Aasu Textiles Pvt Ltd vs The Commissioner Of Customs
2018 Latest Caselaw 604 Bom

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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                ORDINARY ORIGINAL CIVIL JURISDICTION

                        CUSTOMS APPEAL NO. 84 OF 2016

 Aasu Textiles Private Limited
 A company incorporated under 
 the Companies Act, 1956 
 having their office at 
 A-203/204, Udyog Bhawan,
 Sonawal Road, Goregaon (East)
 Mumbai-400 063.                                                   ... Appellant

           Vs.

 The Commissioner of Customs
 (Preventive), Mumbai, 
 having his Office at
 New Custom House, 2nd Floor,
 Mumbai - 400 001.                                                 ... Respondent

                                ......
 Mr. Naresh Jain a/w Ms. Neha Anchila i/by Agrud Partners for the
 Appellant.
 Mr. Pradeep S. Jetly a/w Mr. Jitendra B. Mishra for the 
 Respondent.
                                ......

                               CORAM : S. C. DHARMADHIKARI &
                                           SMT. BHARATI H. DANGRE, JJ.

DATE : JANUARY 18, 2018.

ORAL JUDGMENT (PER S. C. DHARMADHIKARI, J.) :

1. By this Appeal, the assessee challenges the order of the

Customs, Excise and Service Tax Appellate Tribunal, Mumbai

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(CESTAT) dated 8th March, 2016. This Appeal was partly argued

before another Bench and leave was sought to amend the memo

to introduce additional grounds. The additional grounds,

according to the counsel appearing for the assessee, would raise

substantial questions of law. The four questions introduced by

amendment read as under:

"(a-1) Whether on the facts and circumstances of the case, action of seizure of goods i.e. Nylon filament yam contained in 105 cartons vide panchanama dated 9.07.2003 by the Superintendent of Central Excise (Preventive) Officer is bad in law and liable to be quashed, since the Superintendent of Central Excise (Preventive) Officer is not the proper officer for the purpose of the seizure of goods under section 110 of the Customs Act, 1962?

(a-2) Whether on the facts and circumstances of the case, since the Search and Seizure action under section 110 of the Customs Act is bad in law and void-ab-inito, entire subsequent proceedings such as Show Cause Notice and Adjudication based on illegal seizure are liable to be quashed?

(a-3) Whether on the facts and circumstances of the case, issuing of the show cause notice by the Deputy Commissioner (Preventive) Central Excise is bad in law and liable to be quashed since Deputy Commissioner (Preventive) Central Excise is not the officer of the custom, had not jurisdiction to issue show cause notice under section 124 of the Customs act, 1962?

(a-4) Whether on the facts and circumstances of the case, since issuing of the show cause notice under section

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124 of the Customs Act is bad in law and void-ab-inito, entire subsequent proceedings based on the Show Cause Notice are liable to be quashed?"

2. Initially, the assessee proposed a question as substantial

question of law but on merits. Now, what is introduced is a

question of jurisdiction.

3. Mr. Jain appearing in support of this Appeal would submit

that the argument was of jurisdiction. It is clear, according to him,

from the annexures to the paper book that show cause notice was

not issued by the competent authority/appropriate officer under

the Customs Act, 1962. The show cause notice was issued by an

officer exercising powers under the Central Excise Act, 1944. In

that, our attention is invited to page 82 Exh."H" of the paper book

which says that though this is a show cause notice referable to

Section 124 of the Customs Act, 1962, it is issued by the office of

the Commissioner of Central Excise, and to be precise, by the

Deputy Commissioner (Preventive), Central Excise, Thane-I.

Mr. Jain would concede that the order-in-original may be passed

by the Commissioner of Customs (Preventive) and a reply to the

show cause notice was also addressed to him, but once the show

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cause notice itself is not issued by the competent authority, then,

from the above acts of the assessee, his consent cannot be

inferred. Even if consent can be inferred, no amount of consent

will confer jurisdiction on an officer who is wholly incompetent to

initiate or set the law in motion. Hence, according to Mr. Jain, this

question of jurisdiction/competence of the authority goes to the

root of the case. He relies upon the judgment and order passed by

the Hon'ble Supreme Court in the case of Commissioner of

Customs v/s. Sayed Ali and Another, reported in (2011) 3 SCC

537 in support of his arguments that the issue of jurisdiction can

be raised for the first time, if it is a pure question of law, even at

this further appellate stage. To support that proposition, he relies

on an order passed in Customs Appeal (L) No.51 of 2017 [The

Commissioner of Customs (Import-I) vs S.S. Offshore Pvt. Ltd.]

decided on 21st December, 2017 by another Bench of this Court.

