Chandna Impex Pvt.
Limited Vs. Commissioner of Customs, New Delhi
J U D G M E N T
D.K. JAIN, J.:
1.
Challenge
in this appeal under Section 130-E of the Customs Act, 1962 ( for short "the
Act"), by the importer, is to the final order dated 2nd September, 2009, passed
by the High Court of Delhi at New Delhi in CUSAA No. 7/2009. By the impugned order
the High Court has dismissed appellant's appeal under Section 130 of the Act on
the ground that no substantial question of law arises from the order of the
Customs Excise and Service Tax Appellate Tribunal (for short "the
Tribunal") in appeal Nos.C/920-22/2005, for its consideration.
2.
To
appreciate the controversy involved a brief reference to the facts, as found by
the Tribunal, would be necessary. These are: The appellant, a body corporate, is
engaged in the business of import of plywood, inlays, MDF laminated boards and
veneer sheets etc. On 22nd May, 2000, one of the directors of the appellant,
namely, Rakesh Chandna, was apprehended by the officers of the Customs
department at Calcutta Airport. He was found in possession of US $45,000/- and
Indian currency of `9,000/-, alongwith several incriminating documents, which fuelled
further follow up action by the Directorate of Revenue Intelligence (for short "the
DRI"). On 23rd May, 2000, in search operations, certain goods were seized
from the premises of the appellant, as no documentary evidence was allegedly
produced for their legal acquisition. The value of the goods so seized was
determined at `24,26,234/-.
3.
Statements
of Rakesh Chandna and one Sanjeev Murgai, Manager of the appellant and also of some
other persons were recorded, which revealed that the goods imported by the appellant
viz. plywood, MDF boards and veneers etc. had been under-valued. Based on the incriminating
documents recovered during the course of investigation, a show cause notice
dated 16th May, 2001 was issued to the appellant by the DRI under Section 124
of the Act, detailing the Bills of Entry, wherein there was mis-declaration of
quantity/description and value of the goods.
The appellant was asked
to show cause as to why duty, amounting to `3,95,58,229/-, be not recovered;
goods be not confiscated and a penalty be not levied on them. Taking into consideration
the explanation furnished on behalf of the appellant in their written
submissions and the documentary evidence available on record, including the fax
messages sent by Rakesh Chandna to his overseas suppliers, the Commissioner of Customs
(Import & General), vide order dated 17th September, 2004, ordered the
confiscation of goods valued at `3,04,98,365/- under Section 111 of the Act; confirmed
the demand, amounting to `1,45,85,446/- under Section 28AB of the Act, besides
levying a penalty, amounting to `1,45,85,446/- under Section 114A of the Act on
the appellant. The Commissioner also levied personal penalty of `10 lakh and `5
lakh on Rakesh Chandna and Sanjeev Murgai respectively.
4.
Being
aggrieved, the appellant preferred an appeal to the Tribunal, which was
dismissed vide order dated 26th-27th June, 2007.
5.
Having
failed in their appeal before the Tribunal, as aforestated, the appellant filed
an appeal under Section 130 of the Act before the High Court raising as many as
7 questions, stated to be substantial questions of law, for the opinion of the
High Court. One of the questions so framed in para 3 of the application was as
follows: "(a)-Whether the Addl. Director General in Directorate of Revenue
Intelligence is "proper officer" within the meaning of section 28 of
the Act?"However, as already stated above, the High Court has dismissed the
appeal of the appellant by a short order, which reads thus: "We have heard
the learned counsel at length and have also gone through the orders passed by the
Tribunal. The arguments before us are the same, as it was raised before the
Tribunal. We find from the orders of the Tribunal that each and every argument has
been dealt in detail and we agree with the reasons recorded by the Tribunal. Therefore,
we are of the opinion that there is no substantial question of law for our
consideration in this case, which is accordingly dismissed."
6.
Mr.
A.K. Sanghi, learned senior counsel appearing for the appellant, while assailing
the order passed by the High Court, strenuously urged that the High Court has
committed a manifest error of law in dismissing the Statutory appeal in limine
by a non-speaking order and therefore, the case deserves to be remitted back to
the High Court for decision on merits of the questions proposed in the appeal.
