Madras High Court
A.K. Impex vs Union Of India on 13 July, 1990
Equivalent citations: 1991(34)ECC157, 1991ECR77(MADRAS), 1991(53)ELT203(MAD)
ORDER
1. These writ petitions were filed under Article 226 of the Constitution of India for issuance of certiorarified mandamus or any other appropriate writ calling for the records relating to the common order passed by the fifth respondent, namely, the Customs, Excise and Gold (Control) Appellate Tribunal, Madras. dt. 2-12-1988 in Order. No. 606/1988 quashing the same and directing the second respondent, namely, the Collector of Customs, Madras, to refund the redemption fine and the personal penalty already paid by them.
2. The brief facts of the case are : The petitioners imported inshell almond seeds and sought clearance under R.E.P. Licence issued against Export Products G.2(i)(a) of the Appendix 17 of Import Trade Control Policy in force at the relevant time. The claimed that the goods as 'Seeds' falling under the category of item indicated against S. No. (d) of the said export product in the policy. According to them, the item allowed for import under the said licence are seeds, pulps, mother plant and germ plasm. Samples were drawn from the goods and sent to the State Horticulture Officer for test. The Officer concerned certified that the goods were seeds fit for germination and viable for sowing. As almonds are dry fruits as known in the trade and are also consumer item or agricultural origin falling under S.No. 121 of Appendix 2(b) of ITC Policy, the Customs House issued a query memo. The Dy. Collector of Customs, Madras, heard the appeals and held that the goods imported cannot be held to be covered by the REP licence produced by the petitioner and treating the imports as unauthorised, ordered the confiscation of the consignment under Section 111 (d) of the Customs Act, 1962 levying a redemption fine amounting to 80% of the c.i.f value in each case. However, he did not impose any personal penalty on the petitioners. The Collector of Customs, Madras, meanwhile, exercising his powers of review under Section 129D(2) of the Customs Act called for the records of the proceedings before the Dy. Collector and he found that the order of the Deputy Collector needed review since, while holding that the imports are not covered by valid licence, the Deputy Collector has not taken into account the high margin of profit commanded by almonds in the market while levying the redemption fine and that he had based the quantum of redemption fine on certain cash bills of retail sales relating to different kinds of almonds. Further, the order of the Deputy Collector was not proper as he has refrained from imposing any personal penalty although there were sufficient grounds to hold that there had been a deliberate attempt as mis-declaration by the petitioners. The Collector of Customs on the basis of the examination of the records, gave direction under Section 129D(4) of the Customs Act to the Asst. Collector of Customs to file an appeal before the Collector (Appeals) for determination about the legality and propriety of the order passed by the Dy. Collector. Subsequently the Customs House also furnished to the petitioners on 18-11-1987 the gist of the adjudication order dt. 9-11-1987 passed by the Deputy Collector and the petitioners were also informed in the said communication that the Collector exercising his powers under Section 129D(2) directed the filing of an appeal against the said order. The petitioners also filed appeals on their own against the order of the Deputy Collector, after receipt of copies thereof challenging the order of confiscation of the goods. The petitioners were also given notice of the department's appeal. Thereupon, the Collector (Appeals) on a consideration of the appeals filed by the petitioner as well as by the department, rejected the appeals filed by the petitioners and held that a higher fine in lieu of confiscation was leviable and fixed it at 200% of the c.i.f. value and he also give a finding that penalty was imposable on the facts and circumstances of the case and imposed a penalty of Rs. 10,000/- on each of the petitioners under Section 112(a) of the Customs Act, 1962. It is against the said order, they preferred appeals before the fifth respondent. The fifth respondent for the reasons stated in his order declined to interfere with the order of the Collector of Customs (Appeals) and consequently rejected the same. These writ petitions were filed challenging the said common order passed by the fifth respondent in the above appeals. Since all the writ petitions arise out of the common order and by consent of both parties, they were heard together and disposed of by a common order.
