JUDGMENT

Dr. ARIJIT PASAYAT, J.—

1.Leave granted.

2.Challenge in this appeal is to the order passed by a learned Single Judge of the Gujarat High Court, setting aside the order passed by the Appellate Tribunal for Foreign Exchange (for short ‘Tribunal’) dated 4th January, 2006 in Appeal nos. 199, 500 and 501 of 2006 whereby the application for dispensation of pre-deposit was rejected.

3.Background facts in a nutshell are as follows :

“On the basis of the alleged violation of certain provisions of the Customs Act 1962 (in short the ‘Act’) notices were issued to certain noticees including the present respondents primarily on the ground of mis-declaration as to the description and narration of the goods imported and on the ground of over-invoicing so far as valuation is concerned and consequentially misusing foreign exchange. Show-cause notices were issued by the adjudicating authority and on consideration of the submissions and replies filed, the orders in original were passed by the Commissioner of Customs (hereinafter referred to as the ‘Commissioner’). The orders passed by the original authority were challenged by the respondents before the Customs, Excise and Service Tax Appellate Tribunal, Bangalore (in short ‘CESTAT’). Notices were also issued under Foreign Exchange Management Act, 1999 (in short ‘Management Act’). The Additional Director General passed orders in terms of the Foreign Exchange Regulation Act, 1973 (in short ‘the Regulation Act’) which has been repealed along with the provisions of the Foreign Exchange Management Act 1999 (in short the ‘Management Act’). The order was passed after considering the replies and submissions in response to the show-cause notices. The adjudicating authority found the noticees guilty of the charges and in terms of the powers conferred under Section 50 of the Regulation Act read with Section 49(3) and 49(4) of the Management Act imposed the following penalties :

(a)A penalty of Rs.7,50,00,000/- (Rupees Seven Crores fifty lakhs only) on Shri Dharmesh P. Shah, Proprietor of M/s Vaishal Impex, (noticee No.1).

(b)A penalty of Rs.4,00,000/- (Rupees Four Crores only) on M/s. Adani Exports Limited, (noticee No.2).

(c)A penalty of Rs.2,00,00,000/- (Rupees Two Crores only) on Shri Rajesh Adani, Director of M/s Adani Exports Limited. (noticee No.3).

4.Questioning correctness of the adjudication order, appeals were preferred before the Tribunal. Along with the appeals, application for dispensation of deposit of penalty amount was filed. The same was rejected as noted above by order dated 4.1.2006.

5.The Tribunal was of the view that neither any prima facie case was made out nor the financial stringency established to warrant dispensation of pre-deposit. A writ petition was filed before the Gujarat High Court primarily questioning the said order and also incidentally questioning legality of the proceedings. The High Court not only dealt with the impugned order before it relating pre-deposit aspect but also the merits of adjudication. It elaborately discussed the merits of the adjudication proceedings, though it itself noted that the Special Civil Applications were filed questioning correctness of the order relating to pre-deposit. Not only the High Court held that the order directing deposit was unsustainable but also held that the order of adjudication was unsustainable, overlooking the fact that the appeals were pending before the Tribunal. The High Court set aside the order passed by the adjudicating authority and remitted the matter to the adjudicating authority i.e. the Additional Director General.

6.In support of the appeal learned counsel for the appellant submitted that the approach of the High Court is clearly unsustainable. High Court itself noticed that the primary challenge was to the order passed by the Tribunal relating to pre-deposit. Though some grounds were taken relating to the merits of the adjudication, the High Court should not have dealt with them and should have left those matters t