Learned counsel argued that all the questions, raised by the appellant in their
appeal are substantial questions of law and therefore, the High Court ought to
have examined each one of the questions so framed instead of dismissing the
appeal by a cryptic order, by merely observing that the Tribunal has dealt with
each and every argument urged on behalf of the appellant and they were in agreement
with the reasons recorded by the Tribunal. Relying on the recent decision of
this Court in Commissioner of Customs Vs. Sayed Ali & Anr.1, the learned counsel
asserted that in any event the question extracted in para 5 (supra) is a
substantial question of law, which should have been examined by the High Court.
7.
Per
contra, Mr. Bishwajit Bhattacharya, learned Additional Solicitor General of India,
submitted that the impugned order deserves to be affirmed as the questions now
proposed in this appeal are pure questions of facts. Learned counsel submitted that
in so far as the question of jurisdiction of the adjudicating authority is
concerned, no such issue has been raised in the present appeal.
8.
Having
bestowed our anxious consideration on the facts at hand, we are of the opinion that
there is some merit in the submission of learned counsel for the appellant that
while dealing with an appeal under Section 130 of the Act, the High Court should
have examined each question formulated in the appeal with reference to the material
taken into consideration by the Tribunal in support of its finding thereon and
given its reasons for holding that question is not a substantial question of
law. It needs to be emphasised that every litigant, who approaches the court
for 1 (2011) 3 SCC 537 relief is entitled to know the reason for acceptance or rejection
of his prayer, particularly when either of the parties to the lis has a right of
further appeal. Unless the litigant is made aware of the reasons which weighed
with the court in denying him the relief prayed for, the remedy of appeal will not
be meaningful.
It is that reasoning,
which can be subjected to examination at the higher forums. In State of Orissa Vs.
Dhaniram Luhar2 this Court, while reiterating that "reason is the heart beat
of every conclusion and without the same, it becomes lifeless", observed
thus : "8.......Right to reason is an indispensable part of a sound judicial
system; reasons at least sufficient to indicate an application of mind to the
matter before court. Another rationale is that the affected party can know why the
decision has gone against him. One of the salutary requirements of natural
justice is spelling out reasons for the order made;......."
It was thus, expected
of the High Court to record some reason, at least briefly, in support of its
opinion that the order of the Tribunal did not give rise to any substantial question
of law. In this behalf, the language of Section 130 of the Act is also
significant. It contemplates that on filing of an appeal under the said Section
either by the Commissioner of Customs or the other party aggrieved, the High
Court has to record its satisfaction as to whether or not "the case
involves a substantial question of law". In 2 (2004) 5 SCC 568 6 the instant
case, it is clear from the afore-extracted order of the High Court that it does
not meet the requirement of stating reasons for coming to the conclusion that
the order of the Tribunal did not give rise to any substantial question of law including
the question extracted in para 5 above. Nevertheless, the next question for consideration
is whether, having regard to the nature of the issues raised by the appellant in
their appeal before the Tribunal, would it be worthwhile to remit the case back
to the High Court to decide, in the first instance, question as to whether or
not the questions proposed by the appellant in their application under Section
130 of the Act are substantial questions of law arising from the order of the Tribunal,
before embarking upon their consideration on merits?
9.
As
stated above, the appellant had framed in their appeal before the High Court,
as many as seven questions as substantial questions of law. It is manifest from
a bare reading of the six questions, viz. (b) to (g), repeated in this appeal, that
none of the questions can be said to be a substantial question of law, in as much
as they do not proceed on the premise that the decision of the Tribunal on the issues
raised therein is perverse, in the sense that the findings of fact, arrived at
by the Tribunal are not based on the material placed before it or that the
relevant material has been ignored by it.
It is trite law that
a finding of fact may give rise to a substantial question of law, inter-alia, in
the event the findings are based on no evidence and/or while arriving at the
said finding, relevant admissible evidence has not been taken into
consideration or inadmissible evidence has been taken into consideration or legal
principles have not been applied in appreciating the evidence, or when the
evidence has been misread. (Ref: West Bengal Electricity Regulatory Commission Vs.
CESC LTD.3;-Metroark Ltd. Vs. Commissioner of Central Excise, Calcutta4;-
Commissioner of Customs (Preventive) Vs. Vijay Dasharath Patel5 & Narendra
Gopal Vidyarthi Vs. Rajat Vidyarthi6)
10.