3. Learned senior counsel appearing for the petitioners, Mr. Habibulla Pasha, mainly submitted that the Tribunal erred in proceeding on the assumption that it is only against the export of dry fruits that almonds in shell could be imported without any basis. Further, the Tribunal failed to decide whether the goods imported would fall under the category of 'Seeds' and without applying its mind, presumed that almonds in shell are dry fruits and they could be allowed to be imported only against the import of dry fruits. He would submit that the Tribunal failed to note that the description in Appendix 2B is generia in nature. The description of 'seeds' under Appendix 17 is specific. Once the goods are specific in nature, then they will not come within the mischief of Serial No. 121 of Appendix 2B. The items coming under Serial No. 121 of Appendix 2B can also be imported if they are allowed under Appendix 17. Further, clause 5 of Appendix 17 clearly mentions that if the goods are specifically mentioned in column 4 of Appendix 17, then the goods could be imported even though they may find a place under Appendix 2-B. This aspect has been completely ignored by the Tribunal and the Tribunal is throughly wrong in stating that the mere capability of germination does not take the goods imported out of the scope of Serial No. 121 of Appendix 2B. He would submit that the imported goods are only almond seeds which are capable of germination and have been certified so by the state Horticulturist to whom the department has referred for opinion. According to the learned counsel, the almonds seeds are obtained after removing the fruit part form the shell and after pulling down the shell and that it cannot be said that the two parts produced by the tree, namely, almond shell and almond fruit can be said to be dry fruit. The learned counsel would further submit even if under the common parlance almond seeds are known as dry fruits, they cannot prevent the importers from importing almonds in shell if they are in fact seeds. There is no scope for reading words into the term 'Seeds' mentioned against Item G.2(1)(a) and that it does not say that the 'Seeds' exclude dry fruits. When the import policy specifically provides for the import of seeds, the ..... in holding that the imports are not allowed. The reasoning given by the Tribunal for not accepting the import of the goods in question as seeds, namely there is no commercial cultivation of almonds in large scale in India, is not supported by any evidence. Further, it is quite irrelevant. The Tribunal's contention that almonds become consumer products merely because of large quantity of import is without any basis as there is no law which supports this view.
The learned counsel vehemently argued that the Customs Department itself having sought for the opinion of the Horticulture Officer which is to the effect that the goods imported are 'seeds' is estopped from turning around and urging that the opinion should be excluded. The Tribunal has erred in holding that the impugned goods were imported on invalid licence, as Para 225 of the Import Control Policy specifically states that REP Licence will not have any condition. The Tribunal is also wrong in going by the description given in the "Economic Times" as one cannot go beyond the term and the terminology used in the Import Control Policy. The learned counsel would state that items like Poppy seeds, Lavang, Dalchini, though find a place in the same paper "Economic Times", are allowed to be imported under the Import Control Policy, Poppy Seeds had been allowed to be imported under the said Category. Hence, the learned counsel would submit that the finding of the Tribunal that the goods imported are only dry fruits and they are not seeds is misconceived and untenable. The learned senior counsel also submitted that under Section 129D(2) of the Customs Act, 1962, the Collector of Customs has to examine the decision or order passed under the Act for the purpose of satisfying himself as to the legality or propriety of such order. Further, the order cannot be said to have become final, unless it is communicated as per the provisions of Section 153 of the Customs Act. In the instant case the order itself was despatched on 11-12-1987. When such is the case, the question of the Collector of Customs, Madras, applying his mind to the order and question of filing appeal on 18-11-1987 do not arise. According to the learned counsel, the impugned order would be effective only if it is communicated. There was no order which could have been examined by the Collector of Customs under Section 129D(2) till 11-12-1987 and as such the appeal filed by the department on 18-11-1987 is not maintainable.
