Bombay High Court
Sainath Aviotechnics Pvt Ltd vs Union Of India on 9 February, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:2927 909 WPL34193-23.DOC
Mohite
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Digitally
ORDINARY ORIGINAL CIVIL JURISDICTION
signed by
TRUSHA
TRUSHA TUSHAR
TUSHAR MOHITE
MOHITE Date:
2024.02.23
12:49:17
WRIT PETITION (L) NO.34193 OF 2023
+0530
Sainath Aviotechnics Pvt.Ltd.
204, Centre Square, Nr.Fidai Arcade,
Andheri West, Mumbai - 400058 ... Petitioner
Versus
1. Union of India
Through Joint Secretary,
Ministry of law, Justice and
Company Affairs,
Aayakar Bhavan, New Marine Lines,
Churchgate, Mumbai - 400 020
2. Commissioner of Customs
Group VB, NS-V, JNCH
Mumbai Zone-II, JNCH
Nhava Sheva, Tal-Uran,
Dist-Raigad, Maharashtra-400707
3. Additional Commissioner of Customs
Appraising Group-VB,
JNCH, Nhava Sheva-V
Nhava Sheva, Tal-Uran,
Dist-Raigad, Maharashtra-400707
4. The Assistant Commissioner of Customs,
CRAC, JNCH
Nhava Sheva, Tal-Uran,
Dist-Raigad, Maharashtra-400707
...Respondents
Mr.H.G.Dharmadhikari a/w Mr.D.A.Bhalerao for the Petitioner
Mr.S.R.Ketkar for the Respondents
_______________________
CORAM: G. S. KULKARNI &
FIRDOSH P. POONIWALLA, JJ.
DATED: 9th February, 2024
_______________________
ORAL JUDGMENT: (PER FIRDOSH P. POONIWALLA, J.)
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1. Rule. Rule made returnable forthwith.
2. Heard finally by consent of the parties.
3. The present Petition has been filed under Article 226 of the Constitution of India seeking the following final reliefs:
"a) This Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, Order or direction under Article 226 of the Constitution of India, and thereby direct to the Respondents Authorities to release the subject machinery to the Petitioner.
b) This Hon'ble Court be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, Order or direction under Article 226 of the Constitution of India, and thereby direct to waive detention and demurrage charges."
4. The Petitioner is a company engaged in providing Aviation and Expressway Services. The Petitioner is also engaged in supply of goods such as Runway Friction Testing Machine. The Petitioner's sister concern, M/s.Sai Aviotechniques, has been awarded Work Orders by Airport Authority of India, Mumbai International Airport Limited and Kampegouda International Airport, Bengaluru for provision of service of Friction Testing of Runways of the aforesaid Airports. The Friction Testing Machine is essential to test the Friction of the Runway in order to avoid accidents to airplanes on account of the slippery runway specifically during the monsoon season.
5. The Petitioner placed an Order for supply of one used Friction Testing Machine Fitted in CAR SAAB 9-5 to M/s.Scandinavian Airfield Systems, Sweden, to cater to the need of its sister concern. Accordingly, the said supplier consigned the machinery under cover of Invoice No.332 dated 17 th December 2021 and Sea Waybill dated 23 rd January 2022 for FOB value of 20,300.00 Euros.
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6. The Petitioner filed Bill of Entry No.7766280 dated 7 th March 2022 for clearance of the said machinery and declared classification of the said machinery under Ch.90318000 (Measuring or Checking Instruments, Appliances and Machines, Not Specified or included elsewhere in this Chapter; Profile Projectors - Other instruments, appliances and machines).
7. The Petitioner declared the transaction value as assessable value at Rs.19,69,247/- in accordance with the invoice raised by supplier and thereby computed the custom duty at the rate of 7.5%, amounting to Rs.5,46,171/-. Further, the Petitioner also filed the required documents along with the Bill of Entry in support of the classification and valuation of the imported machinery.
8. It is the case of the Petitioner that, despite submission of all necessary information, the consignment was not cleared for home consumption and ordered for First Check Examination (FC&E), and, accordingly, the same was examined on 16th March 2022, in the presence of a Government Approved Chartered Engineer, who issued the certificate under Form B. Despite the said examination certificate, the appraising group verbally observed as under:
"a) That the goods are classifiable under Ch. 8705 as Special Purpose Vehicle.
b) And subject to import conditions of Ch. 87
c) As per the Vehicle Identification Number details it is a passenger vehicle and modified subsequently to friction testing vehicle.
d) Re-classifiable as Friction Testing Vehicle."
9. For the aforesaid reasons, the Appraising Group formed an opinion that the friction testing vehicle imported by the Petitioner is prohibited in terms of Section 2(33) of the Customs Act, 1962, and thereby liable for confiscation in terms of Section 111(d) of the Customs Act, 1962.
