Custom, Excise & Service Tax Tribunal
Excellent Betelnut Products P Ltd vs Commissioner Of Central Excise-Nagpur on 11 May, 2022
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
CUSTOMS APPLICATION (MISC) NO: 85327 OF 2022
(on behalf of appellant)
IN
CUSTOMS APPEAL NO: 85127 OF 2022
[Arising out of Order-in-Original No: VIII(Cus)25-169/SIIB/Betelnut
Borkhedi/2021 dated 30th December 2021 passed by the Commissioner of
Customs, Nagpur.]
Excellent Betelnut Products Private Ltd
Shop No. 13, Platinum Commercial Premises CHS
C/o Shah Premchand Damji & Co, Praful Jyoti,
Road No. 7, Ghatkopar East, Mumbai - 400077 ...Appellant
versus
Principal Commissioner of Customs
GST Bhawan, Civil Lines, Telangkhedi Road,
Nagpur - 440 001 ...Respondent
WITH CUSTOMS APPLICATION (EH) NO: 85480 OF 2022 (on behalf of appellant) IN CUSTOMS APPEAL NO: 86021 OF 2022 [Arising out of Order-in-Original No: VIII(Cus)25-169/SIIB/Betelnut Borkhedi/2021/Pt-II dated 30th April 2022 passed by the Principal Commissioner of Customs, Nagpur.] Excellent Betelnut Products Private Ltd Shop No. 13, Platinum Commercial Premises CHS C/o Shah Premchand Damji & Co, Praful Jyoti, Road No. 7, Ghatkopar East, Mumbai - 400077 ...Appellant versus Principal Commissioner of Customs GST Bhawan, Civil Lines, Telangkhedi Road, Nagpur - 440 001 ...Respondent APPEARANCE:
Shri Prakash Shah with Shri Mihir Mehta, Advocates for the appellant Shri Manoj Kumar, Deputy Commissioner (AR) for the respondent C/85127 & 86021/2022 2 CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) MISCELLANEOUS ORDER NO. M/85300/2022 FINAL ORDER NO: A/85472/2022 DATE OF HEARING: 11/05/2022 DATE OF DECISION: 11/05/2022 PER: C J MATHEW On the prayer made on behalf of the applicant, M/s Excellent Betelnut Products Private Limited, that final order no. A/85233/2022 dated 29th March 2022 of the Tribunal, disposing off appeal no. C/85127/2022 challenging order-in-original no. VIII(Cus)25- 169/SIIB/Betelnut Borkhedi/2021 dated 30th December 2021 of Commissioner of Customs, Nagpur denying 'provisional release' under section 110A of Customs Act, 1962, had not been complied with in order no. VIII(Cus)25-169/SIIB/Betelnut Borkhedi/2021/Pt-II dated 30th April 2022 of Principal Commissioner of Customs, Nagpur, the appeal arising therefrom, for which early hearing has also been sought, is also taken up for disposal along with both the applications as the conformity of continued retention of seized goods with order of the Tribunal is required to be examined. Principal Commissioner of Customs, Nagpur, the respondent in the appeal in which direction for disposal of 'application' for provisional release had been ordered and C/85127 & 86021/2022 3 who, according to applicant, had disregarded the spirit of the order is also present in court to render explanation of his actions. As functus officio in the order impugned in the appeal now before us, he is not accountable in personem though, to the extent that the said order is not congruent with order dated 29th March 2002 of the Tribunal, he is and disposal of the appeal on merit does not stand in the way of judicial determination of misconduct, if any, on his part. We draw that distinction with deliberate intent as exercise of quasi-judicial function does not offer a cloak for deliberate defiance should that have occurred. The application for early hearing of the said appeal is, thus, allowed to enable consideration of the appeal itself. Appeal against the order of denial of 'provisional release' under section 110A of Customs Act, 1962 dated 30th April 2022 is taken up along with miscellaneous application for implementation of our final order dated 29th March 2022.
2. All told, three orders were passed - two by Commissioner/ Principal Commissioner of Customs and one, between the two, by the Joint Commissioner of Customs - after the impugned goods were seized under section 110 of Customs Act, 1962 by the Directorate of Revenue Intelligence allegedly for not being in conformity with the description corresponding to the tariff item claimed by them.
