REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO. 1383   0F 2010

CHANDNA IMPEX PVT.  LIMITED

—    APPELLANT

VERSUS

COMMISSIONER OF  CUSTOMS, NEW DELHI

— RESPONDENT

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.  

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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:

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“(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  

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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

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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

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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  

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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 715 4 (2004) 12 SCC 505 5 (2007) 4 SCC 118 6 (2009) 3 SCC 287 7 (2006) 5 SCC 545 8 AIR 1962 SC 1314

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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  

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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  

9 (2004) 170 E.L.T. 51 (Tri-LB)

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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.

.……………………………………               (D.K. JAIN, J.)  

                             .…………………………………….               (H.L. DATTU, J.)

NEW DELHI; JULY 6, 2011.

RS  

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