Madras High Court
Vishal Exports Overseas Ltd vs Commissioner Of Customs Chennai on 4 April, 2022
Bench: R.Mahadevan, J.Sathya Narayana Prasad
C.M.A.Nos.720 & 721 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.04.2022
CORAM :
THE HON'BLE MR. JUSTICE R.MAHADEVAN
and
THE HON'BLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
C.M.A.Nos.720 & 721 of 2022
and
C.M.P.Nos.5210 & 5217 of 2022
Vishal Exports Overseas Ltd.,
301, Sheel Complex, Third Floor,
4, Mayur Colony, Nr.Mithakali Six Roads,
Helmet House, Mithakali,
Ahmedabad – 380 006.
...Appellant in both C.M.As
Versus
Commissioner of Customs Chennai,
(Seaport-Exports)
Customs House,
60, Rajaji Salai, Chennai – 600 001.
...Respondent in both C.M.As
C.M.A.No.720 of 2022:
Civil Miscellaneous Appeal filed under Section 130 of the Customs
Act, 1962 against the final order No.41334/2017 dated 26.07.2017 in
Appeal No.C/86/2006, received on 28/08/2017, on the file of CESTAT,
South Zonal Office, Chennai.
1/15
https://www.mhc.tn.gov.in/judis
C.M.A.Nos.720 & 721 of 2022
C.M.A.No.721 of 2022:
Civil Miscellaneous Appeal filed under Section 130 of the Customs
Act, 1962 against the Miscellaneous Order No.40310-40311/2018 in
C/MISC/693/2007 arising out of the final order No.41334/2017 in Appeal
No.C/86/2006, dated 26.03.2018, received on 13.04.2018, on the file of
CESTAT, South Zonal Office, Chennai.
For Appellant
in both C.M.As : Mr.K.Shakespeare
For Respondent
in both C.M.As : Mr.A.P.Srinivas,
Senior Panel Counsel
COMMON JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.) Heard both sides and perused the materials placed before this court.
2.These Civil Miscellaneous Appeals have been preferred by the appellant against the final order No.41334/2017 dated 26.07.2017 and Miscellaneous Order No.40310-40311/2018 dated 26.03.2018 passed in Appeal No.C/86/2006, by the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Chennai (hereinafter referred to as “CESTAT”), by raising the following substantial questions of law: 2/15
https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 CMA.No.720 of 2022 “1. Whether the CESTAT is correct in confirming the decision of the Adjudicating Authority holding the impugned consignment is subject to valuation under Section 14 of the Customs Act, when the impugned consignment was meant for re-export in hard currency, held at customs notified area?
2. Whether the CESTAT is correct in confirming the order of the confiscation of adjudicating authority, by relying on departmental enquiry, in violation of Principles of Natural Justice?
3. Whether the CESTAT is correct in confirming the order of Adjudicating Authority valuing the goods under Rule 8 of the Customs Valuation (Determination of price of imported Goods) Rules, 1998, when the impugned consignment was sought to be re-exported by the appellant?
4. Whether the CESTAT is correct in affirming the finding of adjudicating authority holding the appellant is guilty of “commercial fraud/money laundering scheme” in respect of the impugned consignment, without any such charge either in the show cause notice or its addendum?
5. Whether the CESTAT is correct in affirming the finding of adjudication authority on the levy of penalty when the impugned consignment is neither a restricted nor a prohibited under the EXIM policy or Customs Act?3/15
https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022
6. Whether the CESTAT Bench violated the rule of law by hearing the case when the person who had accorded sanctioned as the Commissioner of Customs (Seaport- Imports) for the Prosecution of the appellant and its Managing Director under Section 137(1) of the Customs Act, 1962, based on the impugned adjudication order dated 30.12.2005, heard the CESTAT appeal?” CMA.No.721 of 2022 “1. Whether the CESTAT is correct in holding that the show cause notice was issued by the “proper officer” when it was issued under the reference?
2. Whether the CESTAT correct in adjudicating the issue of “jurisdiction” in ROM application, when it found the Final Order in Appeal No.C/86/2006-DB, has not dealt the same?
