RC/3/1997
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 *THE HON'BLE SRI JUSTICE L. NARASIMHA REDDY

AND
*THE HON'BLE SRI JUSTICE CHALLA KODANDA RAM
      +REFERENCE CASE Nos.2 and 3 of 1997
                      and
          +WRIT PETITION No.27775 of 1996
                  % 08-10-2014
REFERENCE CASE Nos.2 and 3 of 1997

# H.C.Choksi                      .. Applicant in
R.C.No.2/1997
# C.R.Salian                            .. Applicant in
R.C.No.3/1997

Vs.

$ Collector-Customs, Hyderabad      .. Respondent

<GIST:

>HEAD NOTE:

! Counsel for applicants : Sri P. Venugopal

^ Counsel for respondent : Sri Gopala Krishna Gokhale

? CASES REFERRED :

1) (S) AIR 1957 SC 49

2) 232 ITR 170

3) 271 ITR 362

4) 79 STC 163

THE HON'BLE SRI JUSTICE L. NARASIMHA REDDY AND THE HON'BLE SRI JUSTICE CHALLA KODANDA RAM REFERENCE CASE Nos.2 and 3 of 1997 and WRIT PETITION No.27775 of 1996

COMMON JUDGMENT: (Per LNR,,J) These two references are presented by the applicants, under Section 130(3) of the Customs Act (for short 'the Act') r/w Rule 29 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 (for short 'the Rules"), as provisions stood in 1993. The applicants seek a direction to the appellate Tribunal to frame a question, namely:

"Whether in the facts and circumstances of the case the Tribunal was justified in dismissing the appeals filed by the applicants as not being maintainable, despite the Company filing the appeal?"

for being referred to this Court for its opinion.

Briefly stated, the facts are that the applicants were working as Commercial Officer and Senior Materials Manager, respectively, by M/s. Sarabhai Electronics Limited, ORG Systems Division, Wadi Wadi, Baroda (for short 'the Company'), in the year 1991. As a part of its activity, the Company used to import computers and allied items from various countries. One such import was of 'Winchester Disc Drives' from M/s. Control Data Corporation of U.S.A. (CDC). The import was not directly to the Company, but it was through the Computer Maintenance Corporation (CMC), a Government of India Agency, and with the permission of Directorate General of Technical Development (DGTD). After the goods were received at the destination, certain defects are said to have been noticed in them. In the meanwhile, M/s. CDC was taken over by another company, by name, M/s. Seagate Technologies at Singapore. After obtaining the necessary clearances from the CMC, the defective imported goods are said to have been sent for repair to M/s. Seagate Technologies at Singapore, from Bombay, the 'exist point'. On the instructions issued by the Company, the repaired goods were redelivered at Hyderabad, the 'entry point'.

In the process of examining the goods for customs clearance, the Assistant Collector of Customs, Air Cargo Complex, Begumpet, Hyderabad, noticed some discrepancies between the particulars mentioned at the exist point, on the one hand, and those mentioned at the entry point, on the other hand. After hearing the Company on the doubts expressed by him, the Assistant Collector of Customs passed an order, dated 16.10.1992, directing confiscation of the goods. However, the facility of redemption of the goods on payment of fine of Rs.3,00,000/- was provided. The value of the goods was mentioned as Rs.7,10,479/-. In addition to that, the Assistant Collector of Customs levied penalty of Rs.1,50,000/- each on the applicants, under Section 112 of the Act, alleging that they abetted the Company, in violating the provisions of the Act and the Rules made thereunder.

The Company, which suffered the order, preferred an appeal before the Collector of Customs, Hyderabad, under Section 129 (A) (1) of the Act and it was dismissed. However, the Collector of Customs directed the original authority to conduct a de novo enquiry, as to the value of the goods and to re-determine the fine amount, in lieu of the confiscation, depending on the outcome of the de novo exercise.

Before the Collector of Customs, the Company pleaded the case of its employees, the applicants herein, also. However, the Collector of Customs refused to entertain that plea, observing that it is for the applicants to work out their remedies.

On coming to know that the appeal preferred by the Company before the appellate authority was dismissed, the applicants filed appeals before the Customs, Excise & Gold (Control) Tribunal, New Delhi (for short 'the Tribunal'), assailing the order passed by the original authority, levying penalty on them. The appeals were dismissed on 16.11.1993, as not maintainable. Thereupon, the applicants filed reference petitions before the Tribunal, with a prayer to refer the question, namely, "in the facts and circumstances, whether the Tribunal was right in dismissing the appeals filed by the applicants as not maintainable", to the High Court. The Tribunal rejected the reference petitions through a detailed common order, dated 26.06.1996. Hence, these two references.

Independently, the applicants challenged the order, dated 16.11.1993, by filing the writ petition.

Sri P. Venugopal, learned counsel for the applicants, submits that the levy of penalty against the applicants by the original authority, through order, dated 16.10.1992, was totally unjustified, particularly when no such penalty was imposed on the Company. He submits that the employer of the applicants i.e., the Company availed the remedy of appeal not only canvassing the correctness of the confiscation of the goods, but also the levy of the penalty on the applicants, and that since the appellate authority refused to entertain the 2nd part of the claim, the applicants have straight away approached the Tribunal. He further submits that the Tribunal ought to have entertained the appeals on merits, particularly when the order before it was already dealt with by the appellate authority, may be at the instance of the Company. He further submits that the applicants raised a pure question of law and the Tribunal ought to have referred the same to the High Court. It is also urged that in the event of this Court finding that there exists a case for reference, the procedure contemplated under Section 130(1) of the Act, namely, to require the Tribunal to refer the question to it, may be dispensed with, since the Parliament itself has dropped the procedure, leading to superfluous exercise, resulting in pendency of the matters for decades together.

