Dismissed

Principal Commissioner of Customs, v. Khan Sadaf

Telangana HC4 Sept 2023CEA/5/2023

Case brief

AI extract

What is this about?

The High Court dismissed an appeal challenging the CESTAT's order allowing an appeal against a compounding order under Section 137 of the Customs Act. The Court held that the Chief Commissioner of Customs is an adjudicating authority, making the compounding order appealable to CESTAT.

What did the court decide?

The appeal was rejected. No order as to costs. Miscellaneous petitions, if any, shall stand closed.

Principal Commissioner of Customs, Vs Khan Sadaf — Customs and Excise | Telangana HC (2023)

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[³³⁸⁶ ]

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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MONDAY, THE FOURTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HONOURABLE SRI JUSTICE P.SAM^KOSHY AND

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THE HONOURABLE SRI JUSTICE LAXMI NARAYANA ALISHETW

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CE NTRAL EXCISE APPEALS NO:⁵ OF²⁰²³

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Appeal under Sectionl30 of The Customs Act,^1962., against^{the Final} Order No. N30O3912023 dated 05.04.2023^{in AppealNo. C/30266/2018 passed} in Customs Excise and Service Tax Appellate^{Tribunal, RegionalBench,} Hyderabad, preferred against the Compounding order^{No.07/2017-CusDated} 02.02.2017 passed in the Chief Commissioner of Customs,^{CentralExcise and} Service Tax, Hyderabad Zone.

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Between:

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Principal Commissioner of Customs, Hyderabad Customs Commissionerate,^7rh Floor, L. B. Stadium Road, Basheerbagh,^Hyderabad 500^004.

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...APPELLANT

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AND

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Khan Sadaf, Dio Mohammed Salim^{KhanRl/o H No 8-2-686t2l6t1tA,2ndand 3'd} Floor Road No. 12, Banjara Hills Hyderabad- 500034.

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...RESPONDENT

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lA NO: 1 OF 20

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Petition under Section 151 CPC^praying that^{in the circumstancesstated} in the affidavit filed in support of the^petition, the^{High Courtmaybe pleasedto} stay the operation of the CESTAT's^{Final OrderNo. 4,/30039/2023dated 05-04-} 2023 Passed by the CESTAT's in Appeal^{No. C/30266/2018,pendingthe} disposal of the main appeal.

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Counsel for the Appellant: SRl.^{DOMINIC FERNANDES}

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Senior Standing Counsel for^CBIC

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Counsel for the Respondent:^NoneAppeared

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The Court made the following:^ORDER

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,i!I I I I i I i I I I I I I t i 1 I I I i I I i i i I i i

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1'TID HO}{'BLE SRI JUSTICE P.SAM KOSHY

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AND

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THII HON'BLE SITI JUSTICE LAXMI NARAYANA ALISHETTY

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C,D.1r.Nq.! qt 2O2Q

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ORI]ER;-11;,:, I /r,1i '.,1d 5/ i tt:;tict, P.SAM I<OSHY)

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Thc inst:rnt a1;pr.:rl has bccn lilcd b1. Lhc Principal (lornmisl.;ioncr oi Cristolns assailing thc order dated 05.04.2t)23. rirlr' Finirl t)r.clcr No.A/30039/2023, passed by rl)(' (lLt:it()trr s. i.-.. r- is.1, ii. Sli'rr-icr' Tzur Appcllatc Tribunai (lor shrrrt ll;r''llilriirr,il ) in ( .rstoLns ,^iplrcal No.C/3026ir120 18.

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i{i lirci :i:-r i)oi':'rirrrc I.r'l'rraltclcs. it,arneci counsel for the i r1t 1:eiiern r

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'l'hc ;,r'i'sr-'irL :,p1tcal lras a bricf histor-v r.l'hich i,i,o uid t>e lcquirc.i lor rl'rc pi-opcr ;lcljudiczrtion of thc appeal, The clisl:utc ariscs; il orn lin c:rrlicr orclcr passed by this High (lourrt ir, V,./ I).1,,r.83.19 t,i 2017. dc:cided on 02. I | .2O17. 'i'hc rcsl;onr:lr:rrr l-rer-t.irt r.v[ro u,as the pel.itionct. in the arlirrcsard u'r'it pctitior. ha,--l claimed for rluashmcnt of the (,r'(ler dal..d 02-.A)-.'2.O 1'l Pirs;scd b,t, ttrc ChieI Conrmissioner, rvhercb-v, l-rc l-ras Ccclitrr:cl Ll-rc oompounding ol lhe oflence

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Act under^{Section137 of the Customs} under^{the Customs} Act,^1'962

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r,r,as^{dismissed bY the Divrsron} 4. The^{sard writ Petitron} Be nch^{of this Court troldingthat the writ petitton ts} not m ain^{tainabl eon the ground that the petitionerhas a} the^{Customs, Central} retnedY^{oi appeal available before} And^{thereafter'thcrc} Excise^{and ServiceTax Tribunal} thc^{APPellate Tribu nal} being Yet^{another aPPealbefore} of India^{themselves filed a} Later^{on, the respondent/Unron} before^{the High Court The said revrc'"t} TCVIC\v petitlon as^{i.A.No1 of 2018 inthe} petitlon which was^registered . W.P.No.834^{9 of 2Ol7 was dismissed} earlier^{u'rit Petition r'e} s,ith^{the foliowing observations:}

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.Battae.r?,":?:,,2i;:;:fr"i,n:2f ;:i'f ;:"!ii?X{r the^leamed """'"' i'ri)r"oi"oinst the order-impuErcd^in, '.if, India^{i,ipeion,:,i,f that dn dqPea} i"?"'1;,,i':Fi,ti,f li: seruice^rax Tnb:::':;;r;" a"t, l e62^(fot secti Arll^on- ttre¹ haue^{2 e o dismt} "l :,:;1;;"""ii' w a, Pet ilion^{pe rmittins} ii)'' r7'-"i""""'^1"",7";!fl Ztnd onotn", haue.fiIed^t.his l#'w,li;"'"!'ix:ii::;.'#:,i:,#::o;:::, order^passed,0,,' X1,o;'il/a"*.i *i" 4i7_21i1,o[,i,n" ";;;;;l"o':::o;;:':';; no1 i^,1'-' co,,,.r, *" Jffil:.;;";;"r'i:,':i#"l,i,i,i'f [,il?,],',i'if ;iJ'ooo""" teaue be decided^{the issue r'v'n''lnlsli'tii)il" asi"..iai"s the appeat'}

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: E |] T iit ! ii i

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StLbjet't lo tte oItott' