whether non-consideration of question justified on ground that issues dealt with in detail by Tribunal and therefore, no further examination done of matter

Case: CHANDNA IMPEX PVT. LTD. v/s COMMISSIONER OF CUSTOMS, NEW DELHI

Citation: 2011 (269) E.L.T. 433 (S.C.)

Issue:- Appeal to High Court under Section 130 of the Customs Act, 1962 – questions referred as substantial questions of law – whether non-consideration of question justified on ground that issues dealt with in detail by Tribunal and therefore, no further examination done of matter?

SCN issued by DRI for customs violation – whether DRI proper officer under the Act to issue SCN – matter remanded to HC for consideration in view of judgment of Supreme Court in Sayed Ali & Anr.

Brief Facts:- Appellant, a body corporate, was engaged in the business of import of plywood, inlays, MDF laminated boards and veneer sheets etc. On 22.03.2000, one of the directors of appellant, namely, Rakesh Chandna, was apprehended by officers of Customs department at Calcutta Airport. He was found in possession of US $ 45,000/- and Indian currency of 9,000/-, along with several incriminating documents, which fuelled further follow up action by the Directorate of Revenue Intelligence (DRI). On 23.03.2000, in search operations, certain goods were seized from appellant’s premises, as no documentary evidence was allegedly produced for their legal acquisition. The value of goods so seized was determined at Rs. 24, 26, 234/-.

Statements of Rakesh Chandna and one Sanjeev Murgai, Manager of appellant and also of some other persons were recorded, which revealed that goods imported by 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 16.03.2001 was issued to appellant by DRI under Section 124 of the Act, detailing the Bills of Entry, wherein there was misdeclaration of quantity/description and value of goods. Demand of duty, confiscation of goods and imposition of penalty were proposed in the show cause notices.

The Commissioner of Customs (Import & General) vide order dated 17.09.2004 ordered confiscation of goods valued at Rs. 3,04,98,365/- under Section 111 of the Act; confirmed the demand, amounting to Rs. 1,45,85,446/- under Section 28AB of the Act, besides levying a penalty, amounting to Rs. 1,45,85,446/- under Section 114A of the Act on appellant. The Commissioner also levied personal penalty of Rs. 10 lakh and Rs. 5 lakh on Rakesh Chandna and Sanjeev Murgai respectively.

Being aggrieved, appellant preferred an appeal to the Tribunal, which was dismissed vide order dated 26th-27th June, 2007. The appellant filed further appeal under Section 130 of the Act before the High Court raising questions, stated to be substantial questions of law, for opinion of the High Court. The High Court dismissed appellant's appeal under Section 130 of the Act on the ground that no substantial question of law arose.

Hence, appellant is before the Supreme Court.

Appellant’s Contention:- Appellant contended 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. Further they argued that all the questions, raised by them 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.

Respondent’s Contention:- Revenue argued that the impugned order deserves to be affirmed as the questions now proposed in this appeal are pure questions of facts. He 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.

Reasoning of Judgment:- The Supreme Court held that there is some merit in the submission of 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 emphasized that every litigant, who approaches the court for 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.

Reliance was placed on decision in State of Orissa Vs. Dhaniram Luhar [(2004) 5 SCC 568] wherein it was held that “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”.

The Supreme Court held that 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. Referring to Section 130 of the Act, it was noted that the language of the section 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.

It was held that in instant case, it is clear from the order of the High Court that it does not meet the requirement of stating reasons for coming to the conclusion that order of the Tribunal did not give rise to any substantial question of law.

On the issue of remitting back the matter to the High Court to decide, the Supreme Court noted that it is required to see if questions raised by appellant in their application under Section 130 of the Act were substantial questions of law arising from the order of the Tribunal?

The Supreme Court noted that a bare reading of the six questions viz. (b) to (g) show 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 decision of the Tribunal on 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.

Reference was made to decisions in West Bengal Electricity Regulatory Commission Vs. CESC LTD [(2002) 8 SCC 715]; Metroark Ltd. Vs. Commissioner of Central Excise, Calcutta [(2004) 12 SCC 505]; Commissioner of Customs (Preventive) Vs. Vijay Dasharath Patel [(2007) 4 SCC 118]; Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi [(2009) 3 SCC 287];

It was noted that in Hero Vinoth (Minor) Vs. Seshammal [(2006) 5 SCC 545], referring to the Constitution Bench decision of this Court in Sir Chunilal V. Mehta Sons Ltd. Vs. Century Spinning Manufacturing Co. Ltd [AIR 1962 SC 1314] 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 that “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 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”.

The Supreme Court was 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, it was not considered it to be expedient to remit the case to the High Court, in so far as these five questions are concerned.

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 question of law, the appellant is barred from raising the said issue before the Supreme Court in this appeal.

The Supreme Court opined 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 where the question as to who is a “proper officer” in terms of Section 2(34) of the Act has been examined.

The Supreme Court considered the residual question that 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, wherein the decision of the Tribunal in Konia Trading Co. Vs. Commissioner Of Customs, Jaipur [(2004) 170 E.L.T. 51 (Tri-LB)], relied upon by the Tribunal in the present case, has been considered. The Supreme Court was 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.

Impugned order of the High Court set aside. Matter remanded to the Tribunal for fresh adjudication, confined to the question of jurisdiction of the Adjudicating Authority to pass order dated 17.09.2004 after affording adequate opportunity of hearing to both the parties.

Decision:- Appeal partly allowed.

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