TMI Blog2009 (5) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... oel, Jt. CDR and Sumit Kumar, DR for the Respondent. S/Shri S.K. Bagaria, Sr. Advocate, L.P. Asthana, Advocate and R.K. Jain, Secretary Bar Association as amicus curie. [Order per : M. Veeraiyan, Member (T)].- This is a very strange case where the referral order containing opinions in favour of the Department came under ferocious attack from totally unexpected quarters lead by the Ld. Jt. CDR. The order was portrayed as illegal on various grounds like lack of jurisdiction of the referral bench, absence of cause for reference, lack of examination of relevant details, not referring judgements favourable to the Department, factual errors in the order. The valiant defence to the maintainability of the referral order also came from unexpected quarters, namely the assessees though the referral order contained opinions against them. 2. When the matters were called, learned Jt. CDR drew our attention to an application filed by the Department seeking adjournment by twelve weeks on the ground that "The Departmental Representative handling these matters has been drafted for Election Duty till 3rd week of May and he has proceeded for the same; that meanwhile the following eight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the stay stage when the DR would have come prepared only for defending the stay petition and as a result in-depth preparation was not expected. The referral bench had no authority under Rule 4(1) of CESTAT (Procedure) Rules 1982 to decide beyond stay petition as only stay petition was listed before them. (b) Even if both parties consented, the referral bench does not get jurisdiction to decide the appeal at the stay stage. The referral order should not have been made at stay stage and is not only "irregular" but "illegal". (c) Further, there were several judgments in favour of the Department. There was no occasion for citing the same at the stay stage and therefore the same do not find a place in the referral order. In this context, he submits that the following judgments are some which are in their favour: (i) J.K. Cotton Spg. Wvg. Mills Co. Ltd. v. Sales Tax Officer, Kanpur - 1997 (91) E.L.T. 34 (S.C.) (ii) Union of India v. Hindustan Zinc Ltd. - 2008 (225) E.L.T. 183 (Raj.) (iii) G.S.L. v. C.C.E., Vadodara - 2004 (176) E.L.T. 690 (Tri-Mumbai) (iv) C.C.E., Indore v. Rajaraam Brothers - 2007 (217) E.L.T. 284 (Tri.- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o grant of stay which has no direct relevance to the issues referred to the Larger Bench in para 6. He also submits that the decision of the Larger Bench in the case of Nicholas Piramel (I) Ltd. has since rendered vide order reported in 2008 (89) RLT 566 (CESTAT-LB). He also submits that there is no separate earlier order in favour of the appellant in their own case and according to them it refers basically the stay order passed in this very same case. 6.1.3 He also submits that if the observations and orders in para 8 are found to be erroneous, no remedy lies before the Larger Bench and remedy lies elsewhere. 6.1.4 He also submits that the reference at the interim stage in the present case is proper and legal and is also supported by precedents. In this regard, he relies on the following orders referring to the Larger Bench at stay stage and the subsequent order of the Larger Bench in the said case. "(i) Bosch Chasssis Systems (I) Ltd. v. C.C.E., Delhi-III reported in 2008 (229) E.L.T. 686 - Larger Bench Order reported in 2008 (232) E.L.T. 622; (ii) C.C.E., Pondicherry v. Acer India Ld. v. C.C.E., reported in 2004 (166) E.L.T. 21 (S.C.) - Larger Bench order rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as in the case of Vandana Global Ltd. 6.4 Shri S.P. Ojha, Consultant appearing for the appellant Anjani Steel Ltd. submits that he does not agree with the preliminary objection raised by the Department and that he has no objection to the Larger Bench hearing the issues. 6.5 Shri Rohit Chowdhry, Advocate appearing for the appellant M/s. Prakash Industries submits that he does not agree with the preliminary objection raised by the Department and that he has no objection to the Larger Bench hearing the issues. 6.6 Shri K.K. Anand, learned Advocate appearing for the appellant M/s. Salasar Sponge Power Ltd. supports the view that the reference to Larger Bench is valid. He draws our attention to the submissions of the learned Jt. CDR that there were decisions which were of conflicting in nature even though the said decisions have not been specifically mentioned in the referral order. 7.1 At the request of the Bench, Learned Senior Advocate Shri S.K. Bagaria appearing as amicus curie submits that the law of precedent has to be respected; when a Bench notices conflicting and diametrically opposite decisions of the coordinate Benches, it cannot ignore either of the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for the purposes of hearing the difference of opinion. There is also special Bench for hearing Anti-Dumping matters presided over by the President. Section 129C of the Customs Act (made applicable under Section 35B of the Central Excise Act to central excise matters) envisages that power of the Tribunal can be exercised by any Bench of the Tribunal. 