3. Whether the CESTAT is correct in not re-hearing the Appeal denovo, despite it noticing the fact that its earlier Final Order had not dealt with the issue of jurisdiction raised by the revenue and the appellant?
4. Whether the CESTAT Bench violated the rule of law by hearing the case when the person who had accorded sanction as the Commissioner of Customs (Seaport-Imports) for the Prosecution of the appellant and its Managing 4/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 Director under Section 137(1) of the Customs Act, 1962 based on the impugned adjudication order dated 30.12.2005, heard the ROM application from the CESTAT appeal?” 3.1. The brief facts of the case are that the appellant had imported product viz., ladies nightwear and raised a letter of credit for USD 4,08,888 C&F in favour of one M/s.Prestige General Trading, Dubai, UAE. Subsequently, in order to re-export the said consignment to Russia, without physical bonding, they sought permission to the DC (Bonding) and DC(Exports) declaring the unit price at USD 5.10 C&F per piece, by letter dated 08.11.2001. On scrutiny, it was alleged that they had imported the goods of inferior quality and had re-exported the same to Russia in contravention of the Customs Act, 1962. Hence, the Commissioner of Customs (Sea) issued a Show Cause Notice dated 21.05.2002 to the appellant, calling upon them to explain as to why the goods imported vide B/E No.30887 dated 02.11.2001 valued @ U.S.S.408888 (Rs.2,01,50,303) should not be confiscated under Section 111(d) & (m) of Customs Act, 1962; Assessable value should not be fixed at Rs.15,17,408/-; and Penalty should not be levied under Section 112(a) of the Customs Act, 1962 for their 5/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 act of misdeclaration of value and country of origin. In response to the same, the appellant sent its reply vide communication dated 18.03.2004 and thereafter, filed its written submissions before the Commissioner of Customs (EP).
3.2. The respondent/Adjudicating Authority passed the order -in original No.4493/05 dated 30.12.2005, confiscating the goods in question to the value of Rs.15,31,994/- and redeeming the same on payment of Rs.3,82,000/-, besides imposing penalty of Rs.1,00,000/-. While so, one Mr.Madhu Mohan Damodhar in his official capacity as Commissioner of Customs (Seaport-Imports), vide order dated 04.09.2006, accorded sanction for prosecution of the appellant company and its Managing Director, for the offence under Sections 132 & 135(1)(c) of the Customs Act, 1962. Pursuant to the same, on 15.03.2007, the Assistant Commissioner of Customs, Prosecution Unit (Sea) Customs House, Chennai, lodged a complaint against the appellant and its Managing Director, before the learned Additional Chief Metropolitan Mageistration, EOI, Egmore, Chennai and the said complaint was taken on file in C.C.No.161 of 2007. 6/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 3.3. In the mean while, the appellant preferred an Appeal No.C/86/2006-DB before the CESTAT, as against the order dated 30.12.2005 passed by the Adjudicating Authority. The said Appeal was ultimately, dismissed by the CESTAT comprising of one Ms.Sulekha Beevi, C.S, Member (Judicial) and the said Mr.Madhu Mohan Damodhar, Member (Technical), vide final order No.41334/2017 dated 26.07.2017, which is impugned in CMA.No.720 of 2022. Subsequently, the appellant filed a miscellaneous application in C/MISC/693/2007 for rectification of mistake crept-in in the final order No.41334/2017 dated 26.07.2017, before the CESTAT. However, the said application was also dismissed by the same set of members of the CESTAT vide Miscellaneous Order No.40310- 40311/2018 dated 26.03.2018, which is impugned in CMA.No.721 of 2022.
4. Though the appellant raised very many substantial questions of law for consideration, the learned counsel for the appellant restricted the same only to the question, “whether the CESTAT violated the rule of law by hearing the case, when the person, who accorded sanction as the Commissioner of Customs (Seaport – Imports) for prosecution of the 7/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 appellant and its Managing Director under section 137(1) of the Customs Act, 1962, had heard the appeal against the adjudication order dated 30.12.2005 and the miscellaneous application and disposed of the same on 26.07.2017 and 26.03.2018 respectively, as a member of the CESTAT. In view of the same, we are of the opinion that there is no necessity to go into the other questions of law raised herein for consideration.