On merits, Mr. Jain would submit that the order-in-original is

dated 30th March, 2004. The Appeal to the Tribunal was filed in

the year 2004. However, it appeared for hearing and final disposal

after a period of 13 years from the date of order-in-original. The

Tribunal framed for its consideration a question and which is to be

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found in para 6 of the order under Appeal. According to Mr. Jain,

this was never the issue involved and even the show cause notice

does not proceed on these lines. Thus, there was no question of

establishing co-relation of the confiscated goods to the duty

paying documents. Mr. Jain would submit that even otherwise, all

the primary documents had reference to the invoices and those

invoices describe the goods. Therefore, nobody had ever disputed

such an aspect which is now being raised. By referring only to the

vessel, the Tribunal could not have upheld the order in original. In

other words, the question or issue framed by the Tribunal took the

appellant by surprise and the Tribunal should have, in the larger

interest, granted time to the appellant/assessee and his Advocate

to prepare thoroughly so as to answer the issue framed by the

Tribunal assuming that it arises from the order-in-original or the

Tribunal has an inherent power to frame it if it is otherwise arising

from the adjudication.

4. For all these reasons, he would submit that this Appeal be

admitted.

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5. On the other hand, Mr. Jetly would submit that all the

arguments canvassed before us are purely an after thought. The

argument on jurisdiction is of a desperate assessee who has no

answer to the show cause notice on merits. He is now raising a

hyper-technical plea, particularly after the adjudication is done by

the competent official. Secondly, on merits also, if the show cause

notice is perused in its totality, there is nothing which would

indicate that the issue for consideration of the Tribunal did not

arise from the same. The allegations make a specific reference to

the vessel and its description as also the documents such as Bill of

Entry, invoice, packing list and certificate issued by the

manufacturer of the goods. For all these reasons, he would submit

that the Appeal should be dismissed as there is no substantial

question of law arising in this case for our determination.

6. With the consent of both sides, we have heard this Appeal

finally. We have carefully perused the Appeal paper book and the

annexures thereto. We have carefully perused the order under

Appeal and the decisions brought to our notice.

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7. We find some merit in the complaint of Mr. Jain that this

was a fairly old Appeal and reaching for hearing before the

Tribunal after 13 years. If the Tribunal was of the view that there

is an issue for consideration with regard to co-relation of the

confiscated goods to the duty paying document, namely Bill of

Entry or otherwise, but that issue was not framed, nor answered

by the order-in-original, then, fairness requires an opportunity to

be granted to the appellant. All the more, when an issue of

jurisdiction and competence of the official, who set the law in

motion, is also raised. The bonafides of the assessee are clear

inasmuch as the order under challenge before the Tribunal has

been complied with. All the amounts, including the penalties,

have been paid and that is undisputed.

8. We find from the order under Appeal that the appellant's

Advocate argued the Appeal extensively on merits. However, what

the Tribunal holds in para 3 is that the issue involved in this case

is regarding the redemption fine imposed by the adjudicating

authority and penalties on the assessee. There was a search

carried out on the godown of a Roadways and certain goods were

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seized by the Central Excise Commissionerate under a reasonable

belief that these goods are not validly and legally brought in the

said godown premises. They were offending goods. Thus, the

Tribunal, in its order itself, says that the seizure is by the officer of

the Central Excise Commissionerate. Secondly, the authorities, on

verification of the documents produced, lifted the seizure on the

goods and which were co-relatable with the duty paying

documents, but issued a show cause notice for confiscation of

Nylon Filament Yarn to the quantity 25100.5 kgs. valued at

Rs.37,65,075/- It is these goods which, after due process of law,

were confiscated with an option to redeem them on payment of

redemption fine and penalties.