Sri Gopala Krishna Gokhale, learned counsel for the respondent, on the other hand, submits that the applicants failed to avail the remedy of appeal before the Collector of Customs, and that the further appeals preferred by them before the Tribunal were rightly rejected, as not maintainable. He submits that in the reference petitions filed by the applicants, the Tribunal has undertaken extensive discussion, with reference to the decided cases, and has taken a correct view of the matter. He further submits that there are no merits in the references sought by the applicants and the same deserve to be rejected. He further submits that the writ petition is not maintainable.

Two decades have elapsed, since the Assistant Collector of Customs passed the order, not only confiscating the goods of the Company, but also levying penalty upon the applicants, and still, the matter did not assume finality. Before this Court itself, the references were pending for the past 17 years. The controversy is in a very narrow compass.

The applicants are neither importers nor exporters. They are just the employees of the Company, which imported certain electronic goods. No irregularity as such was found, when the goods were imported from a company in U.S.A. The whole controversy has arisen, when the goods received, after they were sent for repair or remodeling. The Assistant Collector of Customs noticed some inconsistency in the particulars of the goods furnished at the exist point, on the one hand, and those found at the entry point, on the other hand. It was found that the goods, which were returned after repair, resembled brand new products. Taking the view that the goods, that were received by the Company, were new items and were not covered by valid documents, the Assistant Collector of Customs confiscated them. A facility of redemption of the goods was created, on payment of fine of Rs.3,00,000/-. The nature of relief, that was granted by the Collector of Customs in the appeal preferred by the Company, has been indicated in the previous paragraphs.

The basis for levying the penalty on the applicants was that they did not furnish the correct value of the goods in the respective invoices. Out of the two applicants, only one of them was issued a show-cause notice and ultimately penalty was levied on both of them.

Being the employees of the Company, the applicants naturally relied upon their employer, to pursue the remedies. From a reading of the order passed by the Collector of Customs, it is evident that extensive arguments were submitted on behalf of the applicants also. However, the Collector of Customs refused to entertain the same, on the ground that the applicants were not before him.

The consultants, whom the applicants approached, seem to have taken the view that since the order in original, passed by the Assistant Collector of Customs has been the subject matter of adjudication by the Collector of Customs i.e., the appellate authority, there is no point in repeating the exercise before that authority and, accordingly, advised them to approach the Tribunal, straight away. The Tribunal refused to entertain the appeals, as not maintainable. Thereupon, the applicants sought for references and even that were negatived.

Two aspects become relevant here. The first is about the view taken by the Tribunal, as to the maintainability of the appeal, and the second is about the merits of the references. Though it is essential to maintain a clear distinction between these two aspects, the discussion would be such that there is bound to be overlapping, in the process of answering the questions sought to be referred. The discussion necessarily must be undertaken, though not in absolute terms, about the view expressed by the Tribunal, about the maintainability of the appeals.

Had it been the case where the order passed by the original authority i.e., the Assistant Collector of Customs was not the subject matter of the appeal before the Collector of Customs, by the time, it landed before the Tribunal; refusal to entertain an appeal, could have certainly been treated as legal. However, since the order in original, dated 16.10.1992, has been the subject matter of the appeal before the Collector of Customs; insisting that the applicants ought to have availed that remedy, would amount to being too hyper technical, particularly when both the remedies up to that stage are quasi judicial in nature.

The adjudication is a comprehensive process, more so where a hierarchy of remedies is provided. Under the Act, independent examination of the matter takes place for the first time before an appellate authority. The order of assessment is indeed, a pure administrative exercise. The appellate authority would address all the questions in detail, record the findings of fact, express a view on the questions of law, and adjudicate the matter as it finds appropriate. The appeals therefrom are to the Tribunal and hardly there exist any restrictions, on its power even to deal with questions of fact.

If the proceedings are in relation to an individual or an agency, they are expected to pursue the remedies, at every stage of the hierarchy as provided for in law. Even where there are more parties to the same proceedings, they too are required to pursue the remedies as provided for in law, even if their grievances vis-à-vis the orders under appeal are specific to them. However, if the appellate authority had an occasion to deal with the matter in detail, when approached by one of the several parties to the proceedings, the one, who did not avail the remedy, may justifiably feel that the same result would ensue, if he or she approaches that authority and can think of pursuing the remedy before a higher forum, provided for under the concerned statute. Requiring such party to undergo the same ordeal, as did the other parties, may amount to just subjecting him to the process, knowing fully well, the result thereof. This is particularly so, when the fora are quasi judicial in nature. The effort should be to address the controversy than to be excessively technical.

