TMI Blog2020 (9) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... on 27.11.2019 which is 7.5% of the penalty imposed in the order-in-original. Therefore, the appellate authority declared that appellant had made the mandatory pre-deposit and thus this requirement was satisfied - Appellate authority further noted that the appeal was heard on 09.12.2019. While counsel for the appellant attended the hearing and made submissions on behalf of the appellant, there was no representation on behalf of the Department. Department neither filed any crossobjection on the appeal memo nor submitted any written argument. Thus, it is quite evident that the Department did not contest the appeal filed by the petitioner under section 128 of the Customs Act. Significantly, neither in the affidavit-in-reply nor in the written submissions filed by the respondents there is any explanation for such default by the Department. This conduct of the Department is inexplicable and quite baffling to say the least. The foreign manufacturer obtained licence on 30.09.2019 from BIS for the standard specification IS 252:2013 for its manufactured goods i.e., caustic soda which was imported into India by the petitioner on 01.11.2018. Post the order-inappeal, test report of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the proper officer has reason to believe that any goods is liable to confiscation. Thus seizure may be said to be the first step to confiscation - So when the order of confiscation is set aside, the order of seizure cannot survive. Principles of judicial discipline require that orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. If this healthy rule is not followed, the result will be undue harassment to the assessees and chaos in administration of tax laws. The non-release of the goods of the petitioner by the respondents is without any justification and liable to be interfered with - on thorough consideration of the matter we direct the respondents to release the goods i.e., caustic soda of the petitioner imported vide bill of entry dated 01.11.2018 forthwith without any delay. Writ petition is allowed but without any order as to cost. - WRIT PETITION (ST) NO.5703 OF 2020 - - - Dated:- 2-9-2020 - UJJAL BHUYAN SMT. ANUJA PRABHUDESSAI, JJ. Mr. Vikram Nankani, Senior Advocate with Mr. Prithviraj Choudhary and Mr. Prabhakar Shetty for Petitioner. Mr. Pradeep S. Jetly, Senior Advocate with Mr. J. B. Mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oda was imported by the petitioner from M/s. Mena Energy, Dubai, United Arab Emirates vide bill of entry No.8697133 dated 01.11.2018. M/s. Mena Energy (referred to hereinafter as 'the supplier') had procured the aforesaid quantity of caustic soda from the manufacturer in Iran i.e., M/s. Aravand Petrochemical Company (referred to hereinafter as the 'foreign manufacturer') vide IGM No.2208452 dated 26.10.2018. The declared value of the goods is ₹ 30,70,90,590.00. 6.1. Petitioner has stated that the application made by the foreign manufacturer with BIS was not processed in time. In the meanwhile the consignment was shipped by the supplier. Therefore when the goods arrived in India it was not accompanied by the required BIS certificate in terms of the order dated 03.04.2018. As the goods reached the destination port i.e., Nhava Sheva, Raigad, petitioner filed bill of entry for warehousing under section 46(1) of the Customs Act, 1962 (briefly the 'Customs Act' hereinafter) till such time the required licence was granted to the foreign manufacturer. Being liquid cargo, discharge permission was procured and the cargo was discharged in petitioner's tank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation and Intelligence Branch (Import) seized the said quantity of caustic soda. 6.8. Ultimately, show cause notice dated 25.07.2019 was issued to the petitioner and M/s. Narendra Forwarders by Additional Commissioner of Customs, NS-V under section 124 of the Customs Act. It was alleged that the instant import was unauthorizedly done i.e., without having a due BIS certification for goods already arrived. Thus the importer had rendered the said goods liable for confiscation under section 111(d) of the Customs Act as well as liable for penal action under section 112(a) of the said Act. Hence the petitioner was asked to show cause. In so far M/s. Narendra Forwarders was concerned, it was asked to show cause as to why penalty should not be imposed on it under section 112(b) of the Customs Act. The show cause notice was accompanied by a list of relied upon documents. 6.9. Petitioner submitted its reply on 30.08.2019 followed by a detailed additional submission on 16.10.2019. 6.10. Petitioner has stated that in the meanwhile BIS issued licence dated 30.09.2019 to the foreign manufacturer after due verification of its premises and manufacturing process. As per the licens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized goods and imposed penalty of ₹ 1 crore on the petitioner. The proceeding against the customs broker M/s. Narendra Forwarders was dropped as it was found that there was absolutely total absence of any involvement by the customs broker in the commission of the offence. 