In
Hero Vinoth (Minor) Vs. Seshammal7, referring to the Constitution Bench decision
of this Court in Sir Chunilal V. Mehta & Sons Ltd. Vs. Century Spinning
& Manufacturing Co. Ltd.8 as also a number of other decisions on the point,
this Court culled out three principles for determining whether a question of
law raised in a case is substantial. One of the principles so summarised, is
"The general
rule is that High Court will not interfere with the concurrent findings of the
courts below. But it is not an absolute rule. Some of the well-recognized exceptions
are where (i) the courts below have ignored material evidence or acted on no evidence;
(ii) the courts have drawn wrong inferences from proved facts by applying the law
erroneously; or (iii) the courts have wrongly cast the burden 3 (2002) 8 SCC
7154 (2004) 12 SCC 5055 (2007) 4 SCC 1186 (2009) 3 SCC 2877 (2006) 5 SCC 5458
AIR 1962 SC 1314 8 of proof. When we refer to "decision based on no evidence",
it not only refers to cases where there is a total dearth of evidence, but also
refers to any case, where the evidence, taken as a whole, is not reasonably capable
of supporting the finding".
11.
Tested
on the touchstone of the said legal principle, we are of the opinion that the
order of the Tribunal, wherein the material referred to by the Commissioner in his
order has been extensively analysed, does not give rise to the five questions,
proposed by the appellant in this appeal, as questions of law, much less substantial
questions of law. It would bear repetition that none of the said questions seek
to challenge the findings of the Tribunal or that of the Commissioner, on the issue
raised in the questions, as perverse. It is not within the domain of the High
Court, in appeal under Section 130 of the Act, to investigate the grounds on
which the findings were arrived at by the Tribunal, the final court of fact. In
that view of the matter, we do not consider it expedient to remit the case to
the High Court, in so far as these five questions are concerned.
12.
However,
the question which still survives for consideration is that the appellant
having raised the question of jurisdiction of the DRI issuing the show cause
notice as also the Commissioner of Customs passing the order of adjudication, in
its appeal before the High Court and the High Court having failed to apply its
mind as to whether or not it was a substantial 9 question of law, the appellant
is barred from raising the said issue before us in this appeal.
13.
Having
carefully gone through the appeal, in particular ground (f), wherein the jurisdiction
of the DRI to issue a show cause notice under Section 28 of the Act as a "proper
officer" has been specifically questioned, we are of the view that the
said issue is a substantial question of law, and requires to be examined afresh
particularly in light of the decision of this Court in Sayed Ali & Anr.
(supra), where the question as to who is a "proper officer" in terms
of Section 2(34) of the Act has been examined.
14.
Having
so held, again the residual question would be whether, in the first instance, the
High Court should be asked to examine the question relating to the jurisdiction
of the adjudicating authority or to remit the matter to the Tribunal to reconsider
the issue in light of the recent decision of this Court in Sayed Ali & Anr.
(supra), wherein the decision of the Tribunal in Konia Trading Co. Vs. Commissioner
Of Customs, Jaipur9, relied upon by the Tribunal in the present case, has been considered.
We are of the opinion that in order to avoid prolongation in the life of lis
between the appellant and the revenue, it would be expedient to follow the latter
option, because ultimately the High Court may also like to have the views of
Tribunal on the impact of the said decision of this Court on the facts of the
present case, since the said decision, was not available to the Tribunal when
the appeal of the appellant was decided by it.
15.
Consequently,
the appeal is partly allowed to the extent indicated above and the decision of
the Tribunal on the question of the jurisdiction of the adjudicating authority,
which stood affirmed by the dismissal of appellant's appeal by the High Court,
is set aside. The case is remanded to the Tribunal for fresh adjudication,
confined to the question of jurisdiction of the adjudicating authority to pass order
dated 17th September, 2004, after affording adequate opportunity of hearing to
both the parties.16.However, in the facts and circumstances of the case, there
shall be no order as to costs.
...........................................J.
(D.K. JAIN, J.)
...........................................J.
(H.L. DATTU, J.)
NEW
DELHI
JULY
6, 2011
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