7.3.2 Section 129C(5) of the Customs Act specifically deals with the manner of resolving differences of opinion when the Members are equally divided. He draws our attention of the judgement of the Hon'ble Supreme Court in the case of Paras Laminates reported in 1990 (49) E.L.T. 322 (S.C.) which has dealt with issues relating to the constitution of Larger Bench. 7.3.3 Reference can be made only when there are conflicting decisions of coordinate Benches and when correctness of previous binding decision is doubted and the Bench is incapacitated in deciding the issue on hand or there is impediment in deciding the appeal. The Bench of the Tribunal hearing a matter comes to a firm conclusion that there are conflicting decisions and require that the matter deserves to be considered by the Larger Bench, then Bench can order acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case J.K. Cottons and the decision of the Tribunal in the case of Jawahar Mills The referral order has been made on the basis of a prima facie view of the referral bench which is not regular. Certain observations of the Tribunal in para 8 of the referral order are either incorrect or unclear. Such observations are outcome of mis-representation obviously by the appellant. 8. Though the appellants have been granted the benefit of unconditional waiver of dues as per the impugned orders which were against them, members of the bar who represented the parties submitted that the reference to larger bench has been validly made and that they did not support the view of Department on the preliminary objection. They are of the unanimous opinion that the conflict in decisions has been brought out in the order of the referral bench. They were keen to go ahead and argue on the merits on various issues referred to the Larger Bench. Shri R.K. Jain, Secretary of the Bar association, however, supports the view of Department on the preliminary objection. 9.1 We have carefully considered the various submissions on the preliminary objection. In the present case, the two member Bench cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, including those who first heard it." 10.3 The above sub section relates specifically to difference of opinion within a Bench and when the Members are equally divided in their opinion. In such a situation, it envisages that formulating the point or points of differences and referring to the President. The President may himself hear the point of difference and he will be express his views and the views taken by the majority view among the views of the differing Members and the President will become the decision. The President instead of hearing himself, may refer the case for hearing to a one or more of the Members of the Appellate Tribunal. It is to be noted that when the two Members of a Division Bench are equally divided, then there is no decision on the disputed point. It is merely two different opinions on the point or points. The decision is taken only after the President/Members nominated for the hearing the difference of opinion conclude the hearing and the views of the majority of the these Members become the decision. 10.4 The above legal provision is not strictly applicable to two existing decision of the two different Benches which are in conflict with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when the matter was agitated before the Hon'ble Supreme Court, the Hon'ble Supreme Court was pleased to uphold constitution of the Larger Bench and specifically held that President has the powers to constitute the Larger Bench in the interest of healthy functioning of the Tribunal. This is approved as "a power which is implied in the express grant authorising the President to constitute Benches of the Tribunal for effective and expeditious discharge of its function." 11.4 In other words, the convention followed by the Tribunal regarding referring to a Larger Bench before differing on precedent decision of a coordinate Bench has duly been approved by the Hon'ble Supreme Court in the case of Paras Laminates reported in 1990 (49) E.L.T. 322 (S.C.). In the said Judgment, the Hon'ble Supreme Court has prescribed the guiding principles which are as follows. "9. It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question. This is particularly true when the earlier decision is rendered by a Larger Bench. The rationale of this rule is the need for continuity, certainty and predictability in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refer the case to a Larger Bench. That is a power which is implied in the express grant authorising the President to constitute Benches of the Tribunal for effective and expeditious discharge of its functions" 12. In our view, the Bench of two members acted within their power in stating the points of law which required clarification and the President acted equally within the bounds of his power in constituting a Larger Bench to hear and decide those points. 