3. On direction of the Hon'ble High Court of Bombay, in writ petition challenging the seizure, to deem the seized goods as having C/85127 & 86021/2022 4 been sought for release under section 110A of Customs Act, 1962, the first order dated 30th December 2021 declining 'provisional release' was issued and which was set aside on appeal of M/s Excellent Betelnut Products Private Limited to enable fresh determination upon considering the continued validity of reasons relied upon to deny 'provisional release' of goods.
4. A second order dated 25th April 2022, once again denying 'provisional release', though now for a fresh reason, was issued by Joint Commissioner of Customs claiming jurisdictional competence and, ostensibly, to reassure that every aspect of law, as directed the Tribunal, had been complied with. On application under rule 41 of Customs Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982, the Tribunal, vide order dated 26th April 2022, made it abundantly clear that its earlier order was unambiguous, and in concord with the direction of the Hon'ble High Court of Bombay while disposing off writ petition, in requiring the Principal Commissioner of Customs, who had already arrogated the jurisdiction vested in his subordinate, to re-consider the application and pass appropriate orders. The order dated 30th April 2022 issued thereupon, and now impugned before us, reiterated disinclination to release the goods provisionally.
5. There is one thread of constancy in the three orders of customs authorities denying access to the impugned goods, as also in the cause C/85127 & 86021/2022 5 of action that compelled the importer to approach the Hon'ble High Court of Bombay, viz., effacing of Customs Act, 1962, the author of their, as well as our, being. In the strenuous defence put forth on behalf of the respondent - Principal Commissioner of Customs on each of the occasions, it would appear that we are being solicited to be an accessory in that parricide. It is only to be hoped that this is an episodal aberration and not symptomatic of deeper malaise. The first can be remedied with the armoury at our disposal; the latter may require re-engineering by the Central Board of Indirect Taxes & Customs (CBIC) if disregard for the law and disrespect for judicial authority is not to build up into a tsunami that cares not a whit for even the executive authority unable to rein them in. The writing on the wall may well be ignored at its own peril.
6. At this stage, a recollection of the facts may not be out of place. The dispute concerns 50 bills of entry filed in September/October 2021 declaring import of 'betel nut product known as "supari"' corresponding to tariff item 2106 9030 of First Schedule to Customs Tariff Act, 1975. On the reasonable belief that the goods, to which sub-heading 0802 80 of First Schedule to Customs Tariff Act, 1975 corresponding to 'areca nuts', with consequent prohibition on import if value be less than ₹251per kg in accordance with notification no. 20/2015-2020 dated 25th July 2018 of Director General of Foreign Trade (DGFT), may apply, had been misclassified to escape the C/85127 & 86021/2022 6 interdict, seizure was effected under section 110 of Customs Act, 1962 on 18th November 2021 which was challenged before the Hon'ble High Court of Bombay in writ proceedings that culminated in order for the jurisdictional Commissioner of Customs to consider the plea itself as application for provisional release under section 110A of Customs Act, 1962; thereby hangs this tale which was neither carried back to the Hon'ble High Court for modification to enable implementation or decided on merit to this day.
7. Instead, the chain of circumstances gives the impression that, at each stage, deflection of oversight by the Hon'ble High Court and, subsequently, of the Tribunal was attended to more diligently than establishing veracity of their suspicion about the nature of the impugned goods. Events leave little room for doubt. The controversy over provisional release reached the Tribunal in appeal against the order of Commissioner of Customs, Nagpur dated 30th December 2021 denying provisional release and, that too, without assigning reason. Furthermore, in appeal no.85127/2022, it was brought to the notice of the Tribunal that compliance with documentation and certification requirements for grant of 'out of charge' under section 47 of Customs Act, 1962 was conveniently overlooked on the back of a test report on samples of unknown provenance alleged to controvert that furnished by the importer as conforming to the stipulations under the Food Safety and Standards Act, 2006 and rules notified C/85127 & 86021/2022 7 thereunder. That travesty prompted the Tribunal to direct re-test of samples drawn according to established procedure at an approved laboratory which, having reiterated the earlier confirmation produced by the importer at the time of seeking 'out of charge', was taken on record by the Tribunal in order dated 29th March 2022 remanding the matter to Principal Commissioner of Customs to consider this and, except in circumstance of stoppage by authorities empowered under Food Safety and Standards Act, 2006, to exercise authority within the jurisdictional competence afforded by Customs Act, 1962 - limited, insofar as section 47 therein, to short-payment of duty or evasion of any prohibition - for denial of access to imported goods.
