Judgments delivered by the Supreme Court have binding effect on all lower formation

PJ/Case Laws/2011-12/1342

Case: Tejus Proprietary Concern v/s Union of India & Ors

Citation: 2011-TIOL-594-HC-Mum-Cus

Issue:- Judgments delivered by the Supreme Court have binding effect on all lower formation.

Brief Facts:- Show cause notice issued by Additional Director General, DRI. In appeal before the Tribunal, the Tribunal ordered pre–deposit of Rs. 30 Lakhs on application of waiver of pre-deposit.

Appellant moved application for modification of the order of pre-deposit. Appellant relied upon the judgment of the Supreme Court in the case of Commissioner of Customs vs. Sayed Ali [2011 (265) ELT 17 (SC)] and the decision of the Co-ordinate bench of the Tribunal in the case of Nylex Traders vs. CC (Preventive), Mumbai [2011-TIOL-914-CESTAT-MUM] and submitted that the Additional Director General, DRI was not a proper officer u/s 2 (34) of the Customs Act, 1962 and has no jurisdiction to issue a SCN. IT was also submitted that the Supreme Court in a subsequent decision in Chandana Impex Pvt. Ltd. versus Commissioner of Customs, New Delhi [2011 (269) ELT 433 (SC)] had followed the decision given in Sayed Ali and had remanded the proceedings in that case for fresh consideration.

Despite the decisions relied upon by the appellant, the Tribunal dismissed their modification application by relying upon the decision of the Karnataka High Court in the case of Sri Meenakshi Apparels Pvt. Ltd. versus Commissioner of Customs, Mumbai [2010 (258) ELT 481 (Kar.)]. It was held that SCN was issued on 21.02.2008 and the order of adjudication was passed on 14.09.2009 (which was before the decision of the Supreme Court). It was observed that the issue of jurisdiction was not raised before the Adjudicating Authority.

Against the said decision, appellants filed appeal before the High Court.

Appellant’s Contention:- Appellant contended that the Tribunal has not followed the binding decisions of the Supreme Court and of its own coordinate bench though they were specifically adverted to by the appellant.

Reasoning of Judgment:- The High Court held that the modification application was maintainable in view of judgment of the Division Bench of the High Court in Main Khemka vs. Union of India [2004 (170) ELT 3 (Bom.)] wherein it was held that though the Tribunal cannot exercise the review jurisdiction, a party can always seek a modification of the order within the permissible limits and parameters laid down in law.

It was noted by the High Court that the applicability of decision in Meenakshi Apparels case to the present case was not considered.

The High Court held that the approach of the Tribunal was thoroughly misconceived. The Tribunal is duty bound to follow the precedent. The Tribunal is under a bounden obligation to consider the position in law as expounded by the SC in Sayed Ali’s Case and to determine as to whether the principle was attracted to the facts of the present case. When it failed to do so, appellant justifiable drew their attention towards it and sought a modification of the order.

The Tribunal as a judicial body must realize the importance of the doctrine of precedent as in our legal system. Deference to judgments of the SC is a matter of constitutional principle.

Equally, unless coordinate benches of the Tribunal have due deference and regard for decisions rendered by the Tribunal, the elements of certainty and consistency in the judicial process which lie at the heart of the judicial functioning would be seriously disrupted.

Therefore, the High Court set aside the impugned order of the Tribunal, with the observation that the approach which has been adopted by the Tribunal in the present case, was not consistent with the principles of judicial functioning.

Decision:- Question answered in affirmative in favour of the appellant. Matter remanded for hearing on merits.

Comment:- It is settled issue that the decision of High Courts, tribunal is binding on all lower formation. Similarly the decision of Apex Court is binding on all lower formation.

The second issue coming out of above decision is that the show cause notice issued by officers of DRI and DGCEI are without authority of law and only jurisdictional authorities can issue show cause notices. Even the department has also asked the field formation to issue show cause notice once again if the limitation period is there otherwise keep them pending as the CBEC is preparing for retrospective amendment.

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PJ/Case Laws/2011-12/1342

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