The Tribunal has not properly considered this aspect. Further, under Rule 4 of the Customs (Appeals) Rules, 1982 the application should have been filed in duplicate and it shall be accompanied by two copies of the decision or order passed by the adjudicating authority, one of which at least should be certified copy and a copy of the order passed by the Collector of Customs directing authority to apply to the Collector of Customs (Appeals). Even Form C.A.2 specifies that the order must be enclosed in duplicate. When the appeals were filed by the department before the Tribunal, it was found that no order of the Deputy Collector was enclosed along with the appeals. Since the statutory requirements and the mandatory provisions were not complied with, the appeals are not maintainable. According to the learned counsel, the Tribunal has fallen into a grave error of law by holding that the rule provides only procedural formality and the non-compliance is not fatal. Rule 4 is mandatory and its non-compliance cannot be condoned. According to the learned counsel, the appellate authority has no jurisdiction to entertain any appeal which did not comply with Rule 4 of the Customs (Appeals) Rule as it is not an empty formality but it affect the right of the parties. It is further contended by the learned counsel that the order passed by the Collector of Customs (Appeals) under Section 129D(2) is not in conformity with the provisions and it is one passed with jurisdiction. He would further submit that the Collector of Customs has failed to examine the order to find out whether the order suffers from any illegality or in property. Further he has not examined the decision or order and directed the adjudicating authority to apply to the Collector of Customs (Appeals). The Assistant Collector has no jurisdiction to file an appeal and incorporate various points which were not mentioned by the Collector. According to the learned counsel, under Section 129D(2) a direction is to be given to the adjudicating authority. But in this case admittedly no such direction is given to the adjudicating authority to file appeal. Hence on that ground also, the appeals filed were totally without jurisdiction and against the statutory provisions. The learned counsel would submit that the grounds of appeal has to be prepared as per the provisions under Section 129D(2) of the Customs Act. In the instant case, the Grounds of Appeal which has already been prepared by the Assistant Collector, shows that the Collector of Customs has not applied his mind under Section 129D(2). The Tribunal has failed to consider the various case-laws relied on by the petitioner and has failed to exercise the jurisdiction vested in it properly. He would submit that the Tribunal erred in observing that because the petitioners participated in appeal proceedings after having received the order of adjudication, they cannot claim to have suffered any prejudice merely because the order in adjudication was not made available to them as and when the same was reviewed by the Collector. According to the learned counsel, the Tribunal.... in stating that even without reference to the Chief Controller of Imports and Exports and (Clarification), the Collector of Customs (Appeals) in his order has considered the fact that almond was a consumer item covered by Item 2 Part B of I.T.C. Policy. According to the learned counsel, the functions of the Collector under Section 129-D(2) are quasi-judicial in nature and as such, the Collector had to apply his mind and give reason as to how the order passed by the Deputy Collector of Customs is improper or illegal. Lastly, the learned counsel would submit that the order of the Tribunal is without jurisdiction, violative of the principles of natural justice and contrary to the provisions of the Customs Act and as such the writ petitions are to be allowed.
4. The main questions decided in these writ petitions are two fold(1) whether the goods imported are 'Seeds' falling under Serial No. G.2(i)(a) or it is a consumer item of agricultural origin falling under Serial No. 121 of Appendix 2, Part B ? (2) Whether the appeals filed by the Collector of Customs (Appeals) against order or the Deputy Collector under Section 129D(2) were maintainable.
5. As regards the first question whether the goods imported are seeds or it is a consumer item of agricultural origin, it is relevant to quote the relevant appendices wherein the items were classified. Appendix 17 sets out the policy under which importers holding an R.E.P. Licence could import the goods. As per clause 5 of General conditions, it is provided as follows :-
"No import of an item appearing in Appendix 2 shall be allowed against REP licences, except if an item appearing in Appendix 2, Part B is specifically described for import either under Col. 4 or under Col. 5 or against an "Advance/Imprest Licence issued under this policy."
Column 1 of Appendix 17 gives the product number. Column 2 sets out the export product. Column 3 sets out the import replenishment percentage. Column 4 sets out the materials permitted for import. Column 5 sets out 'remarks'. It is needless to state that if the goods are allowed to be specifically imported under Appendix 17, it does not matter if they fall under Appendix 2, Part B. In these case, under Column 4, against the import of products, under G. 2(i)(a)(d), "Seeds/Bulbs/mother plant germ plasm" are allowed to be imported. There is no mention there that it excludes 'dry fruits'.
6. On the other hand, in the subsequent policy, under Column 4 of Serial No. G. 2, sub-heading (d), it is provided as follows :
"Seeds of Fruits/Vegetables/Flowers, bulbs/mother plant germ plasm (excluding oil seeds and dry fruits) (50%)."