8. The Principal Commissioner of Customs, Nagpur chose to re- interpret the jurisdictional competence by alienating from himself the authority conferred on 'adjudicating authority' under section 110A of Customs Act, 1962 in favour of a subordinate officer even though such scruples did not impede the arrogating of such authority to himself in the first instance. If that disclination had been subdued at the altar of judicial direction, that respect should have also forestalled any inclination to leave the decision to a subordinate authority subsequently; it was too late in the day to come to terms with 'respect' for the law. The direction of the Tribunal echoed those of the Hon'ble High Court and there is a presumption that higher judicial authority would not impose an extra-legal obligation on executive authority C/85127 & 86021/2022 8 and, in the unlikely event of having done so, it was incumbent on that executive authority to approach the Hon'ble High Court of Bombay for modification. Not having done so, it would appear that the intent was to draw attention away from the seizure effected under section 110 of Customs Act, 1962. It was only after the appeal was disposed off by order of 29th March 2022, and the unavoidability of continued oversight of the Tribunal perceived, that show cause notice came to be issued by Joint Commissioner of Customs on 9th April 2022 purportedly out of abiding 'respect' for the law, that impliedly did not concern either the statutory appellate authorities or constitutionally established authority for judicial review, by literally snatching back the empowerment that the Commissioner of Customs had 'illegally usurped' to decide upon denial of provisional release. It would be naïve to accept that, in a executive hierarchy, such acts of reclaiming may, even randomly, occur. That, on the other hand, set the tone to attempt erasure, at least for the moment, of the jurisdictional oversight of the Tribunal which, according to the order of Joint Commissioner of Customs dated 25th April 2022 denying provisional release once again, had the 'temerity' to derail the concerted action of customs authority in defending the frontiers of the nation from insidious onslaught of areca nuts. We shall return to that order presently. Thus, but for the order of the Tribunal of 26th April 2022 reiterating the direction of the Hon'ble High Court of Bombay that the decision under section 110A of Customs Act, 1962 be taken by the C/85127 & 86021/2022 9 Commissioner of Customs, the appellant would have to go through a first appellate authority for remedies. At no stage, initially or thereafter upon re-reading of the law, did it appear to occur to the customs authorities that any extralegal direction could, and should, have been appealed against. And yet, that assertion of the legality, which appellate authorities allegedly displayed their ignorance of, did not stand in the way of the Principal Commissioner of Customs staking his prerogative to, yet again, deny provisional release in the third order. The silent steps of the customs authorities is, if anything, deafening indeed. Wisdom, and appreciation of the narrow framework of empowering law, may dawn late but ignorance of procedure laid down by law remains, invariably, ingrained Law, it would seem, is not an instrument of governance but a bludgeon to defy accountability. By their attempt to engage themselves outside the appellate structure through these 'smart' moves, the intent of escapement from oversight, that their hierarchical superiors also appear not to care a whit about, of judicial hierarchy is made all too clear and borders on contempt for the law and its institutions. Even in the circumstance of having re-established jurisdiction to decide on 'application for provisional release' as directed by Hon'ble High Court of Bombay, the Principal Commissioner of Customs did not pause to consider the law relating to seizure, release, adjudication and confiscation which is the next 'blindspot' in this misadventure embarked upon by customs authorities.
C/85127 & 86021/2022 10
9. The exercise of authority to adjudicate and, by extension, to exercise attendant powers conferred by statute is saved by section 5 of Customs Act, 1962. This does not appear to have occurred to the two authorities who, between themselves and for differing reasons, decided that it would be hurtful to public interest to consider provisional release of the impugned goods. In undertaking statutory exercise of power, the triple pillars of constancy, consistency and certainty in concert accords credibility. The bickering and dithering over authority to adjudicate, and to decide upon provisional release, between a Principal Commissioner of Customs and his hierarchical subordinate is; if not pre-planned, unseemly the latter did not care to elaborate on the mode of re-establishing his prerogative to do so, except by a peripheral reference to draft show cause notice furnished to him by the investigative agency - a fait accompli - it would seem. And there is no exposition in the order of the Principal Commissioner of Customs about the fate of that order of the Joint Commissioner; these are indications of administrative chaos portending even worse unless the Central Board of Indirect Taxes & Customs (CBIC) intervenes to stave off disastrous consequences.
