Customs, Excise and Gold Tribunal - Delhi
Senior Magnetics Ltd. vs Collector Of Customs on 26 May, 1992
Equivalent citations: 1992(40)ECC281, 1992(62)ELT377(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal preferred against the Order-in-Appeal No. 766-C/DLH/90 dated 15-10-1990 passed by the Collector of Customs (Appeals), New Delhi.
2. The appellants M/s. Senior Magnetics Ltd., New Delhi, imported Xenon Video Cassette Loader without any import licence. The appellants were served with a show cause notice and in reply thereto, the appellants requested for waiver of show cause notice and stated that they did not wish to be heard in person. Based upon the declared value of the goods at U.S. Dollars 4,000/- per unit, the matter was adjudicated by the Deputy Collector of Customs who ordered as per order dated 21-11-1986 for confiscation of the goods under Section 111(d) of the Customs Act. However, he permitted the party to redeem the goods on payment of redemption fine of Rs. 50.000/- without imposing any penalty.
During the course of adjudication proceedings in the case of other Importer, it was found that the value of Video loader was declared on the lower side. Printed price list from manufacturers was obtained wherein price of the same is shown as U.S. $ 15,000/- as against U.S. $ 4,000/-. Since the adjudication proceedings were already completed in the present case and the Collector of Customs was not satisfied with the decision of the Adjudicating Authority, he has exercised his powers under Section 129D(2) of the Customs Act and directed the Deputy Collector to apply to the Collector of Appeals for determining certain points said to arise out of the decision of the Deputy Collector. Accordingly, it was filed before the Collector (Appeals). In the meanwhile, the party approached the High Court for release of the goods by way of Writ since the goods were not released despite the payment of redemption fine and the High Court ordered for release of the goods observing that the mere pendency of the application under Section 129D(2) or the action of the Collector in directing the Deputy Collector of Customs to file such an application cannot be treated as automatically operative to suspend the order of Adjudicating Authority. In proceedings under Section 129D(4) the Collector (Appeals) remanded the matter for de novo proceedings directing that Adjudicating Authority should consider all the material and information after giving due opportunity to the Importers and decide the case afresh. Aggrieved by this order the appellants have come before us by way of this appeal.
2. We have heard Shri V. Sridharan, learned counsel for the appellants and Shri Prabhat Kumar, learned J.D.R. for the respondent.
3. The contention of the appellants' counsel is that while initiating the proceedings under Section 129D(1) or 129D(2) of the Customs Act, the authority who exercises such power must confine to the records of the proceedings before the Adjudicating Authority, but not to re-open the issue with reference to material obtained later. He said that under-invoicing was neither an issue nor subsequent material relied upon by the Department was a part of the record. It was not open to the Department to initiate proceedings under Section 129D(2) based upon fresh material which did not form part of the record. He strongly relied upon the decision in the case of Gunvant and Ors. v. Collector of Central Excise and Ors. -1987 (32) E.L.T. 53 (Del.) , wherein it was held that under Section 82 of the Gold Control Act, the revisional Authority can call for and examine the record only for the purpose of satisfying itself as to the legality or propriety of any decision or order of an Adjudicature nature but it cannot restart investigation on the basis of the material obtained later. Reliance was placed by him in the case of State of Gujarat v. Chelabhai Bhanabhai Prajapathi - 33 S.T.C. Page 147 , wherein it was held that the Deputy Commissioner, for initiating suo motii revision under Section 57 of the Bombay Sales Tax Act, 1959, could take into consideration only the record of the proceeding before the Taxing Authority and could not consider materials which did not form part of the record of the assessment. Apart from these two decisions, he cited a series of decisions in support of his contention which are as follows :-
1.
Collector of Central Excise, Bombay v. Industrial Marketing Corporation, Bombay -1985 (22) E.L.T. 950 (Tribunal) .
2. Reckitt & Colman of India Ltd., Calcutta v. Collector of Central Excise, Calcutta -1985 (22) E.L.T. 216 (Tribunal) .
3. Deputy Commissioner v. Dhanalakshmi Vilas Cashew Co. -1969 (24) S.T.C. 491 (S.C.) .
4. D.C.W. Ltd. v. Collector of Central Excise, Madras -1988 (35) E.L.T. 167 .
5. Collector of Customs, Bombay v. Liwe International -1985 (20) E.L.T. 107 .
6. State v. KM. Cheria Abdulla & Co. -1965 (16) S.T.C. 875 .
7. Bala Ganesh Textiles v. C. T. O. -1978 (41) S.T.C. 445 .
8. Ganga Properties v. I.T.O. -1979 (118) I.T.R. 447 .
4. On the other hand, while countering the arguments Shri Prabhat Kumar submitted that this issue relates to valuation and this aspect was very much there in column 6 under the Head Description and Value of the goods as part of the record of proceeding before the Adjudicating Authority. Since the point of valuation was not properly considered by the Adjudicating Authority and this point arises out of the order, it was very much within the competency of Collector to initiate proceedings under Section 129D(2) of the Act and direct the concerned Adjudicating Authority to apply to the Collector (Appeals) to determine such points arise out of that order, referring to the decision in the case of Commissioner of I.T.O. v. Scindia Steam Navigators Co. Ltd., reported in 1961 S.C. 1633 . He urged that while invoking powers under Section 129D, additional evidence can be taken into consideration to arrive at the proper conclusion relying upon the decision of the Supreme Court in the case of Swastic Oil Mills Ltd. v. Deputy Commissioner, Sales Tax -1968 (21) S.T.C. 383 : A.I.R. 1968 S.C. 843 , wherein it was held that 'Once those powers are invoked, the actual interference must be based on sufficient grounds and if it is so considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority. This was followed by the Tribunal in the case of Bell Punch (India) Pvt. Ltd., Calcutta v. Collector of Customs -1983 (14) E.L.T. 2374 , wherein it was held "there is no intrinsic or built-in limitation in the power of the Collector enjoining him to confine himself to the records alone but can take into consideration material which may be outside the record for purposes of finding out the correctness of the order under review. There being no bar or indication in the wording of the section itself, such a restriction on the powers of the Collector cannot be read into. But, the review proceedings should not be based on surmises and conjectures and that there should be some substantial ground for invoking the revisional/review powers. But, once the powers are pressed into action, then even additional enquiry can be conducted by the revising authority or through another authority. Therefore, it cannot be said that the revisional authority is absolutely barred from taking into consideration any piece of evidence, which may not form part of the record." He contended that it is within the powers of the Collector to revise the order passed by the subordinate Adjudicating Authority and the revision power is not subject to strict limitations as observed by the Tribunal in the case of Nuchem Plastics Ltd. v. Collector of Central Excise -1988 (38) ECT 96 (Tribunal) : 1983 E.C.R. 1888 D . He said that decisions cited by the appellants' counsel are not applicable to the facts of this case as they were held in different context and on different facts and circumstances of the case. Further he said that decision of the Tribunal in the case of Collector of Customs v. Liwe International, Bombay cannot be relied as the earlier judicial pronouncements were neither taken note of nor considered while giving ruling with reference to Section 129D(1)of the Act.
5. We have carefully considered the arguments advanced on both sides and perused the records including citations. On going through the decisions cited by both sides, we do not find any direct dicision of the Supreme Court or of any High Court with reference to Section 129D of the Customs Act, 1962. Most of the decisions cited before us were concerned with specific revision provision as envisaged either in the Income-tax or under Sales Tax Act. Other decisions including decisions of the Tribunal which were dealt with the similar provisions have proceeded to decide the issue as if it were a revision. But on going through the provisions of Section 129D of the Act, it appears to us that it is not a mere revision but something more than that. Section 129D of the Customs Act, 1962 reads as under :-
"129D. Powers of Board or Collector of Customs to pass certain orders. (1) The Board may, of its own motion, call for and examine the record of any proceeding in which a Collector of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order direct such Collector to apply to the Appellate Tribunal for the determination of such points arising out of the decision or order as may be specified by the Board in its order.
(2) The Collector of Customs may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Customs in his order.
(3) No order shall be made under Sub-section (2) after the expiry of (one year) from the date of the decision or order of the adjuicating authority.
(4) Where in pursuance of an order under Sub-section (1) or Sub-section (2), the adjudicating authority or any officer of customs authorised in this behalf by the Collector of Customs, makes an application to the Appellate Tribunal or the Collector (Appeals) within a period of three months from the date of communication of the order under Sub-section (1) or Sub-section (2) to the adjudicating authority, such application shall be heard by the Appellate Tribunal or the Collector (Appeals), as the case may be, as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals, including the provisions of Sub-section (4) of Section 129A shall, so far as may be apply to such application.
(5) ..."
Prima facie it appears to be a revision, but if we read the Section as a whole, we can come to the conclusion that it is not a mere revision but combination of revision and appeal, and more in the nature of an appeal as envisaged under Section 129D(4) of the Act. This special type of provision is a unique feature to the Customs & Excise Law. Section 35E of the Excise Act is similar to that of Section 129D of the Customs Act wherein we find that Adjudicating Authority is filing an appeal against his own order before the Appellate Authority as per the direction of the Superior Authority. Revision is different from appeal and the proceedings by way of revision may be commenced at the instance of the aggrieved party or suo moto by an authority superior to the authority which passed the order. The Superior authorities not only call for and examine the proceedings of an order passed by the subordinate adjudicating authorities but if they found that order is erroneous they themselves revise the order of the Adjudicating authorities after giving an opportunity to the other side. While under Section 129D the said authorities on examination of the records called for by them may merely direct their subordinate adjudicating authorities to have the points raised by them (the Board and the Collector) decided by the Appellate Tribunal or the Collector (Appeals) as the case may be. Since this section confers limited revisional powers to the Board and the Collector of Customs, it cannot be treated as revision provision. The title of Section 129D is not revision but that of powers of Board or Collector of Customs to pass certain orders under heading Appeals in Chapter XV of the Customs Act. Section 129DD deals with revision by Central Government which we are not concerned at present. It is not even the contention of Sri Sridharan that Section 129D is a revision but not an appeal. His contention is that additional evidence cannot be taken into consideration while initiating the proceedings as wordings of Section restricts to examine the records of the adjudicating authority and record does not include additional evidence. When once we come to the conclusion that this is an appeal and not a revision, it is well settled that appeal has got a wider scope compare to revision, review or reference. An appeal is a continuation of the proceedings in effect the entire proceedings are before the Appellate Authority and it is within his power to review the evidence and to admit such additional evidence or enquiry if he feels it is necessary for a proper and just disposal of the matter. Further the decisions cited by the appellant's counsel throw sufficient light at what stage the additional evidence is permissible even in the course of revision proceedings. The principles laid down in those judicial pronouncements is that in initiating revision or review proceedings, the concerned authority may look into the materials available on the record only, for ascertaining the legality or propriety of the order sought to be revised or reviewed though subsequently while passing the order on revision or review he could rely upon other material also. Under Section 129D the authority who initiates the proceedings is not a revising authority as it is not revising the adjudication proceedings of the subordinate authority but directs the very adjudicating authority to apply before the Appellate Tribunal or the Collector (Appeals) as the case may be and the authority to whom the matter was referred passes an order with reference to the adjudication order. The direction issued by the Administrative authority is neither a revision nor an appealable order but initiation of proceedings and continues till applying before the appellate authority. As soon as it is filed before the appellate authority either before the Tribunal or the Collector (Appeals) as the case may be, it will be treated as an appeal as it was specified in Section 129D(4) of the Act. In the present case the impugned order was passed by the Collector (Appeals) with reference to the adjudication proceedings and it was within his right to take into consideration of the additional evidence and to decide the issue either by himself or to remand the matter to the concerned Adjudicating Authority. Accordingly, the matter has been remanded to decide the case afresh after giving an opportunity to the appellants. Since we do not find any infirmity in the impugned order, the appeal filed by the appellants is hereby dismissed.
(G.A. BRAHMA DEVA) MEMBER (J).
7/8/91 P.C. Jain, Member (T)
6. I have carefully read the order proposed by my learned brother, Shri G.A. Brahma Deva, Judicial Member but I regret I am unable to persuade myself to agree with the findings and reasons given therein.