5. A perusal of the documents enclosed in the typed set of papers, more particularly, the orders passed by the authorities below, would reveal that the appellant was issued with show cause notice dated 21.05.2022 alleging that inferior quality goods of Indian origin were imported and the same were attempted to be re-exported to Russia by inflating the value manifold with ulterior motive of brining illegal foreign exchange to the tune of over Rs.2 crores. Thereafter, the Adjudication Authority passed the order- in-original No.4493/2005 dated 30.12.2005. Pursuant to the same, the Commissioner of Customs (Seaport – Imports), Chennai, by name, Mr.Madhu Mohan Damodhar, accorded sanction for prosecution of the appellant and its managing Director, under sections 132 and 135(1)(c) of 8/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 the Customs Act, 1962. In the mean while, the appellant preferred Appeal No.C/86/2006, which was heard by the CESTAT, consisting of two members, one of whom is Mr. Madhu Mohan Damodhar, who is the very same officer, according sanction for prosecution against the appellant and the said appeal was ultimately, dismissed on 26.07.2017. Further, the miscellaneous application filed by the appellant seeking to rectify the mistake crept-in in the said order dated 26.07.2017 passed in the appeal, was also dismissed by the CESTAT consisting of the same members, by order dated 26.03.2018. According to the appellant, the orders so passed by the CESTAT consisting of the said member Mr.Madhu Mohan Damodhar, dated 26.07.2017 and 26.03.2018 are in clear violation of rule of law, as there is a reasonable apprehension of bias or likelihood of bias, in deciding the appeal and miscellaneous application.
6. We find some bona fide in the submission of the learned counsel for the appellant. It is a fundamental principle of law that a person should not be a judge in his or her own cause. In common law, this principle has been derived from the Latin maxim - 'nemo debet esse judex in propria 9/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 sua causa'. A reasonable permutation of this principle is that no judge should adjudicate a dispute which he or she has dealt with in any capacity, other than a purely judicial one. The failure to adhere to this principle creates an apprehension of bias on part of the said judge. In this connection, it would be useful to refer to the observations of the Supreme Court in Ashok Kumar Yadav v. State of Haryana [MANU/SC/0026/1985 : AIR 1987 SC 454], which reads as under:
“One of the fundamental principles of our jurisprudence is that no man can be a judge in his own cause. The question is not whether the judge is actually biased or has in fact decided partially but whether the circumstances are such as to create a reasonable apprehension in the mind of others that there is a likelihood of bias affecting the decision. If there is a reasonable likelihood of bias 'it is in accordance with natural justice and common sense that the judge likely to be so biased should be incapacitated from sitting'. The basic principle underlying this rule is that justice must not only be done but must also appear to be done.”
7. It is well settled that every member of a tribunal that is called upon to try issues in judicial or quasi-judicial proceedings, must be able to act judicially; and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially, objectively and without any bias. In such cases, the test is not whether in fact a bias has affected the judgment; the test always is and must be, whether a litigant could reasonably apprehend that a bias attributable to a member of the 10/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 tribunal might have operated against him in the final decision of the tribunal [Refer: Manak Lal v. Dr. Prem Chand Singhvi, MANU/SC/0001/1957 :
AIR 1957 SC 425]. At this juncture, it is apt to quote the dictum of Lord Hewart, C.J., which says "Justice should not only be done but should manifestly and undoubtedly be seen to be done".
8. In A.K. Kraipak v. Union of India [MANU/SC/0427/1969 :
(1969) 2 SCC 262], the Supreme Court, while discussing the rule of bias, has observed:
“15. ... At every stage of his participation in the deliberations of the Selection Board there was a conflict between his interest and duty. Under those circumstances it is difficult to believe that he could have been impartial. The real question is not whether he was biased. It is difficult to prove the state of mind of a person. Therefore what we have to see is whether there is reasonable ground for believing that he was likely to have been biased.