Hence, it is clear that the policy-makers were aware when they excluded the 'dry fruits' from the purview of the 'seeds' under the Policy 1988- 1991 that dry fruits were included in the item of seeds.
7. Further, it is a general rule of construction that a specific entry would prevail over a generic entry. Serial No. 121 of Appendix 2, Part B, is a generic entry, which covers all consumer goods, howsoever described of industrial, agricultural or animal origin, not appearing individually in Appendix 3 Part A and 5 or specifically listed for import under Open General Licence. If this restriction is to be applied, then nothing can be imported. Both sides admitted that if the items specifically find a place under Appendix 17, then notwithstanding the prohibition under Appendix 2 Part B the goods can be imported.
8. Further, in the instant case, admittedly, the Department, itself had consulted the Horticulturist because there was a doubt as to whether the goods imported can be classified as 'seeds.' The Deputy Collector, the Appellate Authority, namely, the Collector, (Appeals) and the Customs, Excise and Gold (Control) Appellate Tribunal have also accepted the fact that the Horticulturist has given the opinion to the effect that the goods imported which are the subject-matter of the proceeding, were fit for germination and were 'seeds'. It is to be noted that the horticulturist who gave the opinion was not the person who was consulted by the importer; but it was only the Customs Department which consulted him. Having consulted the Horticulturist and having obtained the opinion that the goods were 'seeds', the Revenue is estopped from claiming that the goods were not 'seeds'. But they were bound by the opinion of the horticulturist who was an expert.
9. As rightly contended by the learned counsel for the writ petitioner, the reasons given by the Tribunal for not accepting the case of the petitioner and holding that the goods cannot considered as 'seeds' are without any basis and are without substance. The first reason given by the Tribunal for not accepting the case of the petitioner is that since the goods were imported in large quantity, they cannot be described as 'seeds'. It is pertinent to note that the quantity imported cannot be the criterion for deciding the classification of the goods. If once it is found that the goods are seeds, it is immaterial as to the quantity imported. Another factor which influenced the Tribunal is that there is no large scale commercial cultivation of almonds in India. Firstly, there is no evidence to substantiate the same when especially the fact is disputed by the petitioners. As a matter of fact, it is common knowledge that almonds are grown in Kashmir and that it is also not disputed. Secondly it is immaterial whether there is commercial cultivation or not as it is not mentioned in the entry that the goods imported should be used for commercial cultivation.
10. Further, it is not known as to how the Tribunal came to the conclusion that almonds in shells are considered as dry fruits in commercial parlance. It is significant to note that what has been imported by the petitioner is almonds in shells and not almonds as such. Further, as already observed, the Department itself had refereed the matter to the Horticulturist who had clearly given the opinion that they are 'seeds'. It is therefore not understandable as to how the Tribunal came to the conclusion that the goods were known in common parlance as dry fruits. It is also seen that the Tribunal relied on the decision of some other case, namely, M.M. Exports v. Collector of Customs, Madras. The Tribunal failed to note that the said decision was rendered on the admission made by the importers with regard to the description of goods in that case. The alleged admission in that case cannot be used against the petitioner in this case. On a careful analysis of the materials, it is seen that the Tribunal has not given valid and sufficient reasons for rejecting the claim of the petitioner that the goods imported are 'seeds'. In this connection, the learned counsel for the petitioner submitted that if two views are possible, then the one in favour of the assessee should be accepted and it has been so held by various High Courts and the Supreme Court. The learned counsel for the petitioner drew the attention of this Court to the decision reported in Tamil Nadu Papers Ltd. v. Appraiser, Madras Customs [1988 (33) ELT 22 (Madras) rendered by Nainar Sundaram, J.] Wherein in Para 4 it was held as follows :-
"The second principle which helps the case of the petitioner is the rule of construction of fiscal law. Whenever there is an ambiguity on the question of construction of fiscal law, it "is well-settled that it has got to be resolved in favour of the tax payer rather in favour of the Revenue. If the case could be brought within either of the two provisions, it is the right of the tax payer to claim and equally so, the duty of the Court to accord him, the benefit of the provision which leaves him with a lighter burden. Even if there is a doubt as to which of the provisions should be applied, the Court should apply only that provision, which is favourable to the tax payer and even if the result would be to confer a double advantage on him. In this behalf, I feel obliged to refer to the following pronouncements cited by Mr. B.R. Dolia, learned counsel for the petitioner :
Commissioner of Income Tax v. Bosotto Bros. Ltd. - (1940) 8 ITR 1 at page 48; Central Provinces and Berar Provincial Co-operative Bank Ltd. v. Commissioner of Income Tax - 1946(14)ITR 479; Commissioner of Income Tax v. Kulu Valley Transport Co. (P) Ltd. -
Commissioner of Income Tax v. Belapur Sugar and Allied Industries Ltd. - 1983 (141)ITR 404."