In the instant case, there is an angle, which cannot be overlooked. The applicants did not undertake any business or manufacturing activities of their own. Whatever they did was in their capacity as employees of the Company. The penalty was not in relation to their returns. They were certainly justified in relying upon their employer to pursue the remedies on their behalf also and the advise, if any, not to prefer independent appeals cannot be said to be totally lacking merits. As a matter of fact, their employer has also pleaded for them. By the time the appellate authority took the view that the employer of the applicants cannot canvass their case, the stipulated limitation stood expired. Therefore, the only alternative for the applicants was to approach the superior forum, namely, the Tribunal. A peculiar part of the case is that their employer i.e., the Company, which availed the remedy of appeal before the Collector of Customs, did not feel the necessity to pursue the further remedies before the Tribunal, but the applicants, who did not prefer an appeal before the Collector of Customs, came under the necessity to file appeals, before the Tribunal.

Time and again, the Courts have taken the view that the procedure is a handmaid and it cannot frustrate the adjudication of the dispute, as such. The Parliament created as many as four remedies, under the Act, to a party aggrieved by an order of assessment or penalty, namely, the appellate authority, the Tribunal, the High Court and the Supreme Court. On account of the lapse, which, one directly cannot attribute to the applicants, they were denied of the adjudication, at any stage, whatever against the original order. The primary duty of the Tribunals and the Courts is to address the actual controversies and they cannot be swayed away by hyper technicalities, unless the procedural lapse was so serious that it goes to the root of the matter. Therefore, in the peculiar circumstances of the case, the Tribunal ought to have entertained the appeals.

Having refused to entertain the appeals preferred by the applicants, the Tribunal rejected the application to refer the matter to this High Court. The Tribunal did take note of the judgments of the Supreme Court, wherein the principles governing the reference of the matter to the High Court were enunciated. The judgment in Sree Meenakshi Mills Limited, Madurai Vs. Commissioner [1] of Income Tax, Madras is almost a treatise on the subject. What has been summed up by the Supreme Court was extracted by the Tribunal in para 24 of its order. Speaking for the Bench, Justice Venkatrarama Ayyar discussed the subject at length, with reference to the precedents, Indian as well as foreign and the enlisted circumstances, under which, the references can be ordered, and when not.

Broadly stated, the references were held to be mandatory, when what is sought to be referred to, is a question of law. So is the case, when reference is sought, of a mixed question of fact and law. An element of subjectivity was added only, where the proposed reference is about the question of fact. In para 10 of the judgment, an illustration of cases involving questions of fact and law was furnished. Support was derived from cases decided by the House of Lords and other British Courts, as to the maintainability of an appeal before a forum, to settle the question of law. The case on hand fits into the same. In that view of the matter, the Tribunal ought to have acceded to the request of the applicants.

The next question is about the course to be adopted under the law, as it stood, when the Tribunal refused to refer the matter to the High Court. The law was that if an aggrieved party approaches the Court by filing an application for reference, on being unsuccessful before the Tribunal, the High Court must require the Tribunal, to refer the questions to it, if it was satisfied that the question ought to have been referred. Sub-Section 3 of Section 130 of the Act reads:

"Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question."

If this course is adopted, the High Court must require the Tribunal to refer the question, which it has dealt with, to itself and then proceed to decide the matter. The Parliament realized the futility of such exercise and has done away with this procedure by amending the Act. Similar provisions, that were existing in the Income Tax Act and the Central Excise Act, were also deleted. The law, as it stands now, is substantially different. The Tribunal, which was known as CEGAT, has been replaced with a different adjudicatory body. The present law does not provide for reference being made to the High Court, on being required. If for any reason, such reference is made, either it would be a futile exercise, since the High Court has already addressed the issue, or/and the matter would be pending before this Court for another decade, if past experience is any indication. Logical extension of a pedantic approach would be that:

(a) The Tribunal, which is now functioning under the Act, must be required to refer the question framed by the applicants herein to the High Court,

(b) If such question is referred, the corresponding case before the High Court must await its turn for disposal for years together, and

(c) What would be decided at that stage would be as to whether the appeals before the Tribunal at the instance of the applicants were maintainable.

In other words, the appealability of the order passed in the year 1992 would arise for consideration before this Court somewhere after the year 2020.

It does not need any specific effort to point out the weakness in the system or the futility of the remedies, if the course referred to above is adopted. Every reputed jurist subscribed to the view that:

(a) Law is not static nor it is in a straight jacket, and

(b) Courts are not helpless before the rigid and futile frame of procedure.

In the ultimate analysis, the procedure is only a tool, to enable the parties as well as the adjudicating agencies to address the real controversy, than to go around it in futile exercise. More and more, the procedure is permitted to dominate the proceedings beyond the point, there is every likelihood of the very substantive law being rendered futile and citizens being left remedyless. Whatever be the necessity and admissibility to stick to the procedure, the peculiar facts of this case warrant a course of action, which need not be taken a general rule or precedent.

Further, this is not a maiden effort in this case alone. I n Commissioner of Income Tax vs. Maharishi Ved [2] Vigyan Vishwa Vidya Peetham , the Delhi High Court; i n Commissioner of Income Tax v. Munak Engineers [3] (P.) Ltd., the Punjab and Haryana High Court and in [4] State of Orissa v. Mahabir Prasad Agrawalla the Orissa High Court, have taken the view that answering the questions straightaway, instead of requiring the Tribunals to frame the questions and send to the High Court once again, cannot be said to be contrary to the letter and spirit of law. Obviously, realising the futility of such exercises, the Parliament itself amended the law providing for appeals to the High Court, straightaway on questions of law. Even otherwise, the relief of requiring the Tribunal to entertain the appeal preferred by the applicants herein, can be granted.

