Very often I find that the judges of the Apex Court dismiss the SLP within seconds without even giving an opportunity to the Appellant's Counsel based on their own mindset and issues involved. In three cases I have personally heard from Learned Judges that how can particular action can be taken despite there being settled position in law.
That's where I had in mind to pen down a this article as I thought of expressing my concerns on the subject. In fact this also reminds the conduct of quite a few judges who are more concerned about quick disposal of cases, the miscarriage of justice is maximum. In case of Indirect Taxation at the adjudication level and also at the first appellate level, the justice in 90% cases is denied. To my mind this happens when the Revenue Targets are fixed by the Finance Ministry in line with the “Marketing Company Norms” the abuse of the law is maximised. In absence of policy of Incentivisation and punishment, the guilty get away without any punishment, despite getting rewarded. Therefore, as and when I am confronted with the contradictory decisions flowing from the institutions that are supposed to settle the law, I remember the words of Late Martin Luther King
"Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress”
- If justice delayed is justice denied, then justice hurried is justice buried. It is an irony of fate that both these well-established metaphors of legal jurisprudence apply to the catena of judgments delivered during last couple of months by Hon’ble CESTAT, Principal Bench which is the highest fact-finding body. A recent disturbing trend has started in which two Technical Members while sitting with one Judicial Member render judgments that contradict the ratio laid by the judgments authored by him while sitting with another judicial member. Hon’ble High Court of Himachal Pradesh and Hon’ble High Court of Bombay had come down heavily and had passed strictures in the past on such decisions. These High Court rulings have not deterred Technical Members from passing such contradictory orders.
- The problem for the Hon’ble CESTAT, which as an Institution has rendered yeoman service both to the Revenue and trade/ industry through its landmark judgments, has arisen due to flawed orders passed by most departmental adjudicating officers, forcing the tax payers to file appeals in CESTAT. The pendency has been mounting up in the CESTAT and now there is a pressure to liquidate the same. It is in this background, that the CESTAT has begun liquidating the pendency in hurry that has led to the situation of denying justice once again both to the Revenue and Trade/Industry.
- In the recent past for assisting the Bench a new practice of filing Written Submissions prior to hearing was introduced by Principal Bench, CESTAT New Delhi. This was a step in right direction because while drafting Written Submissions the Counsels invariably have to go through the files, ascertain the facts and legal issue involved and summarize the arguments supported by judicial precedents. Counsels have capability to summarize the arguments in a brief and effective manner.
- Still filing of written submissions have not helped in passing of judicious orders because the Principal Bench of Hon’ble CESTAT very often did not refer to these submissions placed on record and in quite a few cases did not even refer to the issue raised by the appellant and discuss the same in the final order pronounced. Thus, the appeals have been decided contrary to the facts and legal proposition germane to the issue. This reminds me the words of Theodore Roosevelt
- No man is above the law and no man is below it; nor do we ask any man's permission when we ask him to obey it. Obedience to the law is demanded as a right, not asked as a favor." ~
7. Hon’ble High Court of Madras in the case of Nandhi Spinning Mills (P) Ltd vs. CCE, Salem -2018 (8) G.S.T.L -103 (MAD) while remitting the matter back to CESTAT observed as under: -
2. The Tribunal is a final fact-finding authority. Though the Tribunal has considered the grounds of appeal, there is no discussion. Further, by relying on the decision of Punjab and Haryana High Court in the case of CCE, Chandigarh v. Modern Alloys [2010 (258) E.L.T. 364 (P&H)], Tribunal dismissed the appeal, which cannot be approved in the light of the decision of the Hon’ble Supreme Court in Tata Engineering & Locomotive Co. Ltd. v. Collector of Central Excise, Pune reported in 2006 (203) E.L.T. 360 (S.C.).
……………………
…………………….
(iii) In Commr. of Central Excise, Bangalore-II v. Fitwel Tools & Forgings (P) Ltd., reported in 2010 (256) E.L.T. 212 (Kar.), a Hon’ble Division Bench of Karnataka High Court, at Paragraph 5, held as follows :
“After careful perusal of the order impugned, it is manifest on the face of the order that the Tribunal has committed a grave error in passing the order impugned without assigning any valid reasons and without any discussion. By merely following the order passed in similar matters, it has proceeded to pass the impugned order, allowing the appeal filed by the respondent. Hence, we are of the opinion that the impugned order is cryptic in nature and such a non-speaking order cannot be sustained.”
