CHANDNA IMPEX P.LTD. Vs COMMR.OF CUSTOMS
Bench: D.K. JAIN,H.L. DATTU, , ,
Case number: C.A. No.-001383-001383 / 2010
Diary number: 508 / 2010
Advocates: Vs
B. KRISHNA PRASAD
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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