The writ petition challenging the order, dated 16.10.1992, cannot be entertained, since that order was the subject matter of appeal and reference.

Hence, the Reference Cases are allowed, holding that the appeals preferred by the applicants against the original order, dated 16.10.1992, passed by the Assistant Collector of Customs as confirmed in appeal are maintainable. The order, dated 16.11.1993, passed by the Tribunal is set aside. The Tribunal, which is now functioning in the place of the CEGAT, shall take up the appeals and dispose of the same on merits, as early as possible. There shall be no order as to costs.

The Writ Petition is dismissed.

The miscellaneous petitions filed in the reference cases and the writ petition shall stand disposed of.

_____________________ L. NARASIMHA REDDY, J 8th October, 2014 Note: LR copy be marked.

(b/o) cbs

HON'BLE SRI JUSTICE L. NARASIMHA REDDY AND HON'BLE SRI JUSTICE CHALLA KODANDA RAM

R.C.Nos.2 and 3 of 1997 and W.P.No.27775 of 1996

COMMON ORDER:(per Hon'ble Sri Justice Challa Kodanda Ram)

1) I had the benefit of reading the common Order written by my learned brother and as I am unable to agree with the

reasoning and the result, this separate Common Order if being made.

2) There are two Reference Cases and one Writ Petition.

1st and 2nd petitioners in the Writ Petition are the applicants in the R.C.No.3 of 1997 and R.C.No.2 of 1997 respectively. Both the

Reference Cases and the Writ Petition had arisen on account of the Order-in-Original, dated 16.10.1992 passed by the Collector of

Customs & Central Excise, Hyderabad (in short "Collector

(Customs))" under Sections 111 and 112 of the Customs Act, 1962 (in short "the Act"). It would be appropriate if the cases are being

disposed of by a common order, though dealing separately, as the

statutory provisions applicable are entirely different.

Reference Case Nos.2 and 3 of 1997:

3) The applicant in R.C.No.3 of 1997 is the Commercial

Officer of M/s O.R.G. Systems (A Division of M/s Sarabhai

Electronics Ltd., Baroda) (hereinafter referred to as "the Company"). The applicant in R.C.No.2 of 1997 was the Senior

Materials Manager (hereinafter referred to collectively as

"applicants 1 and 2").

4) A show cause notice dt.07.03.1992 came to be issued to the Company, alleging misdeclaration of the goods as "repaired

and returned items" whereas the goods imported appear to be

Branch New Items and thus violated the provisions of Section 11 of the Act and liable to be confiscated under Section 111 (m) of the

Act, apart from penal action under Section 112(a) of the Act. The

Applicant No.1, who was the Commercial Officer at relevant point of time alleged to have subscribed the importers declaration and also the declaration under Section 10 of the Customs Valuation Rules, 1988 by indicating the goods as "Received after Repair",

thus abetted the offence of evading of the customs duty. Both the

Company and the Applicant No.1 was granted 30 days time for submitting their objections/representations to the Additional

Collector of Customs. The show cause notice came to be replied

by the Company as well as the Applicant No.1 vide their letters dated 22.05.1992. It may be noted that a perusal of the show

cause notice does not disclose any notice having been issued to

the Applicant No.2 (Sr. Materials Manager). Both the Company as well as the Applicant No.1 sought in their representation

opportunity of personal hearing before deciding the case.

Thereafter, the Order-in-Original dated 16.10.1992 came to be passed by the Collector (Customs) confirming the allegations in

the show cause notice and the Company was found to have

violated the provisions of the Act. The confiscation of 45 numbers of Winchester Disc Drivers was ordered by giving an option to

redeem the same on payment of fine of Rs.3,00,000/-in lieu of confiscation in addition to appropriate customs duty, a penalty of

Rs.1,50,000/- was imposed on both the Applicants. As against the

Order-in-Original, the Company filed an appeal before the Collector of Customs & Central Excise (Appeals), Hyderabad (in

short "the Collector (Appeals), who confirmed the finding that the

goods imported were brand new and they are liable to be confiscated. However, the Regional Authority was directed to refix

the value taking into consideration of the submissions of the

Company. When a plea was made on behalf of the Company that penalty against the Applicants may be set aside, the same was

rejected by the Collector (Appeals) by its order dated 13.05.1993, on the ground that there was no appeal filed by the Applicants.

The Collector (Appeals) rejecting the appeal was further appealed

by the Company before the Customs, Excise and Gold (Control) Appellate Tribunal (in short "the CEGAT") under Section 129(B) of

the Act.