8. Aggrieved by the aforesaid order-in-original dated 22.11.2019, petitioner preferred appeal before Commissioner of Customs (Appeals), Mumbai-II under section 128(1) of the Customs Act. Appeal was filed within the period of limitation and by making the requisite pre-deposit. 8.1. Commissioner of Customs (Appeals), Mumbai-II by the order-inappeal dated 20.12.2019 disposed off the appeal. The appellate authority noted that in compliance to section 129-E of the Customs Act, petitioner had made the pre-deposit of ₹ 7,50,000.00 which was exactly 7.5% of the penalty imposed in the order-in-original. When the appeal was heard, petitioner was represented by its counsel, who also filed a written submission. However, none appeared on behalf of the Department in the hearing. No cross-objection or argument was filed before the appellate authority on behalf of the Department. After recording various gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner filed an application dated 14.05.2020 under the Right to Information Act, 2005 seeking the aforesaid information. The said application was disposed off by an order dated 08.06.2020 whereby petitioner was informed that Committee of Commissioners had decided to review the order-in-appeal dated 20.12.2019 and that filing of appeal before CESTAT is under process. It was also stated that copy of the test report was forwarded to representative of the petitioner. 11. From a perusal of the test report dated 23.03.2020, it became evident that the goods in question conform to IS 252:2013 standard specification. 12. Aggrieved by the inaction of the respondents in giving effect to the order-in-appeal, petitioner has approached this Court by filing the present writ petition seeking the reliefs as indicated above. 13. It is contended that the action of the respondents in sitting over the order-in-appeal is totally unacceptable and is violative of judicial discipline. 13.1. There was delay in drawing up samples following the order-inappeal, further delay in sending those samples for testing to accredited laboratory and thereafter total inaction vis-a-vis giving effect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l along with the stay application is pending before the CESTAT and therefore, the writ petition filed by the petitioner may not be entertained giving opportunity to the respondents to effectively pursue their remedy before the CESTAT. 14.3. Further contentions have been made on the merit of the order-inappeal. Contending that the goods were imported in contravention with BIS law which matter is pending for adjudication at the final appellate stage, respondents seek dismissal of the writ petition. It is also contended that any order in favour of the petitioner in the form of release of the goods will make the appeal of the respondents before CESTAT infructuous. Hence, respondents seek dismissal of the writ petition. 15. Mr. Nankani, learned senior counsel for the petitioner submits that conduct of the respondents is highly deplorable. Customs Act provides for a hierarchy of authorities including authorities deciding appeals. Subordinate authorities are bound to comply with orders of the higher authorities as well as the appellate authority. It is not open to the subordinate authority to sit over an order passed by the appellate authority by taking the unjustified plea of filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 03.04.2018. He submits that in terms of the order-in-appeal dated 20.12.2019, samples were drawn on 08.01.2010 and submitted before the accredited laboratory on 05.03.2020. Regarding this delay it is stated that liquid samples were not accepted by the postal department and therefore, an officer was deputed to send the samples to M/s. Shriram Institute for Industrial Research, Bangalore. Test certificate dated 23.03.2020 was received by email on 14.04.2020. 16.2. He further submits that it was in January 2020 that the matter was placed before the Committee of Commissioners and after due deliberation, the Committee decided to seek review of the order-inappeal and accordingly directed filing of appeal before CESTAT. 16.3. In such circumstances, Mr. Jetly submits that the writ petition is not only not maintainable but is also premature. If the writ petition is entertained at this stage and orders are passed thereon, it will render the appeal filed by the respondents before the CESTAT infructuous. He, therefore, seeks dismissal of the writ petition. 17. Submissions made by learned counsel for the parties have received the due consideration of the Court. Also perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratory to ascertain whether the goods conformed to IS 252:2013 specification or not, with the further direction that if the goods conformed to the above specification then the goods should be cleared. Since the consignment was a live one, original authority was directed to complete the exercise within six weeks from the date of receipt of the appellate order. 