11.5 Hon'ble Supreme Court has not only approved the "a reference when members of a Bench find themselves unable to decide a case according to what they perceive to be the correct law and fact" but also a reference by "stating the points of law which required clarification" 12. We find that there are no specific provisions in the statue regarding the constitution of LB " conflict in decisions" among co-ordinate Benches, its powers and functions, what matters can be referred who can refer such matters to LB, at what stage the matter can be referred. Further, no specific case law has been cited to say that the referral Bench cannot refer the matter on a prima facie view taken by them, it is seen that the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that the credit availed by the appellant may not be admissible. After recording their opinion as above, the Division Bench referred the following issues to the Larger Bench vide order dated 17-6-08 (a) Whether the term "capital goods" can include plant, structures embedded to earth? (b) Whether the goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures can be treated as 'inputs' in relation to their final products as inputs for capital goods, or none of the above? (c) Whether the credit can be allowed in respect of goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures and plant? 13.2 The submission that the referral Bench had jurisdiction only to deal with stay petition is not correct as the stay petition cannot be considered in isolation but has to be considered only with reference to the appeal. The registry being office of the Tribunal exercises the assigned functions of the Tribunal. The Bench constituted by the President has the necessary powers and can deal with the stay petition as well as appeal and it cannot be a case that only on the registry listing the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid of merit. They could have moved an application before the referral Bench or challenged the order before a higher forum. A submission was also that in view of the reference having been made at the stay stage, the appeal has been taken up for out of turn disposal which is not warranted. Such a submission is devoid of merit. The referral Bench has the powers to suo motu give priority over important matters as considered by them. 13.6 The submission that there was no impediment to the referral Bench in following the decision in the case of Bhushan Steel is contrary to the submission that the said decision has been made per incuriam by overlooking many other precedent decisions. There is definitely impediment to the referral Bench to follow the precedent decision after expressing a contrary opinion. To follow the said decision shall be against judicial freedom and to take a contrary decision shall be against to judicial discipline. 13.7 We also hold that the other grounds challenging the maintainability of the order of the referral Bench are also not sustainable. 14. The Larger Bench, like any other Bench of the Tribunal, has powers to regulate the proceedings in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Department is not grounded on any violation of mandatory provisions. The challenge to the order of referral bench through the preliminary objection is unjustified as the objection does not serve any interests of the revenue. (b) It has not been shown that the procedure adopted by the referral Bench has caused any harm or prejudice to the Department. (c) The issues referred to larger bench arise out of facts discussed in the referral order. (d) It appears that the opinion of the referral bench is in conflict with the decision of the Tribunal in the case relating to Bhushan Steel against which (decision in Bhushan Steel) the Department has gone on appeal. (e) The observations in para 8 of the referral order relate to order waiving pre deposit of dues and has no direct bearing on the issues referred to the LB. If the Department was of the view that there were errors/mistakes in the order they could have filed an application before the Division Bench; if they were aggrieved of the referral order, they were also free to challenge the same before competent forum. (f) The department has not made any application before the referral Bench on the issues raised before us. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be necessary to decide that question of law for a just and proper decision of the case (Ref: Annexure I, page 6 of Paper Book of Revenue). Therefore Principal grievance of Revenue was that while hearing stay application, the Bench on its own should not have framed the questions and referred to the Larger Bench hurriedly without hearing the appeal of both sides granting fair opportunity to each and settling the facts and satisfying other requirement of Apex Court decision in Santosh Hazari's case (supra). Tribunal being a highest court of facts should not have framed questions at a premature stage when decision in Bhusan Steel Strips Ltd. was rendered per incuriam without considering law laid down by Hort'ble Supreme Court in J.K. Cotton's case - 1997 (91) E.L.T. 34 (S.C.) and in Jawahar Mill's case - 2001 (132) E.L.T. 3 (S.C.) and other several judgments decided in favour of Revenue. Being aggrieved by Bombay Bench decision in above case, Revenue has gone in appeal before Hon'ble High Court of Bombay. Relying on the Apex Court decision in the case of K. Ajit Babu and Others v. Union of India and Others decided by Hon'ble Supreme Court on 25-7-1997 Revenue's pleading was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication of Vandana Global Ltd., so also when the Division Bench had observed in Para 8 of the stay order that the first question framed in Vandana Global's case was before a Larger Bench in the case of MIs. Nicholas Piranial (India) Ltd. Sri Jain placing page 47 of his paper book, pointed out that in Ambica Prasad v. State of U.P. AIR 1980 SC 1762 Krishna Iyer J. has pointed out that: "Every new discovery or new argumentative novelty cannot undo or compel re-consideration of a binding precedent. In this view, other submissions sparking with creative ingenuity and presented with high pressure advocacy cannot persuade us to reopen what was laid down for the guidance of the nation as a solemn proposition by the epic fundamental rights case." (emphasis supplied). 23. Relying on the judgment of Hon'ble Supreme Court in the case of Ram Jivan v. Smt Phoola (1976) SCC 852 which has pointed out salutary rule, namely, the rule of judicial precedents and referring to Para 9 of the judgment in Asst. Collector of Central Excise, Kalyan Division and Another v. Dipsi Chemicals Pvt. Ltd. and Another - 1987 (32) E.L.T. 556 (Bom), Sri Jain's pleading was that if precedents whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r public interest is not jeoparadised and institutional embarrassment is eschewed. According to the existing provisions of law under section 129C(5) of Customs Act, 1962 (hereinafter referred to as "the Act"), there is no rule to formulate questions and refer the same directly to a Larger Bench at the interim stage of hearing of stay application without sitting on appellate jurisdiction and hearing the appeal itself. There is no mandate of statute to frame questions at the stage of hearing of stay application and seek advice or consultation of Larger Bench to hear the appeal thereafter. This shall amount to prejudging the matter resulting in denial of justice for the basic reason that not only justice is to be done but justice must be seemed to have been done to the litigants. Both litigants before a Court are equal and deserve to be dealt equally under law. Every effort should be made to ensure that no prejudice is occasioned to the litigants framing questions prematurely before hearing of an appeal and no disagreement with a decision of an earlier Bench at the interim stage is conceivable without hearing the appeal in entirety. Any question prematurely framed to seek advice of La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt below must yield to the higher wisdom of the Court above. That is the strength of hierarchical judicial system. 29. According to the law laid down in Paras Laminates' case (supra) existence of a reasoned order by the disagreeing Division Bench is sine qua non. Such an order has to demonstrate the error of law in earlier decision causing impediment to the perception of correct law and fact by the disagreeing Bench as well as points that require to be stated for the president to make a reference to a Larger Bench to resolving the difference. Hon'ble High Court of Calcutta in the case of Govindram Agarwal v. Collector of Customs - 1993 (67) E.L.T. 215 (Cal) has also held that difference is precondition for reference and section 129C(5) allows members of the Tribunal to recommend to the president only when there is difference of opinion. Following the ratio laid by Hon'ble High Court of Gujarat in the case of Colourtex v. Union of India - 2006 (198) E.L.T. 169 (Guj.) = 2008 (9) S.T.R. 426 (Guj.) it may be stated that the Larger Bench can hear the questions referred without deriving any independent jurisdiction and has no power to decide the appeal in entirety. Thus the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een them is a their case by the parties to the dispute; (2) question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on If the dispute between them is a behalf of the parties on the evidence; (3) A question of law, the submission of legal argument by the parties; and (4) decision which disposes of the whole matter by finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law." 32. Similarly Judicial proceedings always require: (i) no man shall be a judge in his own cause, (ii) justice should not be a judge on his own cause, (iii) justice should not only be done but manifestly and undoubtedly seem to be done. These maxims yield the result that no party to litigation can be dealt to the detriment of justice by any premature