Customs, Excise and Gold Tribunal - Delhi
Krishna Fabrics Pvt. Ltd. vs Collector Of Customs on 13 November, 1987
Equivalent citations: 1988(17)ECC235
ORDER
P.C. Jain, Member
1. Before the subject applications could be taken up by the Bench learned JDR raised a preliminary point regarding jurisdiction of the North Regional Bench to decide the matter. He was of the view that the impugned order involved not only the question of ITC licence-whether it is valid or not-but also it involves interpretation of notification 117/F. No. 602/14/78-DBK dated 9-6-1978 as amended from time to time. This notification, according to the learned JDR, is one which exempts imported materials from payment of whole of customs duty subject to the utilisation in manufacture of goods for execution of one or more export orders. Since the impugned order, inter alia, involves interpretation of the exemption notification which means in effect determination of the question relating to rate of duty of customs the case would lie within the jurisdiction of a Special Bench. He has also stated that such cases had earlier been dealt with by Special Benches. He also cited some of the cases of this nature transferred from South Regional Bench to the Special Bench. A list of such cases is mentioned in SDR's letter dated 16-10-1987. He has relied on Tribunal's order delivered by a 5 Member Bench in the case of Collector of Central Excise, Chandigarh v. Kashmir Vanaspati .
2. Learned advocate for the appellant, on the other hand, has stated that the dispute is only about the following three questions:
(1) Whether the resultant product mentioned in the advance licence has been exported or not.
(2) Whether the goods can be confiscated and an appropriate fine has been imposed.
(3) Whether Section 111(o) of the Customs Act is applicable in the facts and circumstances of the case.
Referring to the first question mentioned above, learned advocate pointed out that once the dispute about the resultant product is resolved duty from the appellant is either demandable or not. There is no dispute whatsoever about the rate of duty applicable on the imported material as such. Therefore, the case falls well within the jurisdiction of the Regional Bench. According to him, even the quantum of duty would also not be in dispute, leave apart the rate of duty, if the question of resultant product is decided against the appellant.
As regards the list of cases which have already been handled by Special Benches, whether by way of transfer from South Regional Bench or otherwise, learned advocate has submitted that a specific question regarding jurisdiction did not appear to have been raised in those cases and there is no speaking order on that issue. Therefore, merely because the parties had agreed in those cases to the jurisdiction of Special Bench it does not mean the case of such a nature lies within the jurisdiction of a Special Bench.
3. We agree with the learned advocate for the appellant that the precedents of similar cases having already been decided by, or pending in a Special Bench does not oust the jurisdiction of the North Regional Bench in the absence of any speaking order on the question of jurisdiction. It has been held so in the order of 5 Member Bench mentioned supra that "the jurisdiction could not be conferred by the consent of the parties."
4. We have given careful consideration to the other pleas advanced on both sides. We have also gone through the order of the Tribunal in the case of Kashmir Vanaspati mentioned above. We observe that the decision in the said case relates specifically to the notification 201/79 dated 4-6-1979. This decision does not in terms relate to all exemption notifications. Therefore, each case has to be decided on merits whether it falls within the jurisdiction of a Special Bench or otherwise. In the instant case, according to the learned JDR, question is about the interpretation of the notification 117/78 dated 9-6-1978 whereas according to the learned advocate for the appellant, the question is not one of the interpretation of notification but whether the resultant product to be exported in terms of the condition of the advance licence read with the aforesaid notification is "blankets" or "druggets".
5. Before we go into the pleas advanced on both sides it is appropriate to set out as to what constitutes the jurisdiction of the Special Bench in terms of the legal provisions. The relevant provision is Sub-section (3) of Section 129-C which is reproduced below:--
129-C(3)-Every appeal against a decision or 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 the purposes of assessment, shall be heard by a Special Bench constituted by the President for hearing such appeals and such Special Bench shall consist of not less than 2 Members and shall include at least one Judicial Member and one Technical Member.
It is to be noted from the aforesaid provision that an appeal would be within the jurisdiction of a Special Bench if it involves, inter alia, any question relating to:--(i) rate of duty or (ii) value of goods for the purposes of assessment. It should be noticed here that the question falling for consideration in an appeal for determining jurisdiction of a Special Bench is not relating to quantum of duty. The law advisedly provides for determination of questions relating to rate of duty or value of goods and that too for the purpose of assessment.
6. There are matters which directly involve determination of questions of rate of duty or value of goods such as approval of rate of duty in a classification list or of value of goods declared in a price list, as the case may be.
7. There may, however, be matters which indirectly involve questions of rate of duty or value of goods. Such matters would also lie within the jurisdiction of a Special Bench because the expression "having a relation" in Section 129C(3) would take within its sweep matters which indirectly involve such questions. This is the ratio of the decision of the larger Bench in the case of Kashmir Vanaspati mentioned supra. Such matters can be where the quantum of duty is directly in dispute. Any matter which does not directly involve the quantum of duty cannot involve, even indirectly, the questions of rate of duty or value of goods.
8. It has, however, to be borne in mind that every appeal in which there is a dispute about quantum of duty need not necessarily and invariably fall within the jurisdiction of a Special Bench.
Quantum of duty is determined by:-
(i) rate of duty x quantity of goods or;
(ii) Ad valorem rate of duty x value of goods per unit x quantity of goods, as the case may be.
Quantum of duty referred to above may be affected by an exemption notifica-on issued by the Central Govt. in some of the following ways, namely, (i) rate of duty is lowered or, (ii) value of goods is lowered by excluding the value of certain portion of the goods e.g. containers or (iii) by providing set-off of duty paid on inputs used in the manufacture of certain specified finished goods (this last method of lowering the quantum of duty is generally followed in Central Excise rather in Customs). In other words, quantum of duty on any consignment (lot) of goods is dependent upon any of the following four factors:-
(i) rate of duty (ii) value of goods per unit (iii) quantity of goods (iv) extent of set-off of duty already paid on goods.
Therefore, in every case where dispute about quantum of duty is involved what has to be seen is, for determining the jurisdiction of a Special Bench or in other words in ousting the jurisdiction of a Regional Bench, whether there is any further question of determination of rate of duty or value of goods in any such dispute. If there is no such question falling for determination then such matter will be within the jurisdiction of a Regional Bench even though there may be dispute about the quantum of duty.
9. Our attention was, however, especially drawn as stated above to the legal provisions to the effect that the question for determination may have relation to rate of duty or value of goods. Expression "relating to" or "in relation to" is understood to be one of comprehensiveness which might both have a direct significance as well as indirect significance depending on the context (T.P. Mukerjee's Law Lexicon). They are not words of restrictive content and ought not to be so construed as held by the Madras High Court in the case of State Wakf Board, Madras v. Abdul Aziz Sahib -as referred to in the above mentioned Lexicon. There can be no quarrel with this general proposition of law of meaning of the words "relating to" or "in relation to" or "having relation to". We have gone through the aforesaid report of the judgment of Madras High Court and we find that in that case the facts were such which led the Court to make those observations. The provisions which fell for consideration before the Madras High Court were those of Sections 57(1) and 57(3) of the Wakf Act, 1954. Section 57(1) stated as follows:-
In every suit or proceeding relating to a title of Wakf property...the Court shall issue notice to the Board at the cost of the party instituting such suit or proceeding.
Section 57(3)--In the absence of a notice under Sub-section (1), any decree or order passed in the suit or proceeding shall be declared void, if the Board, within one month of its coming to know of such suit or proceeding, applies to the Court in this behalf.
Facts in that case were that before the commencement of the Wakf Act a dispute arose regarding the title of two properties in 1949 and 1950. The title was accorded to the plaintiff in special appeals by the High Court of Madras on 25-1-1956 i.e. after the commencement of the Wakf Act but before the institution of a Wakf Board under the said Act. The Board was constituted on 1-2-1958. Subsequent to 25-1-1956, there was an original suit instituted by the other claimant to the property for a declaration that the decrees in favour of the original plaintiff were really fraudulent and collusive decrees obtained by the collusion between the original plaintiff and the then representative of the other claimant. The suit regarding declaration of the decrees as fraudulent and collusive ultimately ended into dismissal in the second appeal before a single Judge of Madras High Court in April 1964. On 6-6-1964 Secretary of the Wakf Board received a letter from a person pointing out the above fact and equally stressing that the Wakf Board ought to have been made a party at least to the subsequent litigation which came into existence after the Board was constituted and that the interests of the endowment had suffered because the suit was not complied with in this regard. After receipt of this letter, on 6-7-1964, namely within the period of one month--specified period of limitation under Section 57(3) extracted above--the Wakf Board filed a petition before the High Court. The legal representative of the original plaintiff strenuously contended before the learned Judge (Kailasam, J.) that on two main grounds this petition would fall. The first was whatever might be said about the character of the two original suits, the subsequent suit of 1956 could not be regarded as "a suit or proceeding relating to title to property" within the meaning of these words in Section 57(1). On the contrary, the suit or proceeding related to the nature of decree in the earlier suits, as fraudulent and collusive, and sought to establish that character. The title to the properties was not directly in issue in the subsequent suit of 1956 and therefore, the suit on the relevant proceedings did not thereby violate Section 57(1) because no notice was issued to the Wakf Board. This argument was dismissed by Kailasham, J. but he upheld the other argument concerning the period of limitation of one month raised by the respondent (original plaintiff to the petition filed on 6-7-1964).