7. Since the facts have already been set out in the order of the learned brother, I need not recapitulate them here. It is true that Section 129D is not exactly on the pattern of old Section 130 of the Customs Act, nor is it on the general pattern of revisional power where a superior authority has the power to both examine the record of the proceeding leading to the order of an inferior authority from the point of view of any illegality or any impropriety attached thereto as also to pass such order with respect thereto as it thinks fit. Nevertheless the old case law with reference to such revisional powers does not become otiose. Section 129D envisages two authorities, namely, one for initiating the proceeding i.e., coming to a tentative conclusion of illegality and impropriety after examining the record of the proceeding in the order passed by the lower authority and the other for passing an order as it thinks fit such as confirming, modifying or annulling the decision of the lower authority or remanding the matter back to the adjudicating authority which passed the original order. Under the new scheme of things under Section 129D the first authority for initiating the proceedings is either the Central Board of Excise & Customs or the Collector of Customs, as mentioned in sub-sections (1) and (2) of the said Section 129D. The second authority is either the Tribunal or the Collector of Customs (Appeals), as the case may be. Under the old Section 130 of the Customs Act, both the powers of initiating the proceeding for revision as well as concluding the proceeding, vested in the same authority i.e. the Central Board of Excise & Customs or the Collector of Customs. So if there are any limitations on the power to initiate any proceedings under Section 129D(1) or (2), as the case may be, only those provisions have to be looked into.
7.1 For proper appreciation of the controversy in this appeal, Sub-section (2) of Section 129D with which we are concerned is reproduced below:-
"129D(2) - The Collector of Customs may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him, has passed any decision or any order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order, as may be specified by the Collector of Customs in his order."
[Emphasis supplied]
8. The learned advocate has submitted that the aforesaid provisions of Sub-section (2) are pari materia the usual provisions of revision proceedings which came under scrutiny by various Courts under the Sales Tax cases. In particular, he has drawn attention to Supreme Court's decision in the case of State v. K.M. Cheria Abdulla & Co. -1965 (16) S.T.C. 875 . In that case the Apex Court was examining the scope of powers under Section 12(2) of the Madras General Sales Tax Act. Sub-section (2) of Section 12 of the said Act is reproduced below to appreciate the similarity between the said provision which was before the Supreme Court in that case and the provision of Section 129D(2) :-
"(2) The Deputy Commissioner may -(i) suo motu
(ii) in respect of any order passed or proceeding recorded by the Commercial Tax Officer under Sub-section (1) or any other provision of this Act and against which no appeal has been preferred to the Appellate Tribunal under Section 12A, on application, call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and may pass such order with respect thereto as the thinks fit", (page 882) [Emphasis supplied] The Hon'ble Supreme Court has held as follows with reference to Section 12(2) of the Madras General Sales Tax Act :-
"Turning then to the jurisdiction which the revising authority may exercise under Section 12(2), attention must first be directed to the phraseology used by the Legislature. The Deputy Commissioner is thereby invested with power to satisfy himself about the legality or propriety of any order passed or proceeding recorded by any officer subordinate to him, or the regularity of any proceeding of such officer, and to pass such orders with respect thereto as he thinks fit. For exercising this power, he may suo motu or on application call for and examine the record of any proceeding or order. There is no doubt that the revising authority may only call for the record of the order or the proceeding, and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding. But there is nothing in the Act that for passing an order in exercise of his revisional jurisdiction, if the revising authority is satisfied that the subordinate officer has committed an illegality or impropriety in the order or irregularity in the proceeding he cannot make or direct any further enquiry. The words of Sub-section (2) of Section 12 that the Deputy Commissioner 'may pass such order with respect thereto as he thinks fit' means such order as may in the circumstances of the case for rectifying the defect be regarded by him as just. Power to pass such order as the revising authority thinks fit may in some cases include power to make or direct such further enquiry as the Deputy Commissioner may find necessary for rectifying the illegality or impropriety of the order, or irregularity in the proceeding. It is therefore not right badly to propound that in passing an order in the exercise of his revisional jurisdiction, the Deputy Commissioner must in all cases by restricted to the record maintained by the officer subordinate to him, and can never make enquiry outside that record."