...In deciding the question of bias we have to take into consideration human probabilities and ordinary course of human conduct.”
9. In S. Parthasarathi v. State of A.P. [MANU/SC/0059/1973 :
(1974) 3 SCC 459], the Supreme Court has applied the "real likelihood" test and restored the decree of the trial court which invalidated compulsory retirement of the Appellant by way of punishment. It was observed thus:11/15
https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 “16. ...We think that the reviewing authority must make a determination on the basis of the whole evidence before it, whether a reasonable man would in the circumstances infer that there is real likelihood of bias. The court must look at the impression which other people have. This follows from the principle that justice must not only be done but seen to be done. If right-minded persons would think that there is real likelihood of bias on the part of an inquiring officer, he must not conduct the enquiry; nevertheless, there must be a real likelihood of bias. Surmise or conjecture would not be enough. There must exist circumstances from which reasonable men would think it probable or likely that the inquiring officer will be prejudiced against the delinquent. The court will not inquire whether he was really prejudiced. If a reasonable man would think on the basis of the existing circumstances that he is likely to be prejudiced, that is sufficient to quash the decision....”
10. In G.Sarana (Dr.) v. University of Lucknow [MANU/SC/0067/1976 : (1976) 3 SCC 585], the Supreme Court had referred to the judgments of A.K. Kraipak v. Union of India (Supra) and S. Parthasarathi v. State of A.P. (Supra) and observed:
“11. ... the real question is not whether a member of an administrative board while exercising quasi-judicial powers or discharging quasi-judicial functions was biased, for it is difficult to prove the mind of a person. What has to be seen is whether there is a reasonable ground for believing that he was likely to have been biased. In deciding the question of bias, human probabilities and ordinary course of human conduct have to be taken into consideration.”
11. In Ranjit Thakur v. Union of India [MANU/SC/0691/1987 :
(1987) 4 SCC 611], the Supreme Court held that “as to the test of the likelihood of bias what is relevant is the reasonableness of the 12/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 apprehension in that regard in the mind of the party. The proper approach for the Judge is not to look at his own mind and ask himself, however, honestly, 'Am I biased?'; but to look at the mind of the party before him”.
12. Thus, applying the aforesaid principles to the facts and circumstances of the present case, we are of the view that Mr.Madhu Mohan Damodhar, who originally accorded sanction for prosecution against the appellant, based on the adjudication order, ought not to have later heard and decided the appeal filed by the appellant against the very same adjudication order, on the judicial side, as a member of the CESTAT and on this ground alone, the orders impugned herein, are liable to be set aside.
13. At this juncture, the learned Senior Panel Counsel appearing for the respondent fairly conceded the fact that the officer viz., Mr.Madhu Mohan Damodhar, who passed the sanction order for instituting the prosecution against the appellant company, was a member of the CESTAT, at the time of passing of the final order as well as the miscellaneous order in the appeal filed by the appellant and hence, he agreed for remanding the matter to the CESTAT for fresh consideration. 13/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022
14. In such view of the matter, we set aside the impugned final order dated 26.07.2017 and the miscellaneous order dated 26.03.2018 passed by the CESTAT and remand the matter to the CESTAT for fresh disposal in accordance with law. We clarify that we have not expressed any opinion on the merits of the case. The other questions of law raised herein are left open. We dispose of these two appeals accordingly. No costs. Consequently, connected Miscellaneous Petitions are closed.
(R.M.D., J.) (J.S.N.P.,
J.)
04.04.2022
mrr
Index : Yes/No
Speaking Judgement (or) Non-Speaking Judgement To
1.The Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Chennai
2.The Commissioner of Customs, (Seaport-Exports) Customs House, 60, Rajaji Salai, Chennai – 600 001.
14/15 https://www.mhc.tn.gov.in/judis C.M.A.Nos.720 & 721 of 2022 R.MAHADEVAN, J.
and J.SATHYA NARAYANA PRASAD, J.
mrr C.M.A.Nos.720 & 721 of 2022 04.04.2022 15/15 https://www.mhc.tn.gov.in/judis