9. We do not then understand how the Tribunal, in para 6 of

the order under Appeal, holds that the issue involved is whether

the assessee is able to co-relate the confiscated goods to the duty

paying documents that is, Bill of Entry or otherwise. Thus, the

observations in paras 3 and 6 of the order under Appeal are

difficult to reconcile. We only record a prima facie opinion.

Secondly, when the Tribunal was aware of the basic facts that the

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seizure was effected by the Central Excise Commissionerate, the

show cause notice was issued by the Deputy Commissioner of

Central Excise, then, merely marking a copy of that show cause

notice to the Commissioner of Customs (Preventive) and that

authority holding the adjudication and passing the order would

mean jurisdictional issue need not be framed or answered, is

another aspect of the controversy. Though that issue was not

squarely raised, we find that it arises from the order under Appeal.

10. Once these issues and which have been emphasized by us

above squarely arise for consideration, then, we admit this Appeal

on the following newly added substantial questions of law:

"(a-1) Whether on the facts and circumstances of the case, action of seizure of goods i.e. Nylon filament yarn contained in 105 cartons vide panchanama dated 9.07.2003 by the Superintendent of Central Excise (Preventive) Officer is bad in law and liable to be quashed, since the Superintendent of Central Excise (Preventive) Officer is not the proper officer for the purpose of the seizure of goods under section 110 of the Customs Act, 1962?

(a-2) Whether on the facts and circumstances of the case, since the Search and Seizure action under section 110 of the Customs Act is bad in law and void-ab-inito, entire subsequent proceedings such as Show Cause Notice and Adjudication based on illegal seizure are liable to be quashed?

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           (a)     Whether on the facts and circumstances of the case, the

Appellate Tribunal erred in law by confirming the order in original dated 30th March, 2004 passed by the Respondent merely on the ground that there was the discrepancy in the name of the vessel in the Bill of Entry vis-a-vis other import documents?

(b) Whether on the facts and circumstances of the case, the Appellate Tribunal has erred in law in dismissing the appeal of the Appellant without dealing with the elaborate submissions and without giving the proper hearing?

11. We have found from the rival contentions and the points

arising from the order under Appeal which we have noted above,

that no useful purpose would be served by keeping this Appeal

pending in this Court. After bringing to the notice of the Tribunal

the twin aspects of this controversy, namely, on jurisdiction and

merits, as also inviting its attention to the apparent inconsistency

in its findings and conclusions, we have no alternative but to set

aside the order under Appeal. While we proceed to set aside the

same at the instance of an assessee, who is equally to blame

himself for not being fully ready to argue the case, we think that

balance can be struck. We accordingly strike a balance between

the rights and equities by directing that, on the appellant/assessee

before us paying costs quantified at Rs.50,000/- to the Revenue

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within a period of four weeks from today, the Appeal of the

assessee before the Tribunal to stand revived for a decision afresh

on all the points which we have summarized above. We clarify

that beyond inviting the attention of the Tribunal to the issues and

controversy, we have not expressed any opinion on either

contentions. All that we re-state is that old matters have to be

disposed of expeditiously. True it is that primacy also has to be

given to them. True it is that unnecessary accommodation and

adjournments to the appellants like the assessees and their

counsel should not be given, still, at the root of this is rendering of

complete justice. That cannot be compromised at any cost. It is the

duty of the Tribunal as a last fact finding authority, therefore, to

be cautious and careful in its approach as haste is waste. The

Tribunal could have avoided this remand had it been a little more

careful and not proceeded hastily. We hope this much is enough.

The Appeal is accordingly disposed of.

12. At this stage, Mr. Jetly invites our attention to page 114 of

the paper book and says that full compliance with the order-in

-original has not been made.

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13. Mr. Jain says otherwise and contends that after the order-in

-original was received, the assessee - appellant before us has

redeemed the goods and the entire amount has been paid. Let the

Tribunal also clarify this aspect and in addition to costs, ensure

that any outstanding sum is recovered from the assessee, all

without prejudice to the rights and contentions of both sides.

(SMT. BHARATI H. DANGRE, J.) (S. C. DHARMADHIKARI, J.)