It is to be noted that though the said judgment was reversed on a different issue, the above principle was upheld by a Division Bench of this Court in the Judgment [Appraiser, Madras Customs v. Tamil Nadu Newsprint Papers Ltd. - [1988(36)ELT 272 (Mad.)]. It was observed in the Bench decision :
"18. Learned counsel places reliance on the decisions of the Supreme Court in Commissioner of Income Tax, Punjab v. Kulu Valley Transport Co. Ltd., 77 ITR 518 and the Judgment of Venkataswami, J. in M/s. Raj Continental Exporters, Bangalore by Sampathraj v. Union of India, rep. by Secretary, Ministry of Finance, New Delhi and Others - W.P. No. 1429 of 1985 dated 14-5-1985 and that of a Division Bench in Union of India rep. by Secretary, Ministry of Finance, New Delhi & Another v. M/s. Raj's Continental Exports Ltd., Bangalore, Rep. by Sampathraj W.A. No. 451 of 1985 dated 28-6-1985, confirming the judgment of Venkataswami, J, in support of his contention that if two views are possible, the view which is favourable to the assessee must be accepted while construing the provisions of a taxing statute. The proposition as such is not disputed by learned counsel for the appellants. In the view we have expressed already, the above proposition will not apply to the facts of this case."
The Collector of Customs (Appeals) mainly relied on the classification by the Chief Controller of Imports and Exports, which was not produced in these cases. It is to be noted that the Tribunal ought to have set aside the order on the said ground, as rightly contended by the learned counsel for the petitioner when the said classification and the report of the Chief Controller of Imports and Exports is not before the Collector. It is too much to reply on the same which was produced in some other case, M. M. Exports v. Collector of Customs, Madras. On a careful analysis of the entire materials, I find much force in the contention of the learned counsel for the petitioner that the order of the Tribunal is without jurisdiction and it suffers from errors apparent on the face of the records, and as such the contention of the learned counsel for the petitioner that the goods imported were seeds has to be accepted.
11. As far as the second point is concerned, the learned counsel for the writ petitioner challenged the maintainability of the appeal filed by the Collector of Customs (Appeals) against the order of the Deputy Collector on various grounds. In the first instance, it is submitted that there was no order when the appeal was filed before the Appellate Collector on 18-11-1987. The impugned order passed by the Deputy Collector, though dated 9-11-1987, admittedly was despatched only on 11-12-1987 and as per Section 153 of Customs Act the order cannot take effect unless it is communicated. Hence there is no order when the appeal was filed before the Appellate Collector on 18-11-1987 and the Collector also should not have passed an order under Section 129D(2) of the Customs Act. It is seen from Section 153 of the Customs Act that any order or decision passed or any summons or notice issued under the Customs Act shall be served by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent. The contention of the learned counsel for the writ petitioner is that the proceedings before the Deputy Collector has not legally fructified into an order till 11-12-1987. When such is the case, the question of the Collector of Customs (Appeals) applying his mind to the order or decision of the Deputy Collector does not arise. Further, there cannot be two standards, one for the department and another for citizen, as the right of the citizen will be defeated as is sought to be done in the very case. The order may not be communicated to the party and yet the Department can file an appeal against the order which has not been communicated to the party, thereby making right of the party to file an appeal against the order which has not been communicated to the party, and illusory and ineffective. The Collector of Customs (Appeals) can enhance the redemption fine or levy personal penalty in which case the very purpose of filing an appeal by the citizen will be defeated. Further, the citizen could be prevented from filing an appeal by non-communication of the order to the citizen and by the department filing an appeal against an order, not communicated. In the instant case, the appeal was filed on 18-11-1987 before the Collector of Customs (Appeals) while the order of the Deputy Collector was communicated only on 11-12-1987. Hence, there was no order which could have been examined by the Collector of Customs under Section 129D(2) of the Customs Act. In this connection, the learned counsel relied on the decision of the Supreme Court in Bachhittar Singh v. State of Punjab wherein it was held that till the communication of the order, the order cannot be regarded as anything more than provisional in character. No doubt, that was a case which arose in a departmental enquiry held against a Government servant and while interpreting Article 166 of the Constitution of India with regard to the action taken by the Council of Ministers, the question which arose for consideration is, when the order would be effective. In this connection it was held :
