REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL  APPEAL NOS. 4371-4383 OF 2004

COMMISSIONER  OF   CUSTOMS  (IMPORT)

— APPELLANT  

VERSUS

STONEMAN MARBLE INDUSTRIES &  ORS.

— RESPONDENTS

WITH

CIVIL APPEAL NO.840 OF 2011 [Arising out of SLP (C) No. 11177 of 2006]

CIVIL APPEAL NO.841 OF 2011 [Arising out of SLP (C) No. 11180 of 2006]

CIVIL APPEAL NO. 842 OF 2011  [Arising out of SLP (C) No. 11181 of 2006]

CIVIL APPEAL NO.843 OF 2011  [Arising out of SLP (C) No. 11182 of 2006]

CIVIL APPEAL NO.844 OF 2011  [Arising out of SLP (C) No. 12641 of 2006]

CIVIL APPEAL NO. 845 OF 2011  [Arising out of SLP (C) No. 14991 of 2006]

[CIVIL APPEALS NOS.4384-4386 of 2004, 2904, 2860, 3531, 4042, 4135,  4136 OF 2006 AND 229, 348 of 2007]

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J U D G M E N T

D.K. JAIN, J.:

1. Delay in  SLP (C) No. 11177 of 2006, SLP (C) No. 11180 of 2006,  

SLP (C) No. 11181 of  2006, SLP (C) No.  11182 of 2006, SLP (C) No.  

12641 of  2006 and SLP (C) No. 14991 of  2006 is  condoned and Leave  

granted.

2. Challenge in this batch of appeals is to the orders passed by the High  

Court of Bombay dated 3rd July, 2003 in Customs Application Nos. 27-29,  

31, 34, 36 of 2002 and 2-10 of 2003;           24 th March, 2005 in Customs  

Application  Nos.17-18  of  2003;          30th March,  2005  in  Customs  

Application  Nos.26  and  29  of  2003;  16th March,  2005  in  Customs  

Application  Nos.  11-14  of  2003;           6th April,  2005  in  Customs  

Application Nos. 31-33 and 35 of 2003 and 23rd March, 2005 in Customs  

Application Nos. 15-16 of 2003.  By the impugned orders, the High Court  

has rejected the applications filed by the Revenue under Section 130A of the  

Customs Act, 1962 (for short “the Act”) on the ground that no question of  

law  arose  from  the  orders  of  the  Customs,  Excise  and  Gold  (Control)  

Appellate Tribunal (for short “the Tribunal”).   

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3. As common questions of law and facts are involved in all the appeals,  

these  are  being  disposed  of  by  this  common  judgment.  However,  to  

appreciate the controversy involved, a brief reference to the facts in C.A.  

Nos.4371-4383 of 2004, as being illustrative, would suffice.

The respondents-importers were engaged in the business of import of  

rough marble blocks, classifiable under sub-heading 2515.12 of the Customs  

Tariff  Act,  1975,  from  various  countries  such  as  Italy,  Iran,  Turkey,  

Indonesia,  Spain, China, Greece etc.  in the year 1999. These goods were  

covered by Exim Code No. 25151200 of ITC [HS] Classification of Export  

& Import Items 1997-2002, and required a specific licence for importation  

under  the  EXIM  Policy-1997-2002.  Admittedly,  when  the  imports  were  

made all the respondents, in the instant cases, did not possess the licence as  

required under the EXIM Policy.  Additionally, in some cases, the quantity  

and price of the imported goods was mis-declared in the bills of entry.   

4. The  goods  imported  by  the  respondents  were  confiscated  under  

Section 111(d) of the Act. However, the importers were given an option to  

redeem the confiscated goods on payment of redemption fine, which was  

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fixed, adopting the margin of profit as the basis, under Section 125 of the  

Act; and penalty levied under Section 112(a) of the Act.  

5. Aggrieved,  the  importers  approached  the  Tribunal  in  appeal.  The  

Tribunal, in each case, partly allowed the appeal, observing that the facts in  

each case were similar to those in  M/s. Stonemann Marble Industries Vs.  

Commissioner  of  Customs (Order  No.  CI/424-25/WZB/2002  dated  30th  

January, 2002), and therefore, the redemption fine and penalty was reduced  

to 20% and 5% of the CIF value respectively.  

6. Being aggrieved, the Revenue preferred an application under Section  

130A of the Act, stating that the following questions of law arose out of the  

orders of the Tribunal:

“1. Whether on the facts and in the circumstances of the case  the  Tribunal  was  right  in  law  reducing  the  redemption  fine  imposed  under  Section  125  of  the  Customs  Act,  1962  from  Rs.1.01  Crores  to  Rs.  25,00,000/-  and  penalty  imposed  u/s.  112[a] from Rs. 29,40,000/- to Rs. 7,50,000/-  in Appeal  No.  C/1030/01-Mum and in reducing the redemption fine from Rs.  42,84,000/- to Rs. 7,00,000/- and penalty from Rs. 4,00,000/- to  Rs. 2,00,000/- in Appeal No. C/1042/201-Mum by following its  earlier orders in the case of Stonemann Marble Industries.

2. Whether on the facts and in the circumstances of the case the  Tribunal was right in law in intervening with the redemption  fines  of  Rs.  1.01  crores  and  Rs.  42,84,000/-  imposed  under  Section  125  by  the  Commissioner  of  Customs,  Jawahar  Customs  House,  Nhava  Sheva  and  reducing  it  to  Rs.  

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25,00,000/-  and  Rs.  7,00,000/-  and  with  penalties  of  Rs.  29,40,000/- & Rs. 4,00,000/- imposed under Section 112[a] by  the Commissioner of Customs, Jawahar Customs House, Nhava  Sheva & reducing them to Rs.  7,50,000/-  and Rs.  2,00,000/-  respectively without examining the facts of the case?”

7. As afore-mentioned, the High Court has, vide the impugned orders,  

rejected the applications filed by the Revenue on the ground that no question  

of law arose from the orders of the Tribunal. It has held as follows:

“Having heard the counsel on both sides, we are of the opinion  that there are no questions of law which can be said to arise out  of the order of the Tribunal. It is not disputed by the Revenue  that the facts in the case of the Respondents i.e. Marmo Classic  and the facts in the case of Stonemann Marble Industries and  Jai  Bhagwati  Impex Pvt.  Ltd.  are  similar.  On perusal  of  the  orders passed by the Tribunal in the case of Stonemann Marble  Industries and Jai Bhagwati Impex Pvt. Ltd. it is seen (sic.) that  the Tribunal has reduced the redemption fine and penalty by  taking into  account  the  margin of  profits  and the  demurrage  incurred  by  the  importers  of  the  said  consignments.  It  is  pertinent to note that the Tribunal in similar circumstances have  taken a uniform view to restrict the redemption fine to 20% of  the CIF value and penalty to 5% of the CIF value. Under these  circumstances, it is evident that the decision of the Tribunal is  essentially based on finding of fact. The Tribunal has reduced  the  redemption  fine  and  penalty  by  taking  into  account  its  earlier decision as well as the margin profit and the amount of  demurrage  incurred  on  the  goods.  It  is  not  disputed  by  the  Revenue that the CEGAT has power to reduce the redemption  fine and penalty. Therefore, in the facts of the case whether the  reduction in redemption fine and penalty is justified or not, it is  essentially a finding of fact and no material has been adduced  by the revenue to establish that the order of the Tribunal is ex- facie perverse, arbitrary & contrary to the facts on record.”

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8. Hence, the present appeals by the Revenue.

9. Mr.  R.P.  Bhatt,  learned  senior  counsel  appearing  on  behalf  of  the  

Revenue, while assailing the impugned orders contended that the Tribunal  

could not lay down a standard formula for the computation of redemption  

fine  and  penalty  as  facts  and  circumstances  of  each  case  have  to  be  

examined independently. Learned counsel submitted that the Tribunal was  

only required to examine whether or not the Commissioner had exercised his  

discretion  correctly  on the  facts  and circumstances  of  each of  the  cases.  

Learned counsel thus, asserted that the Tribunal erred in law in laying down  

an absolute rule in that behalf, giving rise to a question of law.

10. Per contra, Mr. V.M. Doiphode, learned counsel appearing on behalf  

of the respondents, strenuously urged that the impugned orders deserve to be  

affirmed  in  light  of  the  fact  that  the  Revenue  has  not  challenged  the  

Tribunal’s finding that the facts in the instant cases were similar to those in  

M/s. Stonemann Marble Industries (supra). Relying on the decision of this  

Court  in  Collector  of  Customs, Bombay  Vs.  Super Fasteners,  Marwana  

(Haryana)1, learned counsel contended that it is settled that if the Tribunal  

in its  discretion reduces redemption fine,  this Court  would not  ordinarily  

interfere with the same.  

1 (1997) 10 SCC 591

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11. Before adverting to the rival submissions,  it  would be expedient to  

make a reference to the provisions of Section 130A of the Act, which read as  

follows:

“130A.  Application to High Court.   – (1) The Commissioner  of  Customs or  the  other  party  may,  within  one hundred and  eighty days of the date upon which he is served with notice of  an order under section 129B passed [before the 1st day of July,  2003] (not being an order relating, among other things, to the  determination of any question having a relation to the rate of  duty  of  customs  or  to  the  value  of  goods  for  purposes  of  assessment),  by  application  in  the  prescribed  form,  accompanied, where the application is made by the other party,  by a fee of two hundred rupees,  apply to the High Court  to  direct  the  Appellate  Tribunal  to  refer  to  the  High Court  any  question of law arising from such order of the Tribunal.

(2) The Commissioner of Customs or the other party applying  to the High Court under sub-section (1) shall clearly state the  question of law which he seeks to be referred to the High Court  and  shall  also  specify  the  paragraph  in  the  order  of  the  Appellate  Tribunal  relevant  to  the  question  sought  to  be  referred.”