10. The order of the Joint Commissioner of Customs placed before us, and perused by us owing to reference in the order now impugned before us, is replete with observations on the 'less than diligent' appreciation of the facts and law on the part of the Tribunal. It is not C/85127 & 86021/2022 11 necessary to insult the entire customs administration of the country by culling extracts therefrom in this narration. Suffice it to say, that such confident condemnation of the workings of higher appellate forum would have been admirable had enough sense of rule of law permeated through that bravado and courage was demonstrated to carry those observations to its rightful forum - the constitutional courts - in appeal instead of 'pretend submissiveness' coupled with tactics to evade judicial oversight. We do not deign to dignify its overt lack of propriety, its blatant ignorance of law and obdurate refusal to accord respect, even formally, to higher appellate authorities with further observations about its contents. That we leave to the wisdom of his hierarchical superiors.
11. In the order of the Tribunal, the limiting factors on retention of seized goods had been dealt with at length. The circumstances that warrant absolute confiscation, not for depriving commercial entities of its possessions but for destruction to prevent threat to public safety, had been instructed therein along with the caveat of domain competency, which, under Customs Act, 1962, is limited to collection of duties and enforcement of prohibitions notified under section 11 therein, having the final say even in remand proceedings. The order now impugned before is sufficient cause to pause for taking note of investigative overreach. It commenced with seizure for misclassification which suffices, even without other consequences C/85127 & 86021/2022 12 arising from policy infringement, for detrimental consequence but the refusal to grant provisional release was founded upon an entirely different assumption of 'unfitness for human consumption' arrived at under the cover of darkness by procedural dereliction and which was, then, abandoned in favour of the original cause. Such 'shots in the dark' bespeaks irresponsible exercise of executive power. The lack of such allegation in the show cause notice has been taken note of by the Principal Commissioner of Customs who should, in the first instance, have sought to be convinced with, at least, passable evidence of 'toxicity' before laying his own credibility, and that of his office, on the line.
12. An assured ground that, reasonably, could result in absolute confiscation during adjudication for destruction thereafter and, thus, justifying refusal of provisional release was diluted to that of a classification dispute which, even with potential for confiscation should the allegation of policy infringement be evinced, is no justification for retention; proportion and balance - the hallmarks of fair and non-discriminatory exercise of jurisdiction - does not seem to have been in the ken of these customs authorities. Thus has the direction of the Hon'ble High Court of Bombay, and reiterated by the Tribunal, for disposal of the application for provisional release in accordance with the law been complied with. A cursory and superficial overview would find no cavil with such casuistry at its C/85127 & 86021/2022 13 finest; but abdication by quasi-judicial authorities of their obligation, as the foundation of a judicial superstructure reaching to the Hon'ble Supreme Court, does.
13. It has been contended by Learned Authorized Representative that the transference of authority to decide upon provisional release was in accord with the law as emphasized in the directions of the Hon'ble High Court of Bombay and by the Tribunal. It was further pointed out that section 110 A confers discretion upon the adjudicating authority who may choose from among options according to his estimation of the hazard to public interest and public revenue. He submitted that the consequence of misclassification would be proceedings under section 111 of Customs Act, 1962 for absolute confiscation as the mandate of redemption, in section 125 of Customs Act, 1962, is not applicable to prohibited goods. He pleaded that the discretion to invoke absolute confiscation in such circumstances should be left undisturbed.