"Constitutionally speaking, the Minister is no more than an adviser and that the head of the State, the Governor is to act with the aid and advice of his Council of Ministers. Therefore, until such advice is accepted by the Governor, whatever the Minister or the Council of Ministers may say in regard to a particular matter does not become the action of the State until the advice of the Council of Ministers is accepted or deemed to be accepted by the Head of the State. Learned, it is possible that after expressing one opinion about a particular matter at a particular stage, a Minister of the Council of Ministers may express quite a different opinion, one which may be completely opposed to the earlier opinion. Therefore to make the opinion amount to a decision of the Government, it must be communicated to the person concerned. It is of the essence that the order has to be communicated to the person who would be affected by that order is communicated to the person affected by it, it would be open to the Council of Ministers to consider the matter over and over again and, therefore till its communication the order cannot be regarded as anything more than provisional in character."
Though the Tribunal tried to explain the said decision with reference to the facts of that case, yet the principle enunciated in the said decision only supports the case of the writ petitioner and it is clear from Section 153 of the Customs Act that any order passed by the authority should be communicated to the party. In the instant case it was admittedly communicated only on 11-12-1987 and as such, it cannot take effect till it was communicated. It is not known how the appeal was filed against the said order before the Collector of Customs (Appeals) under Section 129D(2) even on 18-11-1987 and as such we find much force in the contention of the learned counsel for the writ petitioner in this regard. It was also submitted that as per Rule 4 of the Appeal Rules and Form C.A. 2 the appeal should be filed in duplicate and shall be accompanied by two copies of the decision or order passed by the adjudicating authority (one of which at least shall be certified copy) and a copy of the order passed by the Collector of Customs directing such authority to the appeal to the Collector (Appeals). Even the From C.A. 2 specifies that the order must be enclosed in duplicate. It is not in dispute that when the appeal was filed by the department, no order of the Deputy Collector was enclosed along with the appeal. It is vehemently argued by the learned counsel for the writ petitioner that the statutory requirements which were mandatory were not complied with and as such the appeal is not maintainable and the authority below has failed to consider this question in proper prospective. In this connection, the attention of this court was drawn to the decision of the Supreme Court in Ramachandra v. Govind and it was submitted that it is a well known principles that if the statute prescribes a certain procedure, it has to be followed. Their Lordships of the Supreme Court have observed in the above case at Page 918 (Para 25) as follows :
"A century ago, in Taylor v. Taylor, (1875) i ch D 426 Jessel M.R. adopted the rule that where a power is given to be a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden. This rule has stood the test to time. It was applied by the Privy Council, in Nazir Ahmed v. Emperor, 63 Ind Appeal 372 = [AIR 1936 PC 253 (2)] and later by this Court in several cases, Shiv Bahadur Singh v. State of V.P., ; Deep Chand v. State of Rajasthan to a Magistrate making a record under Sections 164 and 364 of the Code of Criminal Procedure, 1898. This rule squarely applied "Where, indeed, the whole aim and object of the legislature would be plainly defeated if the command to be the thing in a particular manner did not imply a prohibition to do it in any other. Maxwell's Interpretation of Statutes, 11th Edn., pp. 362-363." The rule will be attracted with full force in the present case, because non-verification of the surrender in the requisite manner would frustrate the very purpose of this provision. Intention of the Legislature to prohibit the verification of the surrender in a manner other than the one prescribed, is implied in these provisions. Failure to comply with these mandatory provisions, therefore, had vitiated the surrender and rendered it non set for the purpose of S. 5(3)(b)". Ultimately in that case, the judgment of the High Court was affirmed and the appeals were dismissed with one set of costs. In the instant case, the learned counsel for the petitioner also submitted that the very fact that no order copy was enclosed with the appeal shows that the order which was despatched on 11-12-1987, would not have been in the file and it was subsequently introduced in the file in order to get over the objections raised by the petitioner. Whatever that be, it is not in dispute that the statutory requirements for filing an appeal as contemplated under Rule 4 of the Customs (Appeal) Rules, 1982 and Form C.A. 2 have not been complied with and in view of the ratio laid down in the decision of the Supreme Court referred to above there is every force in the contention of the learned counsel for the writ petitioner that the appeal ought not to have been entertained.