18.3. Following the order-in-appeal, fresh samples of the goods were drawn and tested in a BIS accredited laboratory. Test report indicates that the goods conform to IS 252:2013 standard specification. Notwithstanding the same, original authority has not passed the fresh order-in-original as directed by the appellate authority. The goods have also not been released to the petitioner. Non-release of goods has been justified and defended by the respondents on the ground that the Department has filed appeal against the order-in-appeal before the CESTAT. 18.4. This then in a nutshell is the controversy or lis before us. 19. At this stage we may mention the relevant dates which have been culled out from the pleadings and written submissions, which according to us have a material bearing on the adjudication. For the sake of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner had acted bona fidely without any mala fide intention. This portion of the order-in-original reads as under:- 32.1. However, it is on record that the importer has applied for BIS registration before shipment of the goods from the country of origin or port of shipment; that they did not file B/E for Home Consumption but as per their interpretation of Policy Para 2.36, they stored the goods in Custom bonded tanks vide Warehouse Bill of Entry; that they have obtained BIS registration on 30.09.2019. Therefore, it is evident that they acted bonafidely without any malafide intention, hence I am inclined to take lenient view while imposing penalty. 21. Coming to the appeal preferred by the petitioner, appellate authority vide the order-in-appeal dated 20.12.2019 noted that the appellant i.e., the petitioner had made the requisite pre-deposit of ₹ 7,50,000.00 on 27.11.2019 which is 7.5% of the penalty imposed in the order-in-original. Therefore, the appellate authority declared that appellant had made the mandatory pre-deposit and thus this requirement was satisfied. 21.1. Appellate authority further noted that the appeal was heard on 09.12.2019. While counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 appellate authority noted that the said circular permitted re-testing of the goods where the goods are still in control of the Department. Observing that in the present case the test to find out as to whether the goods conformed to IS specification 252:2013 was not done at all, it was held that the original authority did not record any finding on the request of the appellant dated 02.05.2019 for fresh testing of sample through BIS accredited laboratory. The said test having not been done, it was held that the order-in-original could not be sustained in law, being premature. Therefore, it was held that the said test was required to be done in the present case. Relevant portion of the order-in-appeal is as under:- 9.2 ... The said test, however, has not been done by the Department. Therefore, impugned OIO is pre-mature and such OIO cannot be sustained in the law. The said test to ascertain as to whether or not the impugned goods are in conformity to the IS 252:2013 is required to be done in this case. 21.5. In such circumstances appellate authority directed the original authority to draw fresh samples of the goods and get those tested through a BIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. Objection of the respondents is that at the time of arrival on import on 01.11.2018 the goods did not have the BIS standard specification IS 252:2013 marking. Therefore, seizure and subsequent confiscation is justified. 22.1. According to us, this objection of the respondents is more of form than of substance. 22.2. In so far substance is concerned, appellate authority has held the view taken by the respondents to be pre-mature as well as erroneous. According to the appellate authority, though the licence was granted subsequently to the foreign manufacturer, the same covered the goods in question as the marking fee for use of the standard mark was paid from 14.08.2018. This was held to be sufficient compliance to the registration requirement. While setting aside the order-in-original, appellate authority directed the original authority to draw fresh samples of the goods and get those tested in BIS accredited laboratory, with the further direction that if the result proved that the goods conform to BIS standard IS 252:2013, the goods should be released. Original authority was directed to complete the above exercise and pass fresh order-in-original within a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or decision, as the case may be, in the following cases, namely:- (i) where an order or decision has been passed without following the principles of natural justice; or (ii) where no order or decision has been passed after re-assessment under section 17; or (iii) where an order of refund under section 27 has been issued by crediting the amount to Fund without recording any finding on the evidence produced by the applicant. Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order: Provided further that where the Commissioner (Appeals) is of opinion that any duty has not been levied or has been short-levied or erroneously refunded, no order requiring the appellant to pay any duty not levied, short-levied or erroneously refunded shall be passed unless the appellant is given notice within the time-limit specified in section 28 to show cause against the proposed order. After the amendment the said sub-section now reads as under:- (3) The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d setting aside of the order-in-original and in an appropriate case remanding the matter back to the original authority for fresh decision complying with the directives of the appellate authority. For example, if an order-in-original is passed in violation of the principles of natural justice or there is procedural impropriety or relevant materials have not been considered then the appropriate order in such a case would be to set aside the order-in-original and direct the original authority to pass a fresh order after hearing the parties or by removing the procedural defects or by considering the relevant materials. Therefore, when we say modifying or annulling the decision or order appealed against, it would indicate setting aside of the impugned order and in an appropriate case remanding of the matter back to the original authority for fresh decision by removing the lacuna and by following the due procedure. In our opinion, this power of remand is inherent in an appellate authority exercising quasi-judicial powers. Viewed in that context the power of remand which was available prior to the amendment was very limited; exercise of which was restricted to only three situations; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to direct the proper officer to file appeal before the CESTAT against such order. 27.3. Sub-section (3) is relevant and it says that every appeal under section 129-A shall be filed within three months from the date on which the order sought to be appealed against is communicated. 27.4. As per sub-section (5), CESTAT may admit an appeal after expiry of the relevant period if it is satisfied that there was sufficient cause for not presenting it within the limitation period. 27.5. What is crucial from the above is that an appeal to CESTAT has to be filed within three months from the date of communication of the order sought to be appealed against with the period of limitation extendable on sufficient cause being shown. Therefore what is of relevance is that the limitation of three months commences from the date on which the order sought to be appealed against is communicated and not from the date of decision or opinion rendered by the Committee of Commissioners under sub-section (2). 28. Reverting to the facts, though respondents have not mentioned the date on which the order in appeal was communicated to the Chief Commissioner or Commissioner of Customs, it is however sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to IS 252:2013 standard specification, the fresh order-in-original has not been passed by the original authority though the period of six weeks expired long back. 31. There are two legal implications which emerge from the above. First one is what is the legal effect of setting aside of the order-inoriginal by the appellate authority and the second is non-passing of fresh order-in-original by the original authority on remand by the appellate authority. 31.1. In the present case there is no dispute that by the order-in-appeal dated 20.12.2019, the order-in-original dated 22.11.2019 was set aside. By the order-in-original the goods in question were confiscated. After the order-in-original is set aide, the order of confiscation no longer survives. When an order is set aside by a superior authority or appellate authority, the consequence thereof is that such an order loses its effectiveness and becomes inoperative. The expression set aside was examined by a Division Bench of this Court in a recent decision dated 03.08.2020 passed in the case of Dudhganga Sahakari Dudh Utpadak Sangh Maryadit Vs. Divisional Joint Registrar, Pune where it was held as under: 32. When an order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute. 33. In Union of India Vs. Kamlakshi Finance Corporation Limited, 1992 (38) ECR 486 , Supreme Court held in clear terms that the mere fact that the order of the appellate authority 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. In that case arising out of the Central Excise Tariff Act, 1985 the adjudicating authority did not comply with the order passed by the appellate authority. When this was questioned before the High Court, severe strictures were passed by the High Court against two Assistant Collectors who had dealt with the matter. Upholding the strictures passed by the High Court, Supreme Court held that utmost regard should be paid by the adjudicating authorities as well as the appellate authorities to the requirements of judicial discipline and the need for giving effect to orders of the higher appellate authorities which are binding on them. Principles of judicial discipline require that orders of the higher appellate authorities should be followed unres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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