8. Hon’ble High Court of Allahabad in the case of CCE vs. Oudh Sugar Mills -2017 (249) E.L.T 118 (All) while remitting the matter back to CESTAT observed as under: -
5. Strangely, Tribunal has passed a cryptic order holding that question of ‘Welding Electrode’ stands answered by some judgments of different High Courts and has given reference of three judgments, We have checked and find that only one judgment in Ambuja Cements Eastern Ltd. v. CCE, Raipur - 2010 (256) E.L.T. 690 (Chhattisgarh) has been rendered by Chhattisgarh High Court and rest two judgments are of Tribunal.
6. Issue with regard to other items, even otherwise, has not been considered. A very casual and cursory approach has been shown by Tribunal in deciding appeal of Revenue without looking into the question raised in respect to various items. Apparently, judgment of Tribunal is wholly non-speaking and unreasoned.
9. Similarly, Hon’ble High Court of Punjab & Haryana while remanding the matter back to CESTAT in the case of CCE- Delhi-lll vs. J. D. Auto Electric (P) Ltd- 2016 (337) E.L.T -171 (P & H) observed as under: -
10. A perusal thereof shows that it does not satisfy the test of a reasoned and speaking order. Further, it was noticed that the case had been booked against the respondent on the ground that the corporation had diverted the goods as they had altered the description of goods in the invoices issued by them showing the goods supplied by the manufacturer/supplier. It was only recorded that the revenue had failed to produce corroborative evidence to prove that the respondent had not received the goods against the invoices issued by the corporation. The Tribunal being a final fact-finding authority was required to deal with all aspects of facts and law and then record its conclusions based thereon. No legally justified reasons have been recorded by the Tribunal for dismissing the appeal of the revenue.
11. In view of the above, since the order dated 20-4-2015 (Annexure A-4) does not qualify being a reasoned speaking order as enunciated by the Apex Court in M/s. Kranti Associates Pvt. Ltd.’s case (supra), accordingly, the appeal is allowed and the order dated 20-4-2015 (Annexure A-3) passed by the Tribunal is set aside. The matter is remitted to the Tribunal to decide the same afresh for passing a well-reasoned speaking order after affording an opportunity of hearing to the parties in accordance with law.
10. The Principal Bench of Hon’ble CESTAT is bound by the command of judicial discipline and therefore, must pass order based on facts and legal position and not arbitrarily without discussions or consideration of law involved.
Judiciary must remain independent, but the independence demands that decisions be rendered on facts and merits. In this regard Stephen Breyer, Supreme Court Justice of U.S. Court of Appeals stated as follows:
Independence doesn't mean you decide the way you want. Independence means you decide according to the law and the facts."
A. Custom Valuation – SVB – Post importation charges not includible
A.1 It has been decided in catena of judgments that post importation charges are not to be included in the assessable value in terms of Section 14 of the Customs Act and Rule 3 & Rule 10 of the Valuation Rules Further, the transaction value is to be accepted even if in case of related parties so long as it is established that the relationship did not influence the price. Additionally, the Interpretative Notes to Rule 3 circulated by the Directorate General of Custom Valuation clearly spells out the exclusions.
A.2 It is incumbent on Revenue authorities to prove that the Importer had fulfilled contractual obligation on behalf of the exporter, consequent to which additional consideration flew back to exporter. Therefore, the amounts that were either payable or paid on behalf of the Exporter are includible in the assessable value.
A.3 The relevant judgments of Hon’ble CESTAT and the higher courts are as follows:
- M/s Samsonite South Asia Pvt. Ltd. vs Commissioner of Customs (Imports) [2015 (327) E.L.T. 528- (Tri. - Mum)]
- Orochem India Pvt. Ltd. vs Commissioner of Cus. (Imports) [2015 (327) E.L.T. 254 (Tri. - Mum)]
- SI Group India Ltd. vs Commissioner of Customs, Mumbai [2015 (319) E.L.T. 161 (Tri. - Mum)]
- Hindustan Machines vs. Commissioner of Central Excise [2013 (294) E.L.T. 43 (Tri. - Del.) which was affirmed by Hon’ble Delhi High Court in [2015 (322) E.L.T. 616]
- Philips India Ltd. vs. CCE Pune [1997 (91) E.L.T. 540 (SC)]
- LML Ltd. vs Commissioner of Central Excise, New Delhi [2001 (129) E.L.T. 131 (Tri. - Del.)]