[Emphasis supplied by the learned advocate page 883-884] Based on the above authority, the learned advocate for the appellants states that for the purpose of ascertaining the legality or propriety of an order, as mentioned in Section 129D(2), the Collector has necessarily to confine himself to the record alone. If there is any illegality or impropriety on the record and not merely on the face of the order of the lower authority then alone the Collector is competent to pass an order for initiating the proceedings for filing of an appeal before the Collector of Customs (Appeals) in terms of Section 129D(2) but the Collector cannot travel beyond the record before the lower authority. He has submitted that it is admitted to the department that their sole ground for re-opening of the adjudication order already passed by the Deputy Collector of Customs is on the basis of a quotation received subsequently from the same supplier from whom the appellants have obtained the goods. An information received subsequently, which was not before the adjudicating authority whose order is sought to be re-opened under Section 129D(2) cannot be taken into account for the purpose of finding of any illegality or impropriety of the said order. Illegality or impropriety of the said order passed by a lower authority has to be strictly judged on the basis of the material on record. It is a different matter that the Collector of Customs (Appeals) may, once the lower authority's order is tentatively held to be illegal or improper, take fresh material into consideration while passing an order confirming, annulling or modifying the said order of the lower authority. He has also submitted that this view taken by the Apex Court in K.M. Cheria Abdulla & Company's case was reaffirmed by that Court in Swastik Oil Mills Ltd. v. H.B. Munshi, Deputy Commissioner of Sales Tax, Bombay -1968 (21) S.T.C. 383 .
9. Learned D.R. for the Revenue, on the other hand, has relied upon the following observations of the Supreme Court in Swastik Oil Mills Ltd. :-
"Once those powers are invoked, the actual interference must be based on sufficient grounds and if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority."
In making the above observation the Court relied upon its earlier decision in K.M. Cheria Abdulla & Company's case. It has, therefore, been contended by the learned D.R. that the department was right in re-opening the order passed by the Deputy Collector on a subsequent investigation made by the department.
10. Having considered the contention of both sides and after careful perusal of the Supreme Court's two decisions on which reliance has been placed by both sides, I am inclined to agree with the submissions made by the learned counsel of the appellants. The Apex Court in Swastik Oil Mills has relied on para extracted from K.M. Cheria Abdulla & Company's case, supra. It is, therefore, clear that the basic enunciation of law by the Apex Court is in its judgment in K.M. Cheria Abdulla & Company's case, relevant extracts from which have already been set out above. It is crystal clear from the ruling of the Supreme Court that the record (of the proceeding) alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding. The additional material can be taken into consideration by the revising authority only in passing an order and not for the purpose of coming to the tentative conclusion of illegality or impropriety. Since it is admitted to the department that there is no illegality or impropriety attached to the order of the Deputy Collector on the basis of evidence on record of the proceeding of the said order, the order of the Collector of Customs under Section 129D(2) directing the Deputy Collector of Customs to file an appeal before the Collector (Appeals) was ab initio void as being without jurisdiction. The impugned order, therefore, is not correct in law. I, therefore, set aside it and allow the appeal with consequential relief.
11. This order is, however, passed without prejudice to any other remedy that may be available to the department under the Act for re-opening the assessment made by the Deputy Collector of Customs or lower authority.
(P.C. JAIN) TECHNICAL MEMBER 16/9/91 Difference of Opinion In view of the aforesaid orders, the following difference of opinion has arisen :-
"Whether in the facts and circumstances of this case the appeal is to be allowed or to be dismissed."
(P.C. JAIN) TECHNICAL MEMBER (G.A. BRAHMA DEVA) JUDICIAL MEMBER DATED : 16/9/91 The following difference of opinion has arisen in view of the orders passed by two of us (placed below) :-
"Whether in the facts and circumstances of this case the appeal is to be allowed or to be dismissed."
The point of difference of opinion is referred to the President in terms of Section 129C of the Customs Act for further necessary action.
(P.C. JAIN) TECHNICAL MEMBER 16/9/91 (G.A. BRAHMA DEVA) JUDICIAL MEMBER Hon'ble Vice-President.
K.S. Venkataramani, Member (T) 11 A. The learned Counsel Shri V. Sridharan appearing for the appellants addressed his arguments on the point of difference. He submitted that for initiating the proceeding under 129D(2) of the Customs Act, 1962, the Collector of Customs has to confine himself of the material available with the adjudicating officer subordinate to him at the time of passing the adjudication order. Only if on the basis of that material the Collector is satisfied that the adjudication order passed is illegal or improper, he can give direction to the adjudicating authority to apply to the Collector (Appeals) for determination of the points arising out of the order. The learned Counsel urged that the Collector (Appeals) while considering such an application filed in pursuance of the direction of the Collector of Customs can consider further material. The learned Counsel cited the Supreme Court decision in the case of State v. K.M. Cheria Abdulla & Co. -1965 (16) S.T.C. 875 as also to the case of Swastik Oil Mills decided by the Supreme Court - A.I.R. 1968 S.C. 843, to say that the Reviewing Authority can call for and examine the records of the adjudication while invoking his power of review but that in passing an order in review further enquiry can be made. The learned Counsel also in the same context relied upon the case law reported in 1969 (24) S.T.C. 491 (S.C.) - Deputy Commissioner of Income Tax v. Dhanalakshmi Vilas Cashew Co.