14. According to Learned Counsel for the appellant/applicant, in the proceedings leading to the impugned order, they had sought provisional release by relying on the decision of the Hon'ble High Court of Delhi in Additional Director General (Adjudication) v. Its My Name Pvt Ltd [2021 (375) ELT 545 (Del.)] and of the Hon'ble High Court of Bombay, coincidently in a dispute over 'arecanut', in Isha Exim v. Union of India [2022 (1) TMI 818 BOMBAY HIGH C/85127 & 86021/2022 14 COURT] but which did not seem to impress both the customs authorities who denied provisional release on the back of pressing dictates of mis-classification that evaded 'tariff value restrictions' in import policy framed under the authority of Foreign Trade (Development & Regulation) Act, 1992. In re Its My Name Pvt Ltd, the Hon'ble High Court of Delhi held, in a dispute pertaining to gold, silver and articles of jewellery that '48. Clearly, provisional release may be allowed, under Section 110A of the Act, of "any goods, documents or things seized". The Court, as the interpreter of the legislation, cannot profess to greater wisdom than the legislator. Where the Legislature has not thought it appropriate to limit, in any manner, the nature of goods, documents or things which may be provisionally released, under Section 110A, in our view, it is no part of the function of a Court to read, into the said statutory provision, any artificial limitation, not to be found therein. It is only in exceptional situations, where there is an apparent legislative lacuna, which, if left unfilled, would result in manifest injustice, or frustrate the object of the legislation, that a Court can step in and fill the lacuna and, to that limited extent, perform a quasi-legislative function. Else, the Court must rest content with being an interpreter of existing legislation, and has to accept the legislation for what it is.
49. We may, to make matters clearer, contradistinguish Section 110A of the Act, as extracted hereinabove, with Section 125(1) thereof, which reads thus :
"125. Option to pay fine in lieu of confiscation. - Whenever confiscation of any goods is (1) authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited C/85127 & 86021/2022 15 under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit:" (Emphasis Supplied) Section 125(1) of the Act permits release, on payment of duty and redemption fine, of goods prohibited, as well as not prohibited. In the case of prohibited goods, Section 125(1), by using the word "may", confers discretion, on the adjudicating authority, to grant, or not grant, the person, from whose custody or possession the goods had been seized, the option to release the goods on payment of redemption fine. In the case of goods which are not prohibited, however, Section 125(1) mandates grant of permission, to the person, from whose custody or possession the goods were seized, the option to redeem the goods on payment of redemption fine. We are not concerned, in the present case, with Section 125, directly, as the issue of liability to confiscation is still at large before the adjudicatory authority; reference to the said provision has been made only to indicate that, even in the case of prohibited goods, the Act permits release thereof on payment of redemption fine.
50. We are, therefore, unable to subscribe to the submission, of the Learned ASG, relying on Om Prakash Bhatia (supra), that, by virtue of their having been imported in contravention of the Act, the gold, gold jewellery and silver, which were seized, had acquired the character of "prohibited goods" and had, consequently, become ineligible for provisional release. We do not deem it necessary to enter into the niceties of the issue of whether, applying Om Prakash Bhatia (supra), the goods in issue could be regarded as "prohibited" or not. It is not the case of the Revenue that the gold, gold jewellery or silver, forming subject matter of controversy, was prohibited for import per se, in that there was any provision, in the Foreign Trade Policy, or any other C/85127 & 86021/2022 16 statutory instrument, absolutely prohibiting import thereof. The Learned ASG seeks to treat the import of the seized gold, gold currency and silver as "prohibited", by drawing an analogy from Om Prakash Bhatia (supra). Even if, for the sake of argument, the gold, gold jewellery and silver were to be treated as "prohibited", that, by itself, would not render the ineligible for provisional release, under Section 110A of the Act, for the simple reason that Section 110A does not except its application in the case of "prohibited" goods. Rather, it indicates, unequivocally, to the contrary, by using the omnibus expression "any goods, documents or things".
51. The Learned ASG also placed pointed reliance on Circular No. 35/2020-Cus. supra, issued by the C.B.E. & C., para 2 of which absolutely proscribes provisional release of "goods prohibited under the Customs Act, 1962 or any other Act for the time being in force", "goods that do not fulfil the statutory compliance requirements/obligations in terms of any Act, Rule, Regulation or any other law for the time being in force; and "goods specified in or notified under Section 123 of the Customs Act, 1962". Mr. Ganesh relied on Agya Import Ltd. (supra), which holds that para 2 of the said Circular was merely in the nature of a "general guideline", and did not incorporate any mandate. We, having perused para 2 of Circular No. 35/2017-Cus. supra, vis-a-vis Section 110A of the Act, are not inclined to be so magnanimous. According to us, para 2 of Circular No. 35/2017-Cus. is clearly contrary to Section 110A and is, consequently, void and unenforceable at law. It is not permissible for the C.B.E. & C., by executive fiat, to incorporate limitations, on provisional release of seized goods, which find no place in the parent statutory provision, i.e. Section 110A of the Act. Executive instructions may, it is trite, supplement the statute, where such supplementation is needed, but can never supplant the statutory provision. [Lok Prahari v. State of C/85127 & 86021/2022 17 U.P., (2016) 8 SCC 389, which digests several earlier decisions]. By excluding, altogether, certain categories of goods, from the facility of provisional release, para 2 of Circular No. 35/2017-Cus. supra clearly violates Section 110A, whereunder all goods, documents and things, are eligible for provisional release. Goods, which are eligible for provisional release under Section 110A of the Act, cannot be rendered ineligible for provisional release by virtue of the Circular. (Be it noted, here, that we refer to the "eligibility" of the goods for provisional release, as distinct from the "entitlement" thereof, which has to be determined by the adjudicating authority in exercise of the discretion conferred on her, or him, by Section 110A.) Para 2 of Circular No. 35/2017-Cus., therefore, effectively seeks to supplant Section 110A, to that extent, and has, therefore, to be regarded as void and unenforceable at law.