5) The appeals came to be considered by a Special Bench

consisting of three members, in its Order dated 22.11.1993 (now reported in C.R.Salian and H.C. Choksi Vs. Collector of

[5] Customs, Hyderabad . In the said appeal an objection with

regard to the maintainability of the appeal was raised. The Special

Bench by majority of 2:1 had sustained the objection and held that

the appeal as not maintainable as the Order-in-Original was not appealed against and thus had become final. Thereafter,

applicants 1 and 2 filed applications before the Tribunal under

Section 130 (1) of the Act praying the CEGAT to refer the question of law "Whether the Tribunal was right in dismissing the

appeal filed by the applicant as not maintainable?" to the High

Court for its opinion. The CEGAT, after considering the elaborate arguments and by referring to various judgments on the issue, had

refused to state the questions of law said to be arising from the

orders of the Tribunal. As against such orders of the CEGAT refusing to refer the questions, the applicants have filed present

Reference Cases invoking the jurisdiction of the High Court under Section 130(3) of the Act with a prayer to refer the questions of

law to this Court so as to consider the same under Section 130(i) of the Act.

6) In the applications for reference filed under Section 130(3) of the Act, briefly stated the following grounds in support of

the applications:

1) The question which falls for consideration in the appeal,

"Whether the appeal filed by the Company before the Collector (Appeals) questioning the penalty levied against

the appellant itself is maintainable or not?" is the question of

law?

2) Whether the Company cannot be said to be aggrieved by the Order-in-Original?

3) Whether the appeal filed by the company cannot be said to be an appeal on behalf of the applicants, who are only

officers acting for and on behalf of the Company and not in their individual capacity?

4) In that view of the matter, can it not be said that the Company is the actual person aggrieved. Whether the

refusal of the Tribunal is on a very narrow interpretation and too technical etc. At any rate, the question sought to be

referred is a pure question of law and therefore the Tribunal

erred in declining to make a reference to the Hon'ble High Court.

7) By raising the above grounds, the question of law

extracted in the para No.5 is prayed to be referred.

8) At the outset, I would like to make it clear that the order

of the CEGAT refusing to refer, is an elaborate order considering the good number of precedents, wherein legal precedents

governing the scope of Reference Applications were considered

albeit arising under the Income Tax Act. It would be useful to set out the Section 66 of the Income Tax Act, 1921 (in short "the 1922

Act") and Section 256 of the Income Tax Act, 1961 (in short "the

1961 Act"). So far as they are relevant for the purpose of this case are extracted (as existing at relevant time).

9) Section 256 of the 1961 Act, reads as under:

256(1): The assessee or the Commissioner may, within sixty days of the date upon which he is served with notice of an order passed before the 1st day of October, 1998, under section 254, by application in the prescribed form, accompanied where the application is made by the assessee by a fee of two hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High court.

Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days.

(2) If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusal, apply to the High Court, and the High Court may, if it is not satisfied, with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appellate Tribunal shall state the case and refer it accordingly.

(3) Where in the exercise of its powers under sub- section(2), the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives notice of such refusal, withdraw his application, and, if he does so, the fee paid shall be refunded.

10) Section 66 of 1922 Act, reads as under:

Section 66 - Statement of case by Commissioner to High Court:

(1) if, in the course of any assessment under this Act or any proceeding in connection therewith other than a proceeding under Chapter VIII, a question of law arises, the Commissioner may, either on his own motion or on reference from any Income-tax authority subordinate to him, draw up a statement of the case and refer it with his own opinion thereon to the High Court.

(2) Within one month of the passing of an order under section 31 or section 32, the assessee in respect of whom the order was passed may, by application accompanied by a fee of one hundred rupees or such lesser sum as may be prescribed, require the Commissioner to refer to the High Court any question of law arising out of such order and the Commissioner shall, within one month of the receipt of such application, draw up a statement of the case and refer it with his own opinion thereon to the High Court:

Provided that, if, in exercise of his power of review under section 33, the Commissioner decides the question, the assessee may withdraw his application, and if he does so, the fee paid shall be refunded.

(3) If, on any application being made under sub- section (2), the Commissioner refuses to state the case on the ground that no question of law arises, the assessee may apply to the High Court, and the High Court, if it is not satisfied of the correctness of the Commissioner's decision, may require the Commissioner to state the case and to refer it, and, on receipt of any such requisition, the Commissioner shall state and refer the case accordingly.

11) Section 130 of the Customs Act, under which reference is sought, may also be noticed.

Section 130(1): The Commissioner of Customs or the other party may, within sixty days of the date upon which he is served with notice of an order under section 129B passed before the 1st day of July, 1999 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment), by application in such form as may be specified by rules made in the behalf, accompanied, where the application is made by the other party, by a fee of two hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court;

Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days.

(2) On receipt of notice that an application has been made under sub-section (1), the person against whom such application has been made, may, notwithstanding that he may not have filed such an application, file, within forty-five days of the receipt of the notice, a memorandum of cross- objections verified in such manner as may be specified by rules made in this behalf against any part of the order in relation to which an application for reference has been made and such memorandum shall be disposed of by the Appellate Tribunal as if it were an application presented within the time specified in sub-section (1).

(3) If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the Commissioner of Customs, or, as the case may be, the other party may, within six months from the date on which he is served with notice of such refusal, apply to the High Court and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appellate Tribunal shall state the case and refer it accordingly.

12) A comparative reading of Section 66 of 1922 Act, Section

256 of 1961 Act and Section 130 of the Act, would leave no manner of doubt that the provisions in these enactments are

analogous and are in pari materia. It is well settled by the

Judgment of the Supreme Court in Commissioner of Income Tax Vs. Bansi Dhar & Sons & Commissioner of Income Tax, Bihar

[6] Vs. Chathuram Bhadani etc., . Interpretation given with

respect to an analogous provision, which is in pari materia in a cognate act, can be a reliable guide in interpreting the provisions.

