Bombay High Court
Tejus Rohitkumar Kapadia vs Union Of India & Ors on 7 September, 2011
Author: D.Y.Chandrachud
Bench: D.Y.Chandrachud, A. A. Sayed
VBC 1 cuapp37.11-7.9
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O. O. C. J.
CUSTOMS APPEAL NO.37 OF 2011
WITH
NOTICE OF MOTION NO.2600 OF 2011
Tejus Proprietary Concern of
Tejus Rohitkumar Kapadia. ...Appellant.
Vs.
Union of India & Ors. ...Respondents.
....
Mr.Sujay N.Kantawala with Mr.Brijesh Pathak for the Appellant.
Mr.Pradeep S.Jetly for the Respondents.
.....
CORAM : DR.D.Y.CHANDRACHUD AND
A. A. SAYED, JJ.
September 7, 2011.
ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :
This appeal is directed against two orders passed by the CESTAT. By the first of the orders dated 9 May 2011, the Tribunal on an application for waiver of pre-deposit directed the Appellant to deposit an amount of Rs.30 lakhs. The Appellant had, before the Tribunal, relied upon a judgment of the Supreme Court in Commissioner of Customs vs. Sayed Ali,1 to contend that the Additional Director General, DRI was not a proper Officer within the meaning of Section 2(34) of the Customs Act, 1962 and had no 1 2011 (265) ELT 17 (SC) ::: Downloaded on - 09/06/2013 17:42:32 ::: VBC 2 cuapp37.11-7.9 jurisdiction to issue a notice to show cause. The grievance of the Appellant was that though the judgment of the Supreme Court was cited before the Tribunal and was referred to in paragraph 7 of the decision, the Tribunal had not considered the principle of law laid down by the Supreme Court though it ought to have followed a binding precedent of the Supreme Court. Accordingly, the Appellant moved an application for modification of the order of pre-deposit. Besides adverting to the aforesaid grievance, the Appellant also made a reference to the fact that a Coordinate Bench of the Tribunal had in the case of Nylex Traders vs. Commissioner of Customs (Preventive), Mumbai,2 followed the judgment of the Supreme Court in Sayed Ali in holding that the Commissioner of Customs (Preventive) did not have jurisdiction to issue a notice to show case. Besides, it was also submitted before the Tribunal that the Supreme Court had in a subsequent decision in Chandana Impex Pvt. Ltd. vs. Commissioner of Customs, New Delhi,3 followed the decision in Sayed Ali and had remanded the proceedings in that case, before the Tribunal for fresh consideration. Despite these decisions, which were brought to the 2 Application No.C/MA(Ors)/415 &416/2010 decided on 7 June 2011 3 2011 (269) E.L.T. 433 (SC) ::: Downloaded on - 09/06/2013 17:42:32 ::: VBC 3 cuapp37.11-7.9 notice of the Tribunal, the Tribunal by its order dated 12 August 2011, dismissed the application for modification of the earlier order on the ground that a decision of the Karnataka High Court in Sri Meenakshi Apparels Pvt Ltd. vs. Commissioner of Customs, Mumbai,4 was relied upon by the Department.
2. In appeal before this Court, the submission which is urged is that the Tribunal has not followed the binding decisions of the Supreme Court and of its own Coordinate Bench though they were specifically adverted to by the Appellant. The appeal is admitted on the following substantial question of law:
Whether the Tribunal has erred in deciding the application for waiver of pre-deposit without considering the judgments of the Supreme Court in Sayed Ali (supra) and Chandana Impex (supra) and a decision of the Coordinate Bench in the case of Nylex Traders (supra).
3. The appeal is taken up for hearing and final disposal, by consent.
4 2010 (258) ELT 481 (Kar.)