52. An executive instruction, which runs contrary to the parent statute and is, therefore, void and unenforceable and, in view thereof, need not be challenged. It is stillborn ab initio, faultily conceived; its evisceration, by legal process, is entirely unnecessary. As such, the reliance, by the Learned ASG, on the absence of any specific challenge, by the respondent, to the Circular, fails to impress.
53. We have, therefore, in exercising our jurisdiction under Section 130 of the Act, to ensure that such exercise regulates within the aforesaid well-delineated boundaries. On merits
54. Before proceeding to deal with the actual aspect of provisional release of the seized gold, gold jewellery and silver, we deem it appropriate to deal with the residual submission, of the Learned ASG, to the effect that the Learned Tribunal ought not, in any case, to have itself exercised the C/85127 & 86021/2022 18 jurisdiction, vested in the adjudicating authority - in the present case, in the ADG, DRI - and fixed the terms of provisional release. According to her, the only course of action open to the Learned Tribunal, consequent to quashing the Order, dated 4th October, 2019, of the ADG, was to remand the matter to the ADG, to exercise the jurisdiction vested in him by Section 110A of the Act, and fix the terms of provisional release. The Learned Tribunal, according to her, could not have undertaken this exercise, and, by doing so, it effectively usurped the jurisdiction of the Learned ADG, conferred by Section 110A.
55. We are unable to agree, for various reasons.
56. Firstly, Section 129B(1) of the Act empowers the Learned Tribunal, seized with an appeal, challenging the order of the adjudicating authority, to "pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary". We are convinced that the jurisdiction, of the Learned Tribunal, to "confirm, modify or annul" the order dated 4th October, 2019, was wide enough to encompass the power to direct provisional release, and fix the terms thereof. Remand, to the authority to pass the order under appeal before the Learned Tribunal, is, statutorily, only an alternative course of action, the Learned Tribunal. We may take judicial notice, at this point, of the fact repeated demands, to the authorities below, merely clog the litigative process and lead to multiplicity of proceedings, and benefits neither the assessee nor the Revenue. Where, therefore, the Learned Tribunal is in a position to decide the appeal, it would be well advised to do so, rather than merely C/85127 & 86021/2022 19 remand the matter to the authority below. Indeed, in a case in which the Learned Tribunal is in a position to decide the appeal on merits, and pass effective unenforceable directions, remand, by it, of the proceedings, the authority below, may amount, practically, to abdication of its jurisdiction. It is obviously with a view to ensure that the demand is not resorted to, as an "easy way out", that the Legislature has, advisedly, conferred wide powers, on the Learned Tribunal, to confirm, modify or annul the order before it. On principle, therefore, we are unable to discern any apparent illegality, or want of propriety, on the part of the Learned Tribunal, in directing provisional release and fixing the terms thereof, rather than remand in the matter to the ADG, to undertake the said exercise.
57. Secondly, in the present case, any such demand, by the Learned Tribunal, to the ADG, as Mr. Ganesh has correctly submitted, would have been an exercise in futility. We are entirely in agreement with the finding, of the Learned Tribunal, regarding the unsustainability, ex facie, of the order, dated 4th October, 2019, of the Learned ADG. In fact, the order borders on perversity, and may also amount, perilously, to disobedience, of the directions issued by us in our order dated 9th October, 2019 in WP (C) 8707/2019. Para 7.3 of the order, dated 4th October, 2019, of the Learned ADG, reads thus :
"In view of abovementioned citations on restricted and prohibited goods, it appears that it would be premature to arrive at any conclusion, about provisional release of seized goods, before completion of adjudication proceedings."