;
1974 (33) S.T.C. 147 - The State of Gujarat v. Chelabhai Bhanabhai Prajapati ;
1979 (118) I.T.R. 447 - Ganga Properties v. Income Tax Officer . The learned Counsel also submitted that the Department is relying upon the Supreme Court decision in the case of Swastik Oil Mills Ltd. v. Deputy Commissioner, Sales Tax -1968 (21) S.T.C. 383 . Even in that decision the ratio of the State v. K.M. Cheria Abdulla & Co.
of the Supreme Court had been followed and it cannot be a authority for saying that material outside the records before the Adjudicating Authority can be made the basis for directing a review of the order of that authority. The learned Counsel further cited the Tribunal decision in the case of Reckitt & Colman of India Ltd., Calcutta v. Collector of Central Excise, Calcutta -1985 (22) E.L.T. 216 (Tribunal) as well as Collector of Central Excise, Bombay v. Industrial Marketing Corporation, Bombay -1985 (22) E.L.T. 950 (Tribunal) wherein the Tribunal held that only material on record can be looked into for ascertaining legality of the order to be reviewed, though, subsequently while passing the order on review other material can also be relied upon. The learned Counsel urged that review cannot be initiated solely on the basis of additional material which was not before the adjudicating authority since the initiation of the review proceedings is in itself bad in law in this case. The impugned order of the Collector (Appeals) is vitiated. Shri Prabhat Kumar, the learned Departmental Representative appearing for the Department contended that a perusal of the adjudication order of the Deputy Collector would show that the value of the imported goods as declared by the appellants had been accepted which would show that in passing the order, valuation of the goods was also a question determined by the Deputy Collector. In this context, therefore, the order of the Collector of Customs under Section 129D(2) is valid as it arises out of one of the issues decided by the Deputy Collector and to determine the legality and propriety of that decision. The learned Departmental Representative further referred to Section 263 of the Income Tax Act which covers revision of an order prejudicial to Revenue and this concept would logically mean an order not in accordance with law. In the present case the Collector of Customs had examined the records of the adjudicating proceedings by the Deputy Collector to satisfy himself whether the Deputy Collector's order was correct in accepting the declared value in his adjudication. It was urged that the Deputy Collector is not only an adjudicating officer but also vested with powers of investigation. It was his duty to have enquired regarding correctness of a value declared also when adjudicating the case. In such a situation a review of the order by Deputy Collector accepting incorrectness of declared value is valid. The learned Departmental Representative relied upon the case of Tara Devi Agarwal v. C.I. T. -1973 (88) I.T.R. 323 (S.C.) in which another decision of the Supreme Court in the case of Rampayari Devi Sangi v. C.I.T. -1968 (67) I.T.R. 84 (S.C.) was followed. It was argued that it was the duty of Deputy Collector to have made an enquiry to satisfy himself as regards the correctness of the value and on his failing to do so and when the Collector had material to show that such acceptance of the declared value was erroneous, review of the Deputy Collector's order in terms of Section 129D(2) is correct in law. In this connection the Gujarat High Court decision in the case of C.I.T. v. Mukkur Corporation (Guj.) -1978 (III) I.T.R. 312 (Guj.) was cited to say that absence of enquiry and acceptance of returns filed can be a ground for review. The learned Departmental Representative also relied upon the Tribunal decision in the case of Bell Punch (India) Pvt. Ltd., Calcutta v. Collector of Customs -1983 (14) E.L.T. 2374 , wherein the Tribunal had considered the both M/s. KM. Cheria Abdulla case as well as the Swastik Oil Mills case decisions of the Supreme Court and had held that review can take place on the basis of material outside the records of the adjudicating authority. This being the decision of the Three Members Bench should have been followed by the Two Members Bench in accordance with judicial propriety for which the decision of the Supreme Court in the case of Ujagar Prints and Ors. v. Union of India, reported in 1987 (27) E.L.T. 567 (S.C.) was cited. Therefore, the appeal should be rejected according to the Department. In reply, the learned Counsel pointed out that in the Tara Devi Agarwal case the question of calling for records did not arise for determination. Where a duty is cast on the I.T.O. to make an enquiry and he failed to do so, it was held that itself will be a error. There was also the Delhi High Court decision in the case of Gunvant and Ors. v. Collector of Central Excise and Ors., reported in 1987 (32) E.L.T. 53 (Del.) to say that no review can take place on materials obtained subsequent to adjudication order and there has to be finality to investigation and adjudication. It was also urged that the order of the Deputy Collector would show that no question of valuation was raised. Only the question of import without a licence was adjudicated.