12. Next it was contended by the learned counsel for the petitioner that the order passed by the Collector of Customs (Appeal) under Section 129B(2) of the Customs Act is not in conformity with the provisions of the Section. According to the learned counsel while examining the order passed by the Deputy Collector, the Collector has to examine the order to find out, whether the orders suffers from any illegality or impropriety and then only direct the adjudicating authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order. It is only thereafter the grounds of appeal are prepared and filed under Section 129D(4) either by the adjudicating authority or any officer of the Customs authorised in this behalf by the Collector of Customs. In the instant case the Collector of Customs has not stated a single word about the illegality or impropriety of the order, and on the other hand, the Collector of Customs has stated that the order of the Deputy Collector may not be in the public interest and Government Revenue to have extended the said benefit to the goods and accordingly the order of the Deputy Collector of Customs needs revision. This is not in conformity with the provisions of Section 129B(2) of the Customs Act. Hence, the appeal filed on the basis of such an order is without jurisdiction and not maintainable. The learned counsel also submitted that the Collector of Customs has not formulated any point arising out of decision of order and has not directed the adjudicating authority to apply to the Collector of Customs (Appeals). Further, the points found in the grounds of appeal are not found in the order of the Collector of Customs under Section 129D(2) of the Customs Act. The learned counsel would submit that the Assistant Collector has no jurisdiction to file an appeal and incorporate various points which were not mentioned by the Collector. On going through the relevant provisions of Section 129D(2) and the order of the Collector under Sec. 129D(2) I find that there is every force in the contention of the learned counsel for the petitioner in this regard. The main fact that the Dy. Collr. has exercised his discretion wrongly and the duty levied which, according to the Collector, is low is not a ground for invoking the provision of Sec. 129D(4) especially when no mala fide is attributed to the Dy. Collr. of Customs who passed the impugned order of adjudication. There is no order or direction to the adjudicating authority as required under Sec. 129D(2) of the Customs Act. Even though it is mentioned in the order that the Tribunal was informed by the learned S.D.R. that the adjudicating officer was not available at the time the Collector passed the order under Sec. 129D(2) being away on leave, it is nowhere stated in the order of the Collector in appeal.
13. It was also contended by the learned counsel for the petitioner that the grounds of appeal have already been prepared by the Assistant Collector and the order under Section 129D(2) clearly confirms the grounds of appeal which cannot be done. According to him, the grounds of appeal cannot precede the order under Section 129D(2) of the Customs Act and as such the Collector of Customs has not applied his mind under Section 129D(2) and on that ground also, the appeal filed by the department is not maintainable. On a perusal of the order passed by the Collector under Section 129D(2) of the Customs Act, it is seen that there is every force in the contention. The learned counsel also submitted that the grounds of appeal mentioned cash bills and weekly meetings of the Joint Chief Controller of Imports and Exports which are not found in the order. Hence, extraneous factors have also been taken into consideration which is frowned upon and expressly prohibited as per the dictum of Their Lordships of the Supreme Court as laid down in various decisions. I find much force in the contention of the learned counsel for the petitioner. The consideration of extraneous factors in the impugned order passed by the Collector and the appeals also vitiates the order and consequently the appeal is not maintainable on this ground also.