- Rahul Springs (P) Ltd. vs CCE, Bolpur [2010 (251) E.L.T. 582 (Tri. - kol.)]
- Hindustan Machines vs Commr. Of Central Excise [2013 (294) E.L.T. 43 (Tri. – Del.)]
- Commr. Of Central Excise vs Hindustan Machines [2015 (322) E.L.T. 616 (Del.)]
- Commissioner vs Steel Authority of India Ltd. [2008 (225) E.L.T. A130 (SC)]
- C.C.E., Mangalore vs Mangalore Refinery & Petrochemical Ltd. [2015 (325) E.L.T. 214 (SC)]
- IOCL vs Commr. Of Central Excise [2017 (347) E.L.T. 611 (Tri. – Bang.)]
- Commr. Of Cus., Ahmedabad vs Essar Steel Ltd. [2015 (319) E.L.T. 202 (SC)]
- Commr. Of Cus., Chennai vs Denso Kirloskar Industries Pvt. Ltd. [2015 (324) E.L.T. 431 (SC)]
- Commr. Of Cus. (Appeals), Chennai vs Same Engines India Pvt. Ltd. [2015 (325) E.L.T. 241 (SC)]
- Saregama India Ltd. vs Commr. Of Customs, Airport, Mumbai [2017 (345) E.L.T. 236 (Tri. – Mum.)]
- Commr. Of Cus., (Import), Mumbai vs Hindalco Industries Ltd. Ltd. [2015 (320) E.L.T. 42 (SC)]
A.4 Hon’ble CESTAT in a recent judgment authored by a Member Technical, while sharing the Bench with Hon’ble Dr. Satish Chandra, President, in the case of REEBOK INDIA COMPANY VS COMMISSIONER OF CUSTOMS, PATPARGANJ vide Final Order No. C/A/50117/2018-CU [DB] dated 12.10.2017 held that post importation charges on advertisement incurred on its own are includible in the assessable value of the goods at the time of import despite there being a finding by the adjudicating authority that no amount was either payable or paid by the importer to the exporter.
B. Same member taking different views in similar matters sitting with different Judicial members
B.1 It is matter of record that the same Member Technical while sharing Bench with Hon’ble Ms. Archana Wadhwa Member Judicial in case of Commissioner of Customs, New Delhi vs. Srithai Superware India Pvt Ltd., [2017 (357) E.L.T. 912 (Tri. - Del.)] authored the judgment on similar issue to that of Reebok and rejected the departmental appeal with a view that transaction value is to be accepted if relationship between importer and exporter does not influence the price and such goods are not exported to any other buyer in India.
B.2 The same Technical Member authored while sharing Bench with Hon’ble Ms. Archana Wadhwa Member Judicial, upholding inclusion of Royalty payable in Custom valuation but dropping demand on inclusion of Product Consultancy charges the judgment in THYSSENKRUPP ELEVATOR (I) P. LTD. VS A.C.C. (IMPORT & GENERAL), NEW DELHI [2017 (356) E.L.T. 249 (Tri. - Del.)]
B.3 Therefore, it is clear from the above judgments that the judgment passed in case of Reebok is contrary to the judgments passed in the cases of Srithai Superware & Thyssenkrupp Elevator authored by the same Member Technical.