12. The submissions made have been carefully considered. The Supreme Court in its decision in the case of Collector of Central Excise v. MM Rubber Co., reported in 1991 (55) E.L.T. 289 (S.C.) had observed, with reference to a parallel provisions for review under Section 35E (1) & (2) of the Central Excises and Salt Act, 1944, that the direction to file an appeal under these two sub-sections by the Board and the Collector is to the very adjudicating authority who would otherwise be bound by his own order and not expected to be aggrieved by the same and that when an appeal is filed on such a direction the appellant will be the adjudicating authority himself and not the authority who gave the direction. Further the Supreme Court observed in para-18 of the decision as follows:
"Section 35E comes under the latter category of an authority exercising its own powers under the Act. It is not correct to equate the Board, as contended by Shri Gaurishankar Murthy, to one of the two parties to a quasi-judicial proceeding before the Collector and the Board's right under Section 35E to the exercise of the right of appeal by an aggrieved assessee from an order passed to its prejudice. The power under Section 35E is a power of superintendence conferred on a superior authority to ensure that the subordinate officers exercise their powers under the Act correctly and properly."
In the present case the adjudicating order of the Deputy Collector was passed on the appellants agreeing for the adjudication of the case after waiving the issue of show cause notice and personal hearing. The Deputy Collector had ordered confiscation of the goods under Section 111(d) of the Customs Act, 1962 in the absence of valid licence to cover the import thereof levying a fine in lieu of confiscation. He had also refrained from imposing a personal penalty. The order shows that the correctness of the declared value of the goods was not the subject matter thereof. The appellants had also complied with the adjudication order and paid the fine and the duty on the goods. The direction under Section 129D(2) had been issued subsequent to the culmination of the adjudication proceedings and subsequent to the compliance with the adjudication order by the appellants. The basis for seeking a review is said to be quotation for the same goods which came to the notice of the Department in respect of a subsequent import by another party. There is on record a counter affidavit before Delhi High Court by Shri A.K. Jain, Assistant Collector of Customs (Import Cargo) wherein it has been stated that before the above mentioned quotation came to the notice of respondent Department, the matter pertaining to the Petitioner (the appellants herein) had already been adjudicated. The question is about the validity of such direction under Section 129D(2) by the Collector on the basis of the quotation which came to the notice of the Department subsequent to the adjudication order and which admittedly was not before the Deputy Collector at the time of adjudication who had decided the case only on the basis that the import was unauthorised because there was no Import Licence to cover the goods. On this aspect the Tribunal in the case of Reckitt & Colman of India Ltd. cited supra had considered the K.M. Cheria Abdulla & Co. case as well as the Swastik Oil Mills cited supra of the Supreme Court as well as the Bell Punch (India) Pvt. Ltd., Calcutta decision of the Tribunal also cited supra and had found that in both the decisions of the Supreme Court the principle laid down was that in initiating the proceedings, the officer concerned may look into the matter available in the record only for ascertaining the correctness legality or propriety of the order sought to be reviewed though in subsequently passing the order on review he can rely upon other material also. The Tribunal observed "in the circumstances the contention of Shri Ragavan Iyer based on the observation of the decision of this Tribunal cited supra (Bell Punch case) as if the Collector could look into further material also than was available to the Assistant Collector in the record before him at that time, may not be strictly correct". In other decision of the Tribunal in the case of Collector of Central Excise, Bombay v. Industrial Marketing Corporation, Bombay, the Tribunal again gave the finding that in initiating proceedings under Section 36(2) of the Central Excises and Salt Act, 1944, the Central Government was entitled to take into consideration the material as they stood in the record on the date the impugned order was passed and not on additional material. These two decisions of the Tribunal are subsequent to the Tribunal decision in the case of Bell Punch (India) Pvt. Ltd., Calcutta. It is further observed in the Bell Punch (India) Pvt. Ltd., Calcutta decision also the Tribunal had given the decision in respect with the wording of Section 