10. Since the Petitioner was in dire need of machinery to execute the contract awarded to its sister concern by the various Airport Authorities, by its Page 3 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 ::: 909 WPL34193-23.DOC letter dated 1st April 2022, the Petitioner requested the Department for clearance of the goods without disputing the issue of valuation as contemplated by the Appraising Group. The Petitioner advanced the submission that the impugned capital goods were freely importable and exempted from the policy conditions as specified under Ch.87.
11. Considering the said request of the Petitioner, the Original Adjudicating Authority scheduled the matter for hearing on 5 th May 2022, which was attended by the Petitioner through its Authorised Representative. During the course of hearing, the Petitioner submitted that the imported machinery merits classification under Chapter 90318000 and not under Chapter 8705 and, thereby, the import policy conditions as well as the provisions of the Central Motor Vehicle Act and Rules made thereunder were not applicable to the imported machinery. The Petitioner requested the Original Adjudicating Authority to classify the goods under Chapter 90 as Runway Friction Measuring Machine and thereby allow clearance of goods for home consumption. Despite the said submissions of the Petitioner, the Original Adjudicating Authority, by an Order in Original dated 20 th June 2022, classified the imported machinery under Chapter 87059000. The Original Adjudicating Authority held that the imported machinery was a motor vehicle, and since old motor vehicles beyond the period of three years were prohibited, did not allow clearance, and ordered that the said machinery be re-exported after paying a redemption fine under Section 125 of the Customs Act 1962, and imposed a penalty of Rs.2,00,000/-.
12. Being aggrieved by the said Order-in-Original dated 22nd June 2022, the Petitioner preferred an Appeal before the Commissioner of Customs (Appeals) Mumbai - II on payment of pre-deposit of Rs.15,000/- under Section 129E of the Customs Act, 1962.
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13. The Commissioner of Customs (Appeals) granted personal hearing to the Petitioner on 13th February 2023. Thereafter, by an Order dated 23rd March 2023, the Commissioner of Customs (Appeals) was pleased to allow the Appeal of the Petitioner to the extent of classification by holding that the imported machinery was correctly classifiable under Chapter 90 and not under Chapter 87 as contemplated by the Department. The operative portion of the said Order reads as under:
"10. From the foregoing facts, discussions and findings, I pass the following Order:
i. Uphold the value of the impugned goods as re-determined by the Original Authority to Rs. 23,76,568/-
ii. Set-aside the re-classification under CTH 87059000 as held by the Original Authority and uphold the classification as 90318000 iii. Set-aside the confiscation and Order to release the goods for home consumption iv Set-aside redemption fine and penalty"
14. The Department has filed an Appeal against the said Order dated 23 rd March 2023, being Custom Appeal No.86471 of 2023. It is the case of the Petitioner that the application for condonation of delay filed by the Department in the said Appeal has not yet been numbered / registered nor any notice has been issued to the Petitioner informing it of the filing of the Appeal.
15. Despite there being no stay of the said Order dated 23 rd March 2023 passed by the Commissioner of Customs (Appeals), the Respondents did not release the said machinery for home consumption. In the circumstances, the Petitioner, by its Advocate's Notice dated 6 th October 2023 addressed to the Respondents, sought compliance of the said Order dated 23 rd March 2023 and release of the imported machinery for home consumption.
16. Despite addressing the said legal notice dated 23 rd October 2023, the Petitioner did not receive any response from the Respondents. In these Page 5 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 ::: 909 WPL34193-23.DOC circumstances, the Petitioner has filed the present Petition seeking the reliefs mentioned above.
17. It is the case of the Petitioner that, merely because the Respondents have filed an Appeal against the said Order dated 23 rd March 2023, the same cannot furnish any ground to the Department for not following the said Order, unless its operation has been stayed. This is not the case in the present matter. In support of this submission, the Petitioner has relied upon the judgment of the Supreme Court in Union of India vs. Kamlakshi Finance Cororation Ltd. 1 and the judgments of this Court in Ganesh Benzoplast Ltd. vs. Union of India 2 and Himgiri Buildcon & Industries Ltd. vs. Union of India.3
18. In our view, it is settled law that the principle of judicial discipline requires that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact, that the order of an appellate authority is the subject matter a further appeal, can furnish no ground for the department for not following it, unless its operation has been stayed by the higher appellate authority or by a competent Court. If this healthy rule is not followed, the result will only be undue harassment to the assessee and chaos in the administration of tax laws.
19. The aforesaid well settled position is very clear from the decision of the Supreme Court in Kamlakshi Finance Corporation Ltd. (Supra). Paragraph 6 of the said judgment is relevant and reads as under:
"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 malafides but with the 1 1991(55) E.L.T. 433 (S.C.) 2 2020(374) E.L.T. 552 (Bom) 3 2021(376) E.L.T.257 (Bom.) Page 6 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 ::: 909 WPL34193-23.DOC fact that the officers, in reaching in 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 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. "
20. The said judgement of the Supreme Court in Kamlakshi Finance Corporation Ltd. (Supra) has been followed by a Division Bench of this Court in the case of Ganesh Benzoplast Ltd. (Supra). Paragraphs 32 and 33 of the said Judgment are relevant and read as under:
32. Coming to the second issue, it is also evident that the original authority has not passed the fresh order-in-original on remand as directed by the Commissioner (Appeals), not to speak of within the stipulated period of six weeks but even till date though fresh testing of goods has been carried out which incidentally has turned out in favour of the petitioner. What is striking to note is that the original authority who is a subordinate authority in comparison to the appellate authority i.e., Commissioner (Appeals) has chosen not to comply with the direction of the higher appellate authority exercising quasi-judicial powers. This is disturbing to say the least as it strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute.