(Emphasis Supplied) To us, this finding is completely inscrutable, and is, on the face of it, contradictory in terms. There can be no question of provisional release of seized goods, after completion of adjudication proceedings. Section 110A of the Act specifically empowers provisional release "pending the order of the C/85127 & 86021/2022 20 adjudicating authority". It is impossible, therefore, to conceive provisional release consequent on adjudication, or to understand how the ADG chose to opine that it would be "premature" to arrive at any conclusion about provisional release, before completion of adjudication proceedings. As, after conclusion of adjudication proceedings, the question of provisional release of the goods would be rendered infructuous and, in fact, the adjudicating authority would become functus officio in that regard, in view of the specific words used in Section 110A, the only conclusion, that can follow from the afore-extracted inexplicable finding of the ADG, is that he had made up his mind not to release the seized gold, gold jewellery and silver, provisionally, at any cost. We, therefore, find ourselves in agreement with Mr. Ganesh that any remand, of the matter, to the ADG, to fix the terms of provisional release, would have been an exercise in futility. For this reason, too, we are unable to hold that, in directing provisional release of the gold, gold jewellery and silver, and fixing the terms thereof, the Learned Tribunal exceeded the jurisdiction vested in it.'
15. More pertinently, the Hon'ble High Court of Bombay in re Isha Exim, dealing with provisional release of the same goods as impugned here, has held that '24. However, since after issuance of the impugned Seizure Memo, which is the subject matter of one of the Writ Petition, the Respondents passed an Order for provisional release and since the Petitioner could not get any interim Order in these Petitions till date though they are pending for quite some time, we do not propose to quash the Order of Seizure Memo unconditionally. We have not expressed any views in this matter at this stage whether the Advance Ruling relied upon by the Petitioner would cover the goods in-question or not in C/85127 & 86021/2022 21 view of the rival contentions raised by the Respondents in respect of the process followed relating to the said goods. It is a specific case of the Respondents that there are several other Advance Rulings in respect of the same goods taking a contrary view. Whether the Judgment of Madras High Court in case of the Petitioner itself reported in 2018 (13) G.S.T.L. 273 (Mad.), would apply to the facts of this case or not can be considered after submission of the report by a Government Laboratory or FSSAI classifying the goods in-question under an applicable entry.
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26. In our view since it is an admitted position that the said DYCC could not have carried out such testing at the first instance, we are inclined to direct the Respondents to draw samples of the goods imported by the Petitioner which are subject matter of these Petitions and to send to the Government Laboratory or FSSAI within one week from today.
27. Since the Authorities have admitted that the earlier samples drawn and tested by DYCC could not have been drawn contrary to the two public notices and the said report being the basis for issuance of Seizure Memo, we are inclined to direct the Respondents to release the goods in question on the Petitioner submitting P.D. bond.' to conclude that testing for final determination of applicability of decision of Authority for Advance Ruling should not stand in the way of provisional release against bond.
16. The applicability of a decision of constitutional courts to the facts of a particular dispute is a matter be considered by the quasi-
C/85127 & 86021/2022 22 judicial authority. However, discarding of binding precedent is contrary to judicial discipline which the Hon'ble Supreme Court took note of in Union of India v. Kamlakshi Finance Corporation Ltd [1991 (55) ELT 433 (SC)] thus '6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not "acceptable" to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no C/85127 & 86021/2022 23 ground for not following it unless its operation has been suspended by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.
7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35E confers adequate powers on the department in this regard. Under sub-section (1), where the Central Board of Excise and Customs [Direct Taxes] comes across any order passed by the Collector of Central Excise with the legality or propriety of which it is not satisfied, it can direct the 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. Under sub-section (2) the Collector of Central Excise, when he comes across any order passed by an authority subordinate to him, if not satisfied with its legality or propriety, may 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 Central Excise in his order and there is a further right of appeal to the department. The position now, therefore, is that, if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher C/85127 & 86021/2022 24 appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under S. 35E(1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail.