130(2) of the Customs Act, 1962. The decision took into consideration the argument before it by the learned Departmental Representative that the power vested with the Collector under Section 130(2) of the Act not only enabled him to examine the 'legality' and 'propriety' of a decision or an order passed by subordinate officer, but also the 'correctness' thereof. The Tribunal observed "............we do find justification in the point made by learned Departmental Representative that illegality or impropriety may be borne out from the record, but so far as 'correctness' is concerned, that has invariably reference to some other material, and is not capable of being adjudged or assessed on the basis of records alone". Further after referring to the Supreme Court decision in Swastik Oil Mills case the Tribunal interpretated it to mean that there would be some substantial ground for invoking revisional powers and that this ground has essentially to be, so far as power of 'correctness' is concerned an outside material. In the present case we are dealing with Section 129D(2) of the Customs Act which is confined only satisfaction of the Collector of Customs regarding the legality or propriety of an order of a decision by the subordinate authority and does not extend to the correctness thereof. The decision of the Delhi High Court in the Gunvant and Others case supra is parallel. In that case an Appellate order passed by the Gold (Control) Administrator in December, 1979 was sought to be reviewed by the Central Government under Section 82(2) of the Gold (Control) Act, 1968, based on certain materials obtained in March, 1980. The Hon'ble High Court's observations in paras 6 and 8 of the decision are very relevant which are re-produced below :-
"Para 6. It is apparent that Central Government proposed to exercise revisional jurisdiction under Section 82(2) of the Act on the basis of fresh material which was not on record before the Administrator and which was obtained much later, namely, Mint Master's Report dated 10th March, 1980 and inspection of the goods on 10th June, 80. The short question is whether they have the jurisdiction to do so.
Para 8. It is well settled that additional evidence could not be permitted even in an appeal to enable one of the parties to remove lacunae in presenting its case at the proper stage and to fill in gaps. (See:
State of U.P. v. Manbodhan Lal - A.I.R. 1957 S.C. 912 at page 915). In exercise of jurisdiction under Section 82 of the Act, the Central Government can call for, and examine the record of any proceeding in which an adjudicating authority subordinate to it has passed any order or decision under the Act for the purpose of satisfying itself as to the legality or propriety of any such order. This power has to be exercised essentially on the basis of the record of proceedings before the subordinate authority. The legality or propriety of any decision or order of the subordinate authority must be tested on the basis of the material placed before that authority. No fault can be found with it on the basis of material which could be, but was not, obtained at the proper stage of investigation or on material obtained later. The revisional authority can call for and examine the record only for the purpose of satisfying itself as to the legality or propriety of any decision or order of an adjudicatory nature but it cannot restart investigation on the basis of material obtained later. There has to be finality of investigation and also finality of adjudicatory proceedings. The two cannot be mixed together."
In the present case also therefore, the initiation of the proceedings under Section 129D(2) which is solely based on a quotation for the goods which came to the possession of the Department subsequent to the adjudication of the case by the Deputy Collector and which admittedly did not form part of the record before the Deputy Collector in the adjudication proceedings cannot be held to be permissible, in the light of the ratio of the decisions of the Supreme Court and the High Court as well as the Tribunal referred to above. In the circumstances, the view expressed by the Hon'ble Member (Technical) is concurred with and the appeal deserves to be allowed without prejudice to any other remedy that may be available to the Department under the Act for re-opening the assessment made by the Deputy Collector of Customs or lower authority. The papers are returned to the Registry of Special Bench 'A' for listing before the Bench for the final order.
(K.S. VENKATARAMANI) MEMBER (TECHNICAL) Dated: 18-5-1992 Final Order In view of the majority opinion, the appeal is allowed without prejudice to any other remedy that may be available to the Department under the Act for re-opening the assessment made by the Deputy Collector of Customs or lower authority.
(P.C. JAIN) TECHNICAL MEMBER (G.A. BRAHMA DEVA) JUDICIAL MEMBER DATED : 22-5-1992