33. In Union of India Vs. Kamlakshi Finance Corporation Limited, 1992 (38) ECR 486 = 1991 (55) E.L.T. 433 (S.C.), Supreme Court held in clear terms that the mere fact that the order of the appellate authority is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. In that case arising out of the Central Excise Tariff Act, 1985 the adjudicating authority did not comply with the order passed by the appellate authority. When this was questioned before the High Court, severe strictures were passed by the High Court against Page 7 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 ::: 909 WPL34193-23.DOC two Assistant Collectors who had dealt with the matter. Upholding the strictures passed by the High Court, Supreme Court held that utmost regard should be paid by the adjudicating authorities as well as the appellate authorities to the requirements of judicial discipline and the need for giving effect to orders of the higher appellate authorities which are binding on them. Principles of judicial discipline require that orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. If this healthy rule is not followed, the result will be undue harassment to the assessees and chaos in administration of tax laws."
21. Further, the same legal position has been reiterated by another Division Bench of this Court in the case of Himgiri Buildcon & Industries Ltd. (Supra). Paragraphs 15 to 18 of the said judgment are relevant and read as under:
"15. As seen from the above, the appellate Order is dated 18.09.2020 and we are now in February, 2021. More than four months have gone by without compliance.
16. In Union of India Vs. Kamlakshi Finance Corporation Limited, 1992 Supp (1) SCC 443, Supreme Court held and reiterated that 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, which in itself is an objectionable phrase, and is the subject matter of an appeal can be no ground for not following the appellate Order unless its operation had been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to the assessee and chaos in administration of the tax laws.
17. Following the above decision, Supreme Court again in Collector of Customs Vs. Krishna Sales (P) Ltd., 1994 Supp (3) SCC 73, once again reiterated the proposition that mere filing of an appeal does not operate as a stay or suspension of the Order appealed against. It was pointed out that if the authorities were of the opinion that the goods ought not to be released pending the appeal, the straight-forward course for them is to obtain an Order of stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an Order they cannot refuse to implement the Order under appeal.
18. In a somewhat identical matter, a Division Bench of this Court in Ganesh Benzoplast Limited Vs. Union of India, 2020 (374) ELT 552 referred to the decision of the Supreme Court in Kamlakshi Finance Corporation Limited (supra) and held that non-compliance to Orders of the appellate authority by the subordinate original authority is disturbing to say the least as it strikes at the very root of administrative discipline 14&15_WPST97994&97997_20.doc and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute. Principles of judicial discipline require that the Orders of the higher appellate authorities should be Page 8 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 ::: 909 WPL34193-23.DOC followed unreservedly by the subordinate authorities. In the facts and circumstances of that case, Respondentss were directed to release the goods forthwith and without any delay."
22. Applying this settled legal position to the facts of the present case, by the said Order dated 23rd March 2023, the Commissioner of Customs (Appeals) has set aside the confiscation of the imported machinery and ordered release of the same for home consumption. Though an Appeal has been filed against the said Order dated 23rd March 2023, being Customs Appeal No.86471 of 2023, neither the appellate authority nor any other competent Court has stayed the operation of the said Order dated 23rd March 2023.
23. In our view, in the light of the same, and in the light of the aforesaid settled position in law, the Respondents will have to be directed to release the Friction Testing Machine without prejudice to their rights and contentions in the Appeal filed by them.
24. For the aforesaid reasons, we hereby pass the following Orders:
a. The Respondents are directed to release the Friction Testing Machine for home consumption within a period of one week from the date of intimation of this Order, subject to the Petitioner furnishing a bond for payment of differential duty, in the event, the department succeeds in its Appeal filed before the Tribunal.
b. In regard to the demmurage and detention charges, the Respondents are directed to issue a waiver certificate to the Petitioner along with the release of the said goods.
c. The release of the machinery will be without prejudice to the rights and contentions of the Respondents in Custom Appeals No.86471 of 2023 filed by them.
d. Rule is made absolute in the aforesaid terms. Page 9 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 ::: 909 WPL34193-23.DOC e. Petition is disposed of. f. In the facts and circumstances of the case, there will be no Order as to costs. (FIRDOSH P. POONIWALLA, J.) (G. S. KULKARNI , J.) Page 10 of 10 9th February, 2024 ::: Uploaded on - 23/02/2024 ::: Downloaded on - 26/02/2024 01:54:37 :::