14. The learned counsel for the petitioner vehemently argued that the Tribunal in this case should have gone by the order of the Collector filed and ought not to have looked into the files in order to fill up the lacuna in this case. The order passed by the Statutory Functionary has to stand or fall on the basis of what is contained in the order. One cannot look into the files to supply the deficiency in the order as the Tribunal has sought to do in this case. In this connection, the learned counsel drew the attention of the impugned order passed by the Tribunal wherein the Tribunal referred to the fact that have examined the relevant files relating to the passing of the adjudication order and from the file, they found that the Collector has called for and examined the file and found that the Deputy Collector had omitted to consider the high margin of profit enjoyed by the goods and had misdirected himself on the basis of certain cash bills of goods with regard to the price of goods. In this connection, the learned counsel submitted that the order of the Collector does not contain the same and the Tribunal is not justified in supporting the deficiency in the order while upholding the same. In this connection the attention of this Court was drawn to three decisions. In Mohinder Singh v. Chief Election Commissioner it was held that "when the impugned order does not assign reasons, it is not open to the State which had failed to disclose the reasons in the order, to make goods its omission by disclosing them in the affidavit filed in a writ petition. When a statutory body is conferred with the power to consider the grant of exemption, then the statutory body functions a quasi-judicial authority." In Prabhudas Kumar Vaishya v. Union (1967 Maharashtra Law Journal 981). Their Lordships of the Supreme Court have observed as follows :
"In our view the procedure followed by the High Court was irregular it is not for the High Court to give reasons which Government might have given, but has not chose to give, in support of its conclusion. Since no reasons have been given in support of the order passed by the Central Government, the order was ex facie defective and the defect could not be remedied by looking into the file maintained by the Government and constructing the reasons in support of the order. The reasons in support of the order had to be recorded and disclosed to the parties concerned by the Central Government; the reasons could not be gathered from "notings" made in the file of the Central Government. Recording of reasons and disclosure thereof is not a mere formality. The party affected by the order has a right to approach this Court in appeal, and an effective challenge against the order may be raised only if the party aggrieved is apprised of the reasons in support of the order."
The above decisions were followed in a batch of writ petitions by Sathiadev, J. in W.P. No. 8605 etc. of 1983 dated 16-11-1987. Applying the ratio to the facts of this case and on a perusal of the order passed by the Tribunal, I find that there is every force in the contention of the learned counsel for the petitioner that the impugned order is vitiated on this ground also. The finding of the Tribunal is that an appeal can be filed against the operative portion of the order, which is also not in accordance with the statute as much a course of Section, is not contemplated under the statute. The Tribunal has also failed to take into consideration that the Collector has tried to give a clarification of the Chief Controller of Imports and Exports, which is not before him. It is also pointed out by the learned counsel for the petitioner that in the first instance the Collector relied on "Economic Times" for the market price and that it is not justified when that price prevailed at Delhi. Further, the Tribunal has not given sufficient reasons for rejecting the evidence on behalf of the petitioner, which shows the actual profit and the same would have been more dependable piece of evidence then Economic Times. It was also vehemently argued that the prices reported in "Economic Times" cannot be relevant for assessing the market price and no attempt has been made by the Collector to assess the market price at Madras. Hence it cannot be said that the method adopted by the Deputy Collector is improper and illegal. The learned counsel vehemently argued that the order of the Collector under Section 129D(2) of the Customs Act does not whisper in any way that the order of the Deputy Collector suffers from illegality or impropriety. According to him, for all these reasons the appeal itself is incompetent. I find every force in the contention as in the instant case none of the statutory requirements for filing appeal was followed and the Collector has not exercised his power under Section 129D(2) of the Customs Act properly. The impugned order is vitiated on all these grounds. In view of any findings on both the points, the writ petitions are to be allowed.
15. In the result, all the writ petitions are allowed, Order No. 606 of 1988 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, dated 2-12-1988 is hereby quashed and the second respondent namely, the Collector of Customs, Madras, is directed to refund the redemption fine and personal penalty already paid by the petitioner. However, in the circumstances of the case, there is no order as to costs in these writ petitions.