13) While refusing to make a reference under Section 130(1)

of the Act, the CEGAT in the present case after analyzing the facts in relation to, in its earlier judgment rendered by a 3 Member

Bench, New Delhi on 22.11.1993, gave a categorical finding that

on account of the fact applicants 1 and 2, in spite of having an opportunity to file an appeal before the Collector (Appeals), had

failed to exercise their right and thus allowed the order passed by

the Collector (Appeals) original authority) under Section 129A(1) of the Act, to become final and binding. After analysis of the

provisions as well as the precedents governing the same, the

Special Bench of the CEGAT in its order dated 22.11.1993 had held, the appeals filed by the applications against the orders of the

Collector (Appeals) passed in the appeal filed by the Company is not maintainable. The collector (Appeals) had refused to entertain

the arguments for and on behalf of applicants 1 and 2 as they were not parties, who had preferred appeal and specifically rejected the

contention on their behalf while passing orders under Sections 111

(m) and 112 (a) of the Act. The CEGAT having analyzed and

considered the nature of powers exercised by the original authority

as well as the appellate authorities had come to a conclusion that the Company cannot be said to be person aggrieved or aggrieved

person and the actual aggrieved persons had not chosen to

exercise their right of appeal. The CEGAT also found that the

appeal is a statutory remedy conferred and the procedure

governing entertaining, consideration and disposal of the appeal, is

strictly governed by the Act. In other words, in the opinion of the CEGAT, there is no scope to consider a plea to decide the

parameters of the statues prescribing the limitation. The

reasoning of the CEGAT is to the effect that without filing an

appeal against the Order-in-Original by the applicants, no further

appeal can be filed to the second appellate authority treating an

order passed in the case of the Company by the 1st appellate

authority as an order passed in their case.

14) The entire interpretation may sound to be too technical

and pedantic, however, at the cost of reputation it may be worth

mentioning that the order of the Special Bench was of three

Members, wherein there was a difference of opinion between the Judicial Members and the Technical Member. In other words,

there is a scope for an element of discussion and debate. The

CEGAT rejected the application stating that there is no referable

question of law and the order of the CEGAT dated 22.11.1993

reported in C.R.Salian and H.C. Choksi case (1 supra) was on

appreciation of a simple question of fact.

15) Now it is well settled by a catena of judgments that the

High Court in answering a question under Section 66 of 1992 Act

or Section 256 of 1961 Act, it has no appellate or revisional

jurisdiction but only advisory jurisdiction. The above statement of

law which was originally propounded in the case of Tata Iron & [7] Steel Co. Ltd., Vs. Chief Revenue Authority , 50 Indian

Appeals 212 of the Judicial Committee was reaffirmed in The

Commissioner of Income Tax Vs. Bombay Port Trust [8] Corporation Ltd., (1935 Indian Appeals 408 and 157 ELT 665

(SC)]. Further in Income Tax Commissioner of CIT Bombay vs.

[9] Sindia Steamship Navigation Co., Ltd., a Constitution Bench

of the Supreme Court held that reference jurisdiction was special

jurisdiction which is different from appellate or revisional or

supervisory jurisdiction over the Tribunal.

16) In the context of dealing with the powers of the High

Court under Section 66 of 1992 Act and Section 256 of 1961 Act, a

categorical argument on behalf of the parties that High Court

exercised inherent powers akin to general jurisdiction under Article

227 of the Indian Constitution was specifically rejected by the Supreme Court in Commissioner of Income Tax Vs. Bansi Dhar

[10] & Sons . Further in the case of C.P. Sarathy Mudaliar Vs.

[11] Commissioner of Income Tax, A.P., Supreme Court while

reversing the judgment of the AS.P. High Court had held as

follows:

"6. We need express no opinion on the correctness or otherwise of the view expressed by the High Court in this judgment, for we are clearly of the view that the procedure followed by the High Court is erroneous. The High Court, in a reference under section 66 of the Income-tax Act, is exercising advisory jurisdiction; it is not sitting in appeal over the judgment of the Tribunal. If a question is raised by the Tribunal and referred to it, it is the function of the High Court to answer that question. The Tribunal will thereafter give effect to the opinion of the High Court. If the High Court finds that material facts are not stated in the statement of the case, or the Tribunal has not stated its conclusions on material facts, the High Court may call upon the Tribunal to submit a supplementary statement of case under section 66(4). But the High Court has no power to set aside the order of the Tribunal even if it is of the view that the Tribunal has not considered the question which, in the opinion of the High Court, should have been considered. The High Court must answer the question posed before it; thereafter, it is the duty of the Tribunal to pass such orders as are necessary to give effect to the judgment of the High Court conformably to that judgment."

17) The scope of consideration in disposing of an application filed under Section 130(2) of the Act, by the High Court is highly

limited and restricted. In the words of the Supreme Court, if a

question sought to be referred is a live issue and there is a scope

for debate ,thereby there is a possibility of more than one view and

the issue raised is not settled by any binding judicial precedent,

the High court in exercise of its powers under Section 130(2) of the Act should call for reference and answer the question of law.

A reference may be made to the orders in Income-Tax Officer Vs.