act. Therefore it has been held by Apex Court in S. Nagaraj Ors. v. State of Karnataka - 1993 Supp (4) SCC that Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem. 34. The Division Bench which has formulated questions in the present case in hand was at the prima facie stage of hearing of stay application. It was yet to hear the matter at length exercising its appellate jurisdiction and full opportunity of length of hearing on facts and evidence in respect of the matter in controversy was due. So also no speaking or reasoned order had emerged recording and demonstrating reasons of disagreement with earlier decision of a Division Bench which is an essentiality of law declared by Apex Court in Paras Laminates' case (supra). The Bench itself made a direct reference to Larger Bench without the reference being made by the Hon'ble President. When such a judicial order came to existence, President was bound to refer to Larger Bench in exercise of his administrative power. Such a situation is not the sanction of Apex Court Decision in Paras Laminates' case (supra) since following of judicial decorum and judicial discipline is strength of justice delivery system. It is golden rule of law that judicial independence of forum should remain unimpaired and its decision is made without being influenced by Larger Bench advice or consultation at a pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to be followed by the Tribunals in dealing with the said matters. The scope of the jurisdiction of the Tribunals constituted by statute can well be regulated by the statute itself and principles for guidance of the said Tribunals may also be prescribed subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provisions of law may legitimately do cannot be permitted to be done by any other means. 36. With utmost respect it may be said that all that what has been said above is not meant to disrespect to the Division Bench which has directly referred the questions to a Larger Bench but that has been said in emphasizing the necessity of self-imposed discipline in such matter in obeisance to such weighty institutional considerations like the need to maintain decorum and comity. So also it is not meant to disrespect to the Division Bench in stressing the need for self-discipline on the part of the Division Bench while exercising its jurisdiction on interim application. Appeals pass through two stages i.e., stage of stay hearing and the stage of appeal hearing as noticed by A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is obvious that it is the prerogative of the President either to refer the matter to third Member or constitute a Larger Bench in case of such difference of opinion or hear the matter himself, and thereafter the majority of the opinion to form the decision. (3) Reference of matter to a Larger Bench or a third Member is entirely in the discretion of the President of the Tribunal, albeit the discretion has to be exercised judiciously. (4) There is no power vested with the Division Bench or the Single Member Bench to refer the matter directly to a Larger Bench. Neither any statutory provision gives such power to Division Bench or Single Member Bench to do so nor there is any judicial pronouncement vesting such power upon the Division or the single Member Bench, This is essentially to maintain judicial discipline in the administration of justice by the Tribunal. (5) Even in cases where the Division is faced with a situation of having already delivered two different orders on the same issue taking by two different views by two different Benches, the Bench facing such a situation has to formulate the issue which is required to be referred to the Larger Bench and thereupon ask the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e outcome of collective deliberation of the Members. This is known as judicial collectivism. At that time also, the Order dated 24th April, 2009 passed by the Hon'ble President was not known to us. 44. In my view, the guidelines as recorded in the Order dated 24th April, 2009 rest the entire issue in the present case. For the purpose of proper appreciation, the relevant portion of the guideline as recorded in the order of the ld. brother Panda, is reproduced below:- "(3) Reference of matter to a Larger Bench or a third Member is entirely in the discretion of the President of the Tribunal, albeit the discretion has to be exercised judiciously. (4) There is no power vested with the Division Bench or the Single Member Bench to refer the matter directly to a Larger Bench. Neither any statutory provision gives such power to Division Bench or Single Member Bench to do so nor there is any judicial pronouncement vesting such power upon the Division or the single Member Bench. This is essentially to maintain judicial discipline in the administration of justice by the Tribunal." 45. To sum up, reference of a matter to the Larger Bench or a third Member is entirely in the discreti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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