On a bare perusal of the provisions, it  is manifest that it  is for the party  

applying for reference to clearly state the question of law which he seeks to  

be referred to the High Court and then it is for the High Court to consider  

whether  any such  question  of  law stated  in  the  application  for  reference  

before  it  should  be  directed  to  be  referred.  (See:  Beer  Sain  Vs.   

Commissioner of Customs (ICD)2).   It is manifest from the format of the  

2 (2007) 15 SCC 362

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questions proposed by the Revenue, extracted in para 6 supra, for reference  

to the High Court that the Revenue did not assail the Tribunal’s finding to  

the effect that the facts in the instant cases were similar to those in  M/s.   

Stonemann Marble Industries (supra).  It is a trite proposition that unless  

the correctness of facts, on the basis whereof an inference is drawn by the  

Tribunal, is put in issue, a question of law does not arise from its order.

12. In Dhirajlal Girdharilal Vs. Commissioner of Income Tax3, Bombay  

a Constitution Bench observed that:

“5. The question whether  or not the Hindu undivided family  was doing business in shares transferred to it  by the firm, is  undoubtedly a question of fact; but if the court of fact whose  decision on a question of fact is final, arrives at this decision by  considering material which is irrelevant to the enquiry, or by  considering  material  which  is  partly  relevant  and  partly  irrelevant, or bases its decision partly on conjectures, surmises  and suspicions, and partly on evidence, then in such a situation  clearly an issue of law arises.”

13. Similarly, in K. Ravindranathan Nair Vs. Commissioner of Income  

Tax, Ernakulam4, while dealing with Section 256 of the Income Tax Act,  

1961, a Bench of three learned Judges of this Court had held that:  

“7. The High Court overlooked the cardinal principle that it is  the  Tribunal  which  is  the  final  fact-finding  authority.  A  decision on fact of the Tribunal can be gone into by the High  

3 AIR 1955 SC 271 4 (2001) 1 SCC 135

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Court only if a question has been referred to it which says that  the finding of the Tribunal on facts is perverse, in the sense that  it is such as could not reasonably have been arrived at on the  material placed before the Tribunal. In this case, there was no  such question before the High Court. Unless and until a finding  of fact reached by the Tribunal is canvassed before the High  Court in the manner set out above, the High Court is obliged to  proceed upon the findings of fact reached by the Tribunal and  to give an answer in law to the question of law that is before it.

8. The  only  jurisdiction  of  the  High  Court  in  a  reference  application is  to answer the questions of  law that  are placed  before it. It is only when a finding of the Tribunal on fact is  challenged as being perverse, in the sense set out above, that a  question of law can be said to arise.”

14. In  Sudarshan  Silks  & Sarees  Vs. Commissioner  of  Income  Tax,   

Karnataka5, this Court had observed that:

“Question  as  to  perversity  of  the  findings  recorded  by  the  Tribunal on facts was neither raised nor referred to the High  Court for its opinion. The Tribunal is the final court of fact. The  decision of the Tribunal on the facts can be gone into by the  High Court in the reference jurisdiction only if a question has  been referred to it which says that the finding arrived at by the  Tribunal on the facts is perverse, in the sense that no reasonable  person could have taken such a view. In reference jurisdiction,  the High Court can answer the question of law referred to it and  it  is  only when a finding of fact  recorded by the Tribunal  is  challenged  on the  ground of  perversity,  in  the  sense  set  out  above, that a question of law can be said to arise.”

15. Thus tested, we are in complete agreement with the High Court  

that the questions raised by the Revenue for reference could not be  

5 (2008) 12 SCC 458

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said to be questions of law.  It bears repetition that the Revenue did  

not specifically challenge the finding of the Tribunal that the facts in  

the instant cases were similar to those in  M/s. Stonemann Marble  

Industries (supra), which was essentially a finding of fact.  Although,  

we do find some substance in the submission of learned counsel for  

the  Revenue  that  a  standard  formula  cannot  be  laid  down  for  

imposition  of  redemption  fine  and  penalty  under  the  aforenoted  

provisions of the Act and each case has to be examined on its own  

facts but when a final fact finding body returns a finding that the facts  

obtaining in each of the cases before it are similar, and such finding is  

not questioned, levy of redemption fine or penalty uniformly in all  

such cases cannot be construed as laying down an absolute formula,  

which is the case here.  We are convinced that the Revenue did not  

discharge its burden under Section 130A of the Act in as much as it  

did  not  specifically  challenge  the  Revenue’s  aforestated  finding  as  

being perverse. In this view of the matter, the High Court was justified  

in  declining to  issue direction to the Tribunal  to make a  reference  

under Section 130A of the Act.  

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16. In  the  circumstances  and  for  the  foregoing  reasons,  these  

appeals, being devoid of any merit, are dismissed and the impugned  

orders are affirmed.  Parties are left to bear their own costs.

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

                             .…………………………………….             (A.K. PATNAIK, J.)

NEW DELHI; JANUARY 21, 2011.

RS

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