B.8 In the case of Hindustan Petroleum Corporation vs. Union of India 2010 (250) E.L.T -212 (BOM) Hon’ble High Court noted the conduct of one Member who authored two orders inconsistent with each other, hence held in Para 9 as under:-
9. The Tribunal, first and foremost, is duty bound by Article 141 of the Constitution of India to ensure that it follows binding precedent of the Supreme Court. The Tribunal as a judicial body must follow principles of consistency when it decides cases. The lack of consistency is clear on the face of record. In fact, as noted earlier the Tribunal has now passed a third order on 14th December 2009 on a stay application arising out of an appeal filed by the petitioner, by which the view taken in the first order dated 11th September 2009 is reiterated and a direction has been issued for the deposit of an amount of Rs. 1 crore towards a demand of duty. Faced with this situation, we are of the considered view that it would be appropriate to remit the proceedings back to the Tribunal for reconsideration of the matter having regard to the observations made by this Court earlier. Judicial orders must be passed by the Tribunal with a greater degree of circumspection and application of mind. Whim and caprice are alien to the judicial process. Consistency, based on judicial precedents should be the norm.
C. Judicial Discipline
C.1 The idea of penning down this article is to kick of an open honest and frank debate which may not be to the liking of many but yes the issues must be discussed in public interest. This view finds support from quote of William J. Brennan Jr., Supreme Court Justice
"…debate on public issues should be uninhibited, robust, and wide-open and it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials." ~
C.2 Unfortunately, while disposing off the appeals in a hurry to reduce litigation the principle of judicial discipline has been completely given a go by which is impermissible. The judgments settling the issues in question of are binding on all the authorities subordinate to the courts. The judgments pronounced by the Supreme Court would be binding on all the subordinate courts and adjudicating authorities and the Assistant Commissioner as well as the Commissioner. The reliance is placed on the following judicial precedents: -
(a) Union of India and Others vs. Kamlakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433 (SC)], wherein the Hon’ble Apex Court has succinctly held as under:
“6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual mala fides but with the fact that the officers, in reaching their conclusion, by-passed two appellate orders in regard to the same issue which were placed before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellant authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department - in itself an objectionable phrase- and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.”
(b) Tata Motors Ltd. vs. Union of India [2009 (244) ELT 337 (Bom.)], wherein in para 6 the Hon’ble Bombay High Court has held as under:
“6. We are at pains to understand the approach of the learned Tribunal. Judgments of higher Courts considering judicial discipline have to be followed by the Courts subordinate to the higher court. Failure to do so would result in judicial mayhem. Subordinate courts are bound to follow the judgments unless there be a subsequent judgment of a Higher Court which has taken a view different from the view earlier expressed.”
(c). M/s. Zenith Computers Ltd. vs. Commissioner of Central Excise [2014-TIOL-623-HC-Mum-ST], wherein the Hon’ble Mumbai High Court has held as under:
“The word 'adjudication' ordinarily means to act and decide judicially. The word 'acting judicially' is not performing some rituals or completing somehow the assigned work, but is a serious business. It requires continued application of mind and alertness. It should not be undertaken casually. No one can approach judicial proceedings in a lighthearted manner. If differing opinions are rendered frequently, then, that creates an imbalance. Certainty and consistency are necessary as that alone in stills confidence in the Institution of Judiciary and enables it to earn respect and regard for it. The trust and faith in it is then reaffirmed. Its efficacy is maintained. Then, Rule of Law prevails. The administration of justice and conferment of judicial power is intended to reach this goal. No litigant should thrive on uncertainty and unpredictability. If this basic rule of judicial discipline are not abided by and followed meticulously, there will be several complications and which would, then, require not just judicial intervention by the Higher Court but equally by the Parliament. The members of Tribunal should bear in mind that the Legislature expects them to give finality to certain matters. They are not expected to be left open endlessly. It is often said that lesser the Number of Appeals or interference by the Higher Courts the better it will be for the system. Justice delivery should be expedient and efficient. Ultimately, the Adjudication cannot be go on and on. It must end at some stage and at least on factual issues.”
C.3 The cardinal principal is that the justice must be done and be seen to have been done freely, impartially to protect the fabric of the society. This reminds me the words of Joseph Story, Supreme Court Justice
Without justice being freely, fully, and impartially administered, neither our persons, nor our rights, nor our property, can be protected. And if these, or either of them, are regulated by no certain laws, and are subject to no certain principles, and are held by no certain tenure, and are redressed, when violated, by no certain remedies, society fails of all its value; and men may as well return to a state of savage and barbarous independence." ~
Therefore, in the aforesaid background the Justice should be hurried but not buried hence denied.