s Stand (Union of India):
   • The respondent (Customs Department) opposed the petition, arguing that the petitioner had an alternative remedy before CESTAT and had not exhausted it.
   • The petitioner had a turnover of ₹485 crores, making the claim of financial hardship factually incorrect.
   • There was sufficient evidence to justify the customs duty demand.
   • The petitioner’s failure to file an appeal before CESTAT was a deliberate attempt to bypass statutory remedies.

Issues Before the Court:

1. Is the writ petition maintainable despite the availability of an alternative remedy before CESTAT?
2. Were the findings of the customs authority regarding 259 gold consignments perverse and without evidence?
3. Does financial hardship justify invoking the writ jurisdiction under Article 226 instead of pursuing the statutory appeal process?
4. Did the customs authority act beyond its jurisdiction or violate principles of natural justice, warranting High Court intervention?

Petitioner’s Arguments:

1. Findings are Perverse and Based on No Evidence:
   • The customs authority incorrectly extended its adverse findings on four consignments to the entire batch of 259 consignments without independent verification.
   • The duty demand of ₹83.18 crores was arbitrary.
2. No Alternative Remedy Available:
   • The petitioner argued that the customs authority’s actions were entirely without jurisdiction, allowing a direct challenge under Article 226.
3. Financial Hardship:
   • The requirement to deposit 7.5% of the duty amount (₹6.24 crores) as a precondition for appeal before CESTAT was an insurmountable financial burden.
   • The petitioner was unable to arrange the amount required for the pre-deposit.
4. Judicial Precedents Allowing Writ Petitions in Exceptional Cases:
   • Cited Syed Irfan Mohammed v. Union of India (2016 SCC OnLine Hyd 826): Writ petition was entertained where re-opening of an assessment was not permitted.
   • Cited Commissioner of Income Tax v. Chhabil Dass Agarwal (2014) 1 SCC 603: When the statutory authority acts beyond its jurisdiction, courts can interfere even when an alternative remedy exists.
   • Cited Radha Krishan Industries v. State of Himachal Pradesh (2021) 6 SCC 771: Writ petitions can be entertained in cases of fundamental rights violations, breach of natural justice, or orders wholly without jurisdiction.

Respondent’s Arguments:

1. Statutory Remedy Before CESTAT Available and Must be Exhausted:
   • The customs demand was appealable before CESTAT, and the petitioner had not demonstrated any compelling reason to bypass this alternative remedy.
2. Petitioner’s Financial Position is Strong:
   • The petitioner had a turnover of ₹485 crores, contradicting the claim of financial hardship.
   • The requirement of pre-deposit was a statutory mandate, which could not be waived based on mere inconvenience.
3. Adequacy of Evidence Against the Petitioner:
   • Customs officials found sufficient evidence to justify the duty demand.
   • The correct forum for challenging the evidence was CESTAT, not the High Court.
4. High Court Should Not Interfere in Fiscal Matters Unless Exceptional Grounds Exist:
   • Cited Radha Krishan Industries and Chhabil Dass Agarwal to argue that courts should not intervene when adequate appellate remedies exist.

Court’s Analysis:

Doctrine of Alternative Remedy

1. Rule of Exhaustion of Alternative Remedies:
   • The Supreme Court has consistently held that where a statutory remedy is available, a writ petition is not maintainable unless exceptional circumstances exist.
2. Exceptions to This Rule (Radha Krishan Industries Test):
   • The only exceptions where writ jurisdiction can be invoked are:
     • Fundamental rights violation → Not applicable here.
     • Violation of principles of natural justice → Not alleged by the petitioner.
     • Order issued without jurisdiction → The customs order was within jurisdiction.
     • Legislation challenged as unconstitutional → Not the case here.

Findings on the Petitioner’s Case

1. Misleading Averments About Lack of Alternative Remedy:
   • The petition claimed there was no alternative remedy, which was factually incorrect, as an appeal before CESTAT was explicitly provided for.
2. Petitioner’s Financial Capability Contradicts Hardship Claim:
   • The petitioner’s turnover of ₹485 crores undermined its argument that it could not arrange the pre-deposit amount.
3. Customs Order Not Wholly Without Jurisdiction:
   • The order was based on material evidence and was within the legal framework.

Court’s Conclusion:

1. Writ petition dismissed as not maintainable due to availability of an alternative remedy before CESTAT.
2. Petitioner directed to file an appeal before CESTAT within four weeks.
3. CESTAT directed to consider that the petition was pending before the High Court while deciding on condonation of delay.
4. No cost imposed.
5. All interim orders vacated.

Implications of the Judgment:

1. Strengthens the Doctrine of Alternative Remedy:
   • Reaffirms that High Courts should not entertain writ petitions when an appellate remedy exists.
2. Discourages Misleading Pleadings:
   • Petitioners must accurately disclose the availability of alternate remedies.
3. Establishes Precedent in Customs and Taxation Cases:
   • Future petitioners in similar disputes must first approach CESTAT before seeking High Court intervention.

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