8. We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assessee-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them.' In the circumstances in which the cited decisions were found to be unreliable by the customs authorities, we must advise that these guidelines and guardrails, distinguishing tax administrators from brigands and highwaymen, must surely adorn the walls of every chamber in which the hallowed authority to adjudicate is exercised to immunize themselves of any inclination to delude themselves into C/85127 & 86021/2022 25 taking the law into their hands even in face of superior wisdom.
17. The ground of 'unfit for human consumption' is, as admitted by the Principal Commissioner of Customs, no longer existent as far as proceedings initiated against the appellant is concerned. As we have premised supra, the issue before us is simple enough: the extent to which the provisions of section 110A of Customs Act, 1962 are intended by law for denying an importer access to his goods pending a dispute on classification that may have import policy ramifications. That has been elaborately expounded in re Its My Name Pvt Ltd.
18. As the show cause notice issued to the appellant is yet to be adjudicated upon, it is not within our remit to examine the merit of seizure of the goods or the correctness of the classification proposed in the notice. We are concerned only with the extent to which the intendment of law has been exceeded, in the light of factual matrix, in denying provisional release. However, we cannot but note that the rival headings offer little guidance on the dangers posed by one over the other or have such difference in rates of duty as to incentivize deliberate misclassification. Classification does not, of itself, measure the gravity of intent of importer as it is the arena within which the rules of engagement between customs authorities, in any country or across time, and importers; every misclassification may not have been with deliberate intent and that is for the adjudicating authority to evaluate before allowing or denying provisional release. It is from the C/85127 & 86021/2022 26 acknowledgement of such obligation to evaluate that section 110A of Customs Act, 1962 was amended to accord co-terminus jurisdiction under section 124 of Customs Act, 1962 and section 110A of Customs Act, 1962. In the present instance, the Principal Commissioner of Customs has sought to distance himself from that obligation by pleading lack of propriety engendered from the possibility of binding over the 'real adjudication authority' who, however, did not have appear to have any scruples in 'snatching' a process from the Principal Commissioner of Customs; such noble tolerance of assertiveness does not, however, ennoble the omission to consider the issue remanded to him in accordance with intendment of section 110A of Customs Act, 1962. We have no reason to believe that another remand would prompt a less apathetic response to binding precedent.
19. Only such imported goods as are liable for confiscation under section 111 of Customs Act, 1962 may be seized under section 110 of Customs Act, 1962. Upon confiscation, goods vest with the Central Government but the inconveniences of possession coupled with the harm caused by denial to the importer engendered the option of 'redemption' on payment of fine - mandatory for all, other than prohibited, goods where, too, it was not absolute but left to the discretion of the adjudicating authority. The mechanism of redemption fine, under section 125 of Customs Act, 1962, permitting importers to obtain out-of-charge or release of the goods that have C/85127 & 86021/2022 27 been adjudicated as offending runs counter to the contention of Learned Authorised Representative that the employment of 'may' that empowers discretion to confiscate absolutely such goods as are restricted. If that was to be, the expression 'shall' would, as far as section 125 of Customs Act, 1962 is concerned, be superfluous as every enumeration in section 111 of Customs Act, 1962 relates to some restriction, of one kind or the other. That colour assigned to 'prohibited' by Learned Authorized Representative is not tenable.
20. This is a classification dispute and, being a classification dispute, denial of provisional release would be disproportionate detriment. The appellant is a regular importer and differential duty, if any, arising upon conclusion of proceedings should be recoverable without difficulty. Breach of policy prohibition, should that be determined, is also rectifiable for such is the authority to relax vested in the Director General of Foreign Trade and, hence, not warranting denial of provisional release. In the circumstances supra, we consider execution of bond to the extent of three times the differential duty to suffice for safeguard of revenue.
21. The application for implementation of the order is disposed off in view of grant of provisional release on the terms supra on grounds of attempt to evade the order of the Tribunal without recourse to appellate challenge of it and for not having followed the precedent in complying with decisions of the Hon'ble High Court of Bombay and C/85127 & 86021/2022 28 Hon'ble High Court of Delhi. A copy of this order may be transmitted urgently to the respondent herein and with direction to the Principal Commissioner of Customs, Nagpur, who is present here, to take note of for immediate implementation.
(Dictated and Pronounced in Open Court)
(AJAY SHARMA) (C J MATHEW)
Member (Judicial) Member (Technical)
*/as