[12] Unique Mfg., and Marketing Co., Ltd., and Commissioner

[13] of Income Tax Vs. Managing Trustee, Jalakhabai . In

particular, in Commissioner of Income Tax case (9 supra) at

page 622 it was held that at the 256(2) stage High Court isnot

called upon to decide whether the question may ultimately be

decided in favour of the assessee, the High Court had only to

consider whether a question of law which may be supported by

reasonable arguments arises or not.

18) In the case on hand as stated supra there was a difference of opinion between two Judicial Members holding that

appeal filed by the applicants was not maintainable as against the Technical Member taking a view that appeal filed by the applicants

as maintainable. L in other words, there was a difference of

opinion and there was a scope for debate. The issue of this nature

did not fall for consideration earlier before any High Court, or

before the Supreme Court. In those circumstances, the question

being debatable is required for consideration.

19) In the light of the discussion above, in relation to the

scope of the powers of the High Court, while considering the

application seeking reference of a question of law, said to be

arising from the orders of the CEGAT, I am of the opinion the question of law sought to be referred as a question of law arising

from the orders of the CEGAT.

WRIT PETITION No.27775 of 1996:

20) The Writ Petition is filed questioning the Order-in-

Original dated 16.10.1992 passed by 2nd respondent-Collector of

Customs, Hyderabad. Petitioner No.1 is Commercial Officer and

Petitioner No.2 is Sr.Materials Manager of the 5th respondent-M/s Sarabhai Electronics Ltd. During the period 14.01.1992 to

06.02.1992, the 5th respondent-Company alleged to have imported Winchester Disk Drivers and misdeclared the same to be

"repaired and returned items". As the import of Winchester Disc

Drivers by misdeclaring was in violation of the Customs Act, a

show cause notice dated 07.03.1992 came to be issued against

the Company and also against the petitioners herein under Section 127-B of the Customs Act, 1962 (in short "the Act"). The

Company filed their reply to the show cause notice denying the

allegations. Petitioner No.1 also filed a letter dated 22.05.1992

submitting that the Company had filed a detailed reply and prayed

for dropping of the penalty proceedings against him in his individual capacity. Record does not disclose any show cause

notice having been issued to petitioner No.2. Both the petitioner

No.1 and the 5th respondent-Company availed the opportunity of

personal hearing through their advocate before the 2nd respondent. Respondent No.2 passed Order, dated 16.10.1992,

whereunder and whereby the imputations in the show cause notice

came to be confirmed against the Company, giving an option to the

Company to redeem the goods by paying redemption in lieu of

confiscation. Petitioners, were found to be indirectly responsible being officers of the Company and a penalty of Rs.1,50,000/- each

came to be imposed on them under Section 112 (a) of the Act.

The Company alone filed appeal against the Order-in-Original

dated 16.10.1992 before the 2nd respondent, who confirmed the

allegations of new disc drives by misdelcaration but directed fresh

consideration with respect to valuation for the purpose of levy of

customs duty. So far as the petitioners are concerned, plea made on their behalf in the Company's appeal that the penalty imposed

on them should be set aside, was rejected. Company did not file

further Appeal questioning the orders of the 2nd respondent. Both

the petitioners filed appeal before the CEGAT under Section 129(b)

of the Act, assailing the order of the 2nd respondent, which was

rejected as not maintainable. Therefore, both the petitioners filed applications before the Tribunal under Section 130(1) of the Act,

and sought reference of question of law "Whether the Tribunal was right in dismissing the appeal filed by the applicant as not

maintainable?" said to be arising from the orders of the Tribunal,

which came to be rejected by the Tribunal by its Order dated

29.01.1996. Thereafter, both the petitioners filed applications

under Section 130(3) of the Act as reference cases i.e. R.C.Nos.3

and 2 of 1997 before the High Court. Simultaneously, both the petitioners had filed the Writ Petition assailing the orders of the

2nd respondent, in the Writ Petition.

21) In the affidavit filed in support of the Writ Petition,

petitioner had narrated the facts as set out above and as such I do

not see any reason to repeat the same. The Writ Petition affidavit

was sworn by the 2nd respondent-H.C. Chokshi, on behalf of both

the petitioners.

22) Paragraph Nos.1 to 10 is only a narration of the facts

and also explanation in relation to the merits of the matter with

regard to the shipment trying to justify the goods imported were

not new ones but the goods returned after repair. In brief, it is the contention of the writ petitioners that the Order-in-Original has

been made against the Company and the liability, if any, has to be

borne by the 5th respondent; the petitioners have acted bonafide

and as such they did not file appeal under the impression that the

Company would also attend to on their behalf; and they have not

acquiesced with the Order-in-Original; and even if the petitioners

had filed a separate application against the Order-in-Original the entire expenses of the appeal as well as the legal charges would

have been borne by the 5th respondent-Company alone; the

rejection of the plea of the 5th respondent-Company by the Collector to exonerate the petitioners on the ground that the

petitioners had not filed separate appeals, is too technical and

does not stand to legal scrutiny. There was also a specific plea by

the 2nd petitioner that there was never any notice issued to him

and as such, the very passing order against him was in violation of

Section 124 of the Act, besides being violative of principles of

natural justice. As the petitioners were prosecuting appeals before the Tribunal against the order of the Collector and Reference

Applications were being filed, there were no latches in filing the

Writ Petition. With the above contentions petitioners prayed for

issuance of Writ of Certiorari and to quash the order dated

16.10.1992 passed by the 2nd respondent.