In the letters patent appeal against the judgment of the single Judge the respondent (original plaintiff) again raised the aforesaid argument dismissed by Kailasam, J. relating to the nature of proceedings of the subsequent suit of 1956. After setting out the various authorities on the scope of words "relating to" or "in relation to" the learned Judges held that allowance of the claim in the second suit would necessarily have consequences upon the declaration of title to the property claimed as Wakf property in the earlier suit; it is also a suit or proceeding 'relating to the Wakf property'. The fact that the two steps have to be taken to arrive at this inference instead of one direct step, cannot make any essential difference.
10. It would be noticed in the aforesaid observation of the Madras High Court that had a decision on nature of the decrees that it is fraudulent or collusive gone against the original plaintiff, then the next question for determination would have been about the title to the Wakf property. In other words, the question of title to the Wakf property was indirectly involved in that case and in such facts and circumstances, Hon'ble Madras High Court held as above about the meaning to the expression "relating to" or "in relation to". In the instant case, however, before this Bench the only question that falls for determination is, as urged by the learned advocate for the appellant, whether the resultant product in terms of the advance licensing scheme read with DEEC is "blankets" or "druggets". Once this question is resolved either way, no further question falls for consideration in this matter. Therefore, it cannot be said that the question of rate of duty falls for consideration in the instant case even indirectly so as to come within the scope of the expression "having relation to" We are inclined to agree with the learned advocate for the appellant. The question herein is not one of interpretation of notification 117/78-DBK dated 8-6-1978. The notification has already been applied to the goods at the time of importation of the raw material and the duty has already been quantified. In terms of the provisions of advance licensing scheme, the appellant bound himself to the extent of Rs. 17390718. He also bound himself to pay an interest at the rate of 18% if the conditions of the advance licensing scheme were not fulfilled. We observe from the impugned order that the Collector has demanded the said amount of duty and the interest thereon it terms of the bond executed by the appellant with the licensing authorities as well as undertaking given to the Customs House of Bombay.
11. Learned JDR, however, persists [that] export of the "resultant product" specified in the DEEC is, inter alia, a condition for entitlement to the exemption notification which wholly exempts (i.e., prescribes in other words, nil rate of duty) imported inputs for such resultant product. Violation of condition of an exemption notification providing for a lower rate of duty would necessarily involve the question of rate of duty on imported goods. Learned JDR points out for example, if lower rate of duty (including full exemption) is prescribed for certain excisable goods subject to the condition that procedure of Chapter X of C.E. Rules, 1944 is followed, practice of the Tribunal has been that a matter involving a question whether such a condition has been violated or not, is handled by a Special Bench.
12. We agree that in some cases there is no dispute about the applicability of an exemption notification to a product, but the dispute is only about fulfilment of one or more conditions of such a notification. An answer to this dispute alone determines the rate of duty or value of goods. Can it be said in these circumstances that the indirect question involved in such cases is whether the lower rate of duty or value as sanctioned by the notification is applicable ? We think the latter question is framed in too broad a manner to decide the question of jurisdiction. For the purpose of determining the jurisdiction, the disputed questions have to be spelt out with precision in the first instance.
If any of those disputed questions involve rate of duty or value of goods for the purpose of assessment, it will be appropriate to say that such a question, among others, is involved directly. If the spelt out disputed questions do not involve directly a question of rate of duty or value of goods, it is appropriate to see further whether any of the spelt out questions being determined either way, a further question of rate of duty or value would require determination and so on. If such a situation arises, then and then alone it can be said that the question of rate of duty or value of goods is involved indirectly or in other words, the matter involves, inter alia, a question "having a relation to rate of duty or value of goods". Therefore, in the light of the aforesaid discussion, if the dispute is only about fulfilment of one (or more) condition(s) of an exemption notification, and no further question of rate of duty or value of goods is involved for determination, we are of the view that the jurisdiction lies with the Regional Bench i.e. a Bench other than a Special Bench. In the instant case, as stated in para. 10 above, precise question for determination is whether "blankets" or "druggets" is the resultant product. Once this question is determined, no further question falls for determination. Hence the matter falls within the jurisdiction of the North Regional Bench.
13. As regards the submission of practice, we feel that it cannot override the provisions of law. Practice may have been because nobody had challenged it. As we have already held, on the authority of larger Bench judgment mentioned supra, jurisdiction cannot be conferred by consent of the parties. It has to be acquired in terms of the legal provisions.
14. In view of the foregoing, we hold that the North Regional Bench has jurisdiction to deal with this matter.