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VBC 4 cuapp37.11-7.9
4. As the narration in the earlier part of the judgment would show, when the application for waiver of pre-deposit came up before the CESTAT, the Appellant specifically relied upon the judgment of the Supreme Court in Commissioner of Customs vs. Sayed Ali (supra) in support of the submission that the notice to show cause had not, in the present case, been issued by a proper officer within the meaning of Section 2(34) of the Customs Act, 1962. Though the Tribunal adverted to that decision in paragraph 7 of its order dated 9 May 2011, it observed that in this case, the notice to show cause was issued on 21 February 2008 and the order of adjudication was passed on 14 September 2009 (which was before the decision of the Supreme Court). The Tribunal also observed that the issue of jurisdiction was not raised before the adjudicating authority. On this ground, the Tribunal has not referred to the principle of law enunciated in the decision in Sayed Ali's case. After the Tribunal passed its order on 9 May 2011, calling upon the Appellant to deposit an amount of Rs.30 lakhs, in addition to the amount of Rs.20 lakhs already paid (towards the total duty of Rs. 89.36 lakhs), the Appellant moved an application for modification before the Tribunal. Such an application was ::: Downloaded on - 09/06/2013 17:42:32 ::: VBC 5 cuapp37.11-7.9 maintainable in view of a judgment of the Division Bench of this Court in Maina Khemka vs. Union of India.5 In that case the Division Bench, presided over by Hon'ble Mr.Justice R.M. Lodha (as His Lordship then was), considered the earlier judgment of this Court in Baron International Ltd. vs. Union of India,6 and held that though in Baron this Court has held that the Tribunal cannot exercise the review jurisdiction, a party can always seek a modification of the order "within the permissible limits and parameters laid down in law". In the application for modification, the Appellant adverted to the fact that though a vital legal submission based on the judgment of the Supreme Court in Sayed Ali's case had been urged before the Tribunal, the Tribunal had not had due regard to the decision of the Supreme Court in Sayed Ali's case. The Appellant also adverted the fact that in a subsequent decision in Chandana Impex (supra), the Supreme Court had remanded the proceedings back to the Tribunal considering the law laid down in Sayed Ali. The Appellant also relied upon a decision of a Coordinate Bench of the Tribunal in the case of Nylex Traders. Despite this, the Tribunal has dismissed the 5 2004 (170) ELT 3 (Bom.) 6 2004 (163) ELT 150 ::: Downloaded on - 09/06/2013 17:42:32 ::: VBC 6 cuapp37.11-7.9 application for modification merely observing that the Department's representative had relied upon a judgment of the Karnataka High Court in Meenakshi Apparels (supra). Whether that decision had any applicability to this case, or whether it was the judgment of the Supreme Court in Sayed Ali's case that applies has not been considered.
5. We find that the approach of the Tribunal is thoroughly misconceived. The Tribunal is duty bound to follow binding precedent. The Tribunal was under a bounden obligation to consider the position in law as expounded by the Supreme Court in Sayed Ali's case and to determine as to whether the principle was attracted to the facts of the present case. When it failed to do so in its order dated 9 May 2011, the Appellant justifiably drew the attention of the Tribunal to this aspect and sought a modification of the order. In addition, the Appellant relied upon the decision of the Supreme Court in Chandana Impex (supra) and to another decision of a coordinate Bench of the Tribunal itself. The CESTAT as a judicial body, must realize the importance of the doctrine of precedent as in our legal system. Deference to judgments of the ::: Downloaded on - 09/06/2013 17:42:32 ::: VBC 7 cuapp37.11-7.9 Supreme Court is a matter of constitutional principle. Equally, unless coordinate Benches of the Tribunal have due deference and regard for decisions rendered by the Tribunal, the elements of certainty and consistency in the judicial process which lie at the heart of judicial functioning would be seriously disrupted. We are constrained to make this observation because it is necessary for Court and Tribunals to realize the importance of judicial consistency and certainty in decision making. Judges individually in the discharge of their functions are independent adjudicators.
But both individually and as constituents of institutions of which we are a part, judges are bound by a sense of judicial discipline.
That discipline is rigorous but nothing less than a strict adherence to judicial discipline can be acceptable in the work that judges discharge. Benches of a Tribunal must conform to the discipline that the doctrine of precedent exacts. The respect which independent adjudicators in our country command has been assiduously built up over small incremental steps. Consistency and certainty is an important element in the judicial process. They are foundations of the rule of law. These are not just elements of judicial tradition but form part of constitutional principle. They are ::: Downloaded on - 09/06/2013 17:42:33 ::: VBC 8 cuapp37.11-7.9 as binding as a binding precedent. The Tribunal in the present case, has manifestly failed to do so. In the circumstances, while we are inclined to set aside the impugned order of the Tribunal, we do so with the observation that the approach which has been adopted by the Tribunal in the present case, was not consistent with the principles of judicial functioning. We accordingly allow the appeal and set aside the impugned orders of the Tribunal dated 9 May 2011 and 12 August 2011. We restore the application for waiver of pre-deposit to the file of the Tribunal for fresh consideration on merits. In the circumstances of the case, there shall be no order as to costs. In view of the order of remand, we answer the question of law in the affirmative with the clarification that all questions on merits are kept open to be decided by the Tribunal, including whether the notice to show cause was issued by a proper officer.
6. In view of the disposal of the appeal, the Notice of Motion does not survive and is accordingly disposed of.
( Dr.D.Y.Chandrachud, J.) ( A. A. Sayed, J.) ::: Downloaded on - 09/06/2013 17:42:33 :::