23) Record does not disclose any counter having been filed on behalf of the respondents.

24) We have heard the learned counsel for the petitioners Sri

P. Venu Gopal, and Sri Gopala Krishna Gokhaly, learned counsel

for the respondents 1 to 4. As the Writ Petition and R.Cs were clubbed together, they were heard together and the facts are not in

dispute. As set out in para No.1 above, the Order-in-Original

though made against three parties, only the Company had pursued

the remedy of appeal before the forums provided under the

statute. Admittedly, both the petitioners failed to avail of the statutory remedies of appeal. The plea on their behalf came to be rejected and as of date, Order-in-Original had become final. While

dealing with the Reference Application Nos. 2 and 3 of 1997, after

analyzing the statutory provision and the scope of reference

applications, I had come t the conclusion that a question of law

does arise from the order of the Tribunal and the Tribunal had erred in coming to the conclusion that there is no question of law

and the question, which is sought to be referred, is a pure question

of fact. Now, the question is the Writ Petition filed questioning the

Order-in-Original by the petitioners who had already taken

recourse to the remedies available under the Act is maintainable

and required to be considered, as it would be allowing the petitioners to proceed with simultaneously seeking two parallel

remedies.

25) In peculiar facts of this case, I am of the opinion that so

far as the petitioner No.2 is concerned, the Writ Petition deserves to be considered and he is entitled for the relief on the simple

ground that at no point of time he was issued a notice under

Section 111(m), 1112(a) of the Act. Thus, there is a clear violation

of mandatory and statutory provisions. The fact that he was never

issued a notice, is not specifically denied in the Writ Petition and as a matter of fact while considering the appeals C/723 and

C/722/93-B2 decided on 22.11.1993, the Tribunal had recorded

"the facts of the case are that the department issued a show

cause notice dated 07.03.1992 to M/s. ORG Systems and to C.R.

Salian above named appellants and it appears no show cause

notice was issued to Shri H.C.Choksi, the other appellant in this case under Sections 111(m), 112(a) for violation of Section 11 of Customs Act, 1962" (See para 2 of the Order in C.R. Salian and

H.C. Choksi case (1 supra). So far as the petitioner No.1 is

concerned no such ground is available to him.

26) So far as petitioner No.1 is concerned the relief under

Article 226 cannot be granted as there is no plea of violation of

either of statutory provision or lack of jurisdiction in the authority in passing the impugned order.

27) It may also be noted that the 1st petitioner-C.R.Salian,

Commercial Officer, was the one who subscribed the importers

declaration and also the declaration under Rule 10 of Customs

Valuation Rules, 1988 and it was the specific allegation that Shri

C.R.Salian indicated the goods as "Received after Repair". This

imputation was not denied by the 1st petitioner. Further, the nature

and extent of his involvements and to what extent the 1st petitioner

as an Officer of 5th respondent was responsible with regard to

alleged violation of the statutory provisions in importing

Winchester Disc Drivers by misdeclaring them as items brought for repair is pure simple question of fact, which cannot be decided

by this Court in exercise of its jurisdiction under Art.226 of the

Indian Constitution. At any rate, after considering the reply on

behalf of the 5th respondent, which was adopted by the 1st

petitioner, the Order-in-Original came to be passed and in the

absence of any legal infirmity with respect to the jurisdiction error

in passing order or violation of principles of natural justice, a Writ of Certiorari cannot be issued in the case of the petitioner No.1.

Further, he had already invoked the jurisdiction of the CEGAT under the provisions of the Act.

28) In the light of the discussion above, I am inclined to allow the Writ Petition so far as petitioner No.2 quashing the Order-in-

Original dated 16.10.1992. In the facts and circumstances

narrated above and a Writ of Certiorari deserves to be issued in

favour of the petitioner No.2, while rejecting such relief to the

petitioner No.1.

29) In the light of the fact, Reference Cases filed under

Section 130(3) of the Act, and the Writ Petitions filed questioning

the Order-in-Original are clubbed together and heard together, in

the final result, I allow the Writ Petition so far as petitioner No.2 is

concerned quashing the Order-in-Original. L In the light of allowing the Writ Petition quashing the impugned order, RC No.2 of 1997

need not be ordered and hence rejected.

So far as petitioner No1 is concerned, Writ Petition is

dismissed and R.C.No.3 of 1997 is allowed. Accordingly,

jurisdictional Tribunal is directed to state a case with respect to question of law referred to in Para No.5 of this Order. There shall

be no order as to costs.

____________________________ CHALLA KODANDA RAM, J Date: 08.10.2014 Ssv [1] (S) AIR 1957 SC 49 [2] 232 ITR 170 [3] 271 ITR 362 [4] 79 STC 163 [5] 1994 (71) ELT 81 (TRI-Delhi) [6] 1985 SCALE (2) 1416 [7] Bombay 1923 Privy Council [8] (1928) 30 BOMLR 1172 [9] 1961 42 ITR 589 (SC) [10] 1985 SCALE (2) 1416 [11] (1996) 62 ITR 576 (SC) [12] 52 ITR 28 [13] 66 ITR 619