Chandna Impex P.Ltd vs Commr.Of Customs

CHANDNA IMPEX PVT. -- APPELLANT

LIMITED

VERSUS

COMMISSIONER OF -- RESPONDENT

CUSTOMS, NEW DELHI

J U D G M E N T

D.K. JAIN, J.:

1.Challenge in this appeal under Section 130-E of the Customs Act, 1962

( for short "the Act"), by the importer, is to the final order dated 2nd

September, 2009, passed by the High Court of Delhi at New Delhi in

CUSAA No. 7/2009. By the impugned order the High Court has

dismissed appellant's appeal under Section 130 of the Act on the ground

that no substantial question of law arises from the order of the Customs

Excise and Service Tax Appellate Tribunal (for short "the Tribunal") in

appeal Nos.C/920-22/2005, for its consideration.

2.To appreciate the controversy involved a brief reference to the facts, as

found by the Tribunal, would be necessary. These are:

The appellant, a body corporate, is engaged in the business of

import of plywood, inlays, MDF laminated boards and veneer sheets etc.

On 22nd May, 2000, one of the directors of the appellant, namely, Rakesh

Chandna, was apprehended by the officers of the Customs department at

Calcutta Airport. He was found in possession of US $45,000/- and Indian

currency of `9,000/-, alongwith several incriminating documents, which

fuelled further follow up action by the Directorate of Revenue Intelligence

(for short "the DRI"). On 23rd May, 2000, in search operations, certain

goods were seized from the premises of the appellant, as no documentary

evidence was allegedly produced for their legal acquisition. The value of

the goods so seized was determined at `24,26,234/-.

3.Statements of Rakesh Chandna and one Sanjeev Murgai, Manager of

the appellant and also of some other persons were recorded, which

revealed that the goods imported by the appellant viz. plywood, MDF

boards and veneers etc. had been under-valued. Based on the

incriminating documents recovered during the course of investigation, a

show cause notice dated 16th May, 2001 was issued to the appellant by the

DRI under Section 124 of the Act, detailing the Bills of Entry, wherein

there was mis-declaration of quantity/description and value of the goods.

2 The appellant was asked to show cause as to why duty, amounting to

`3,95,58,229/-, be not recovered; goods be not confiscated and a penalty

be not levied on them. Taking into consideration the explanation

furnished on behalf of the appellant in their written submissions and the

documentary evidence available on record, including the fax messages

sent by Rakesh Chandna to his overseas suppliers, the Commissioner of

Customs (Import & General), vide order dated 17th September, 2004,

ordered the confiscation of goods valued at `3,04,98,365/- under Section

111 of the Act; confirmed the demand, amounting to `1,45,85,446/-

under Section 28AB of the Act, besides levying a penalty, amounting to

`1,45,85,446/- under Section 114A of the Act on the appellant. The

Commissioner also levied personal penalty of `10 lakh and `5 lakh on

Rakesh Chandna and Sanjeev Murgai respectively.

4.Being aggrieved, the appellant preferred an appeal to the Tribunal,

which was dismissed vide order dated 26th-27th June, 2007.

5.Having failed in their appeal before the Tribunal, as aforestated, the

appellant filed an appeal under Section 130 of the Act before the High

Court raising as many as 7 questions, stated to be substantial questions of

law, for the opinion of the High Court. One of the questions so framed

in para 3 of the application was as follows:

3 "(a)-Whether the Addl. Director General in Directorate of

Revenue Intelligence is "proper officer" within the

meaning of section 28 of the Act?"

However, as already stated above, the High Court has dismissed the

appeal of the appellant by a short order, which reads thus:

"We have heard the learned counsel at length and have also

gone through the orders passed by the Tribunal. The

arguments before us are the same, as it was raised before

the Tribunal. We find from the orders of the Tribunal that

each and every argument has been dealt in detail and we

agree with the reasons recorded by the Tribunal.

Therefore, we are of the opinion that there is no substantial

question of law for our consideration in this case, which is

accordingly dismissed."

6.Mr. A.K. Sanghi, learned senior counsel appearing for the appellant,

while assailing the order passed by the High Court, strenuously urged

that the High Court has committed a manifest error of law in dismissing

the Statutory appeal in limine by a non-speaking order and therefore, the

case deserves to be remitted back to the High Court for decision on merits

of the questions proposed in the appeal. Learned counsel argued that all

the questions, raised by the appellant in their appeal are substantial

questions of law and therefore, the High Court ought to have examined

each one of the questions so framed instead of dismissing the appeal by a

cryptic order, by merely observing that the Tribunal has dealt with each

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and every argument urged on behalf of the appellant and they were in

agreement with the reasons recorded by the Tribunal. Relying on the

recent decision of this Court in Commissioner of Customs Vs. Sayed Ali

& Anr.1, the learned counsel asserted that in any event the question

extracted in para 5 (supra) is a substantial question of law, which should

have been examined by the High Court.

7.Per contra, Mr. Bishwajit Bhattacharya, learned Additional Solicitor

General of India, submitted that the impugned order deserves to be

affirmed as the questions now proposed in this appeal are pure questions

of facts. Learned counsel submitted that in so far as the question of

jurisdiction of the adjudicating authority is concerned, no such issue has

been raised in the present appeal.

8.Having bestowed our anxious consideration on the facts at hand, we are

of the opinion that there is some merit in the submission of learned

counsel for the appellant that while dealing with an appeal under Section

130 of the Act, the High Court should have examined each question

formulated in the appeal with reference to the material taken into

consideration by the Tribunal in support of its finding thereon and given

its reasons for holding that question is not a substantial question of law. It

needs to be emphasised that every litigant, who approaches the court for

1 (2011) 3 SCC 537

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relief is entitled to know the reason for acceptance or rejection of his

prayer, particularly when either of the parties to the lis has a right of

further appeal. Unless the litigant is made aware of the reasons which

weighed with the court in denying him the relief prayed for, the remedy of

appeal will not be meaningful. It is that reasoning, which can be

subjected to examination at the higher forums. In State of Orissa Vs.

Dhaniram Luhar2 this Court, while reiterating that "reason is the heart

beat of every conclusion and without the same, it becomes lifeless",

observed thus :

"8.......Right to reason is an indispensable part of a

sound judicial system; reasons at least sufficient to

indicate an application of mind to the matter before

court. Another rationale is that the affected party

can know why the decision has gone against him.

One of the salutary requirements of natural justice is

spelling out reasons for the order made;......."

It was thus, expected of the High Court to record some reason, at least

briefly, in support of its opinion that the order of the Tribunal did not give

rise to any substantial question of law. In this behalf, the language of

Section 130 of the Act is also significant. It contemplates that on filing of

an appeal under the said Section either by the Commissioner of Customs

or the other party aggrieved, the High Court has to record its satisfaction

as to whether or not "the case involves a substantial question of law". In

2 (2004) 5 SCC 568

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the instant case, it is clear from the afore-extracted order of the High

Court that it does not meet the requirement of stating reasons for coming

to the conclusion that the order of the Tribunal did not give rise to any

substantial question of law including the question extracted in para 5

above. Nevertheless, the next question for consideration is whether,

having regard to the nature of the issues raised by the appellant in their

appeal before the Tribunal, would it be worthwhile to remit the case back

to the High Court to decide, in the first instance, question as to whether

or not the questions proposed by the appellant in their application under

Section 130 of the Act are substantial questions of law arising from the

order of the Tribunal, before embarking upon their consideration on

merits?

9.As stated above, the appellant had framed in their appeal before the

High Court, as many as seven questions as substantial questions of law. It

is manifest from a bare reading of the six questions, viz. (b) to (g),

repeated in this appeal, that none of the questions can be said to be a

substantial question of law, in as much as they do not proceed on the

premise that the decision of the Tribunal on the issues raised therein is

perverse, in the sense that the findings of fact, arrived at by the Tribunal

are not based on the material placed before it or that the relevant material

has been ignored by it. It is trite law that a finding of fact may give rise to

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a substantial question of law, inter-alia, in the event the findings are

based on no evidence and/or while arriving at the said finding, relevant

admissible evidence has not been taken into consideration or inadmissible

evidence has been taken into consideration or legal principles have not

been applied in appreciating the evidence, or when the evidence has been

misread. (Ref: West Bengal Electricity Regulatory Commission Vs.

CESC LTD.3;-Metroark Ltd. Vs. Commissioner of Central Excise,

Calcutta4;- Commissioner of Customs (Preventive) Vs. Vijay Dasharath

Patel5 & Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi6)

10.In Hero Vinoth (Minor) Vs. Seshammal7, referring to the

Constitution Bench decision of this Court in Sir Chunilal V. Mehta &

Sons Ltd. Vs. Century Spinning & Manufacturing Co. Ltd.8 as also a

number of other decisions on the point, this Court culled out three

principles for determining whether a question of law raised in a case is

substantial. One of the principles so summarised, is :

"The general rule is that High Court will not interfere with

the concurrent findings of the courts below. But it is not an

absolute rule. Some of the well-recognized exceptions are

where (i) the courts below have ignored material evidence or

acted on no evidence; (ii) the courts have drawn wrong

inferences from proved facts by applying the law

erroneously; or (iii) the courts have wrongly cast the burden

3 (2002) 8 SCC 715

4 (2004) 12 SCC 505

5 (2007) 4 SCC 118

6 (2009) 3 SCC 287

7 (2006) 5 SCC 545

8 AIR 1962 SC 1314

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of proof. When we refer to "decision based on no

evidence", it not only refers to cases where there is a total

dearth of evidence, but also refers to any case, where the

evidence, taken as a whole, is not reasonably capable of

supporting the finding".

11.Tested on the touchstone of the said legal principle, we are of the

opinion that the order of the Tribunal, wherein the material referred to by

the Commissioner in his order has been extensively analysed, does not

give rise to the five questions, proposed by the appellant in this appeal, as

questions of law, much less substantial questions of law. It would bear

repetition that none of the said questions seek to challenge the findings

of the Tribunal or that of the Commissioner, on the issue raised in the

questions, as perverse. It is not within the domain of the High Court, in

appeal under Section 130 of the Act, to investigate the grounds on which

the findings were arrived at by the Tribunal, the final court of fact. In that

view of the matter, we do not consider it expedient to remit the case to the

High Court, in so far as these five questions are concerned.

12.However, the question which still survives for consideration is that the

appellant having raised the question of jurisdiction of the DRI issuing the

show cause notice as also the Commissioner of Customs passing the order

of adjudication, in its appeal before the High Court and the High Court

having failed to apply its mind as to whether or not it was a substantial

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question of law, the appellant is barred from raising the said issue before

us in this appeal.

13.Having carefully gone through the appeal, in particular ground (f),

wherein the jurisdiction of the DRI to issue a show cause notice under

Section 28 of the Act as a "proper officer" has been specifically

questioned, we are of the view that the said issue is a substantial question

of law, and requires to be examined afresh particularly in light of the

decision of this Court in Sayed Ali & Anr. (supra), where the question as

to who is a "proper officer" in terms of Section 2(34) of the Act has been

examined.

14.Having so held, again the residual question would be whether, in the

first instance, the High Court should be asked to examine the question

relating to the jurisdiction of the adjudicating authority or to remit the

matter to the Tribunal to reconsider the issue in light of the recent

decision of this Court in Sayed Ali & Anr. (supra), wherein the decision

of the Tribunal in Konia Trading Co. Vs. Commissioner Of Customs,

Jaipur9, relied upon by the Tribunal in the present case, has been

considered. We are of the opinion that in order to avoid prolongation in

the life of lis between the appellant and the revenue, it would be expedient

to follow the latter option, because ultimately the High Court may also

9 (2004) 170 E.L.T. 51 (Tri-LB)

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like to have the views of Tribunal on the impact of the said decision of

this Court on the facts of the present case, since the said decision, was not

available to the Tribunal when the appeal of the appellant was decided by

it.

15.Consequently, the appeal is partly allowed to the extent indicated

above and the decision of the Tribunal on the question of the jurisdiction

of the adjudicating authority, which stood affirmed by the dismissal of

appellant's appeal by the High Court, is set aside. The case is remanded to

the Tribunal for fresh adjudication, confined to the question of jurisdiction

of the adjudicating authority to pass order dated 17th September, 2004,

after affording adequate opportunity of hearing to both the parties.

16.However, in the facts and circumstances of the case, there shall be no

order as to costs.

...........................................

(D.K. JAIN, J.)

............................................

(H.L. DATTU, J.)

NEW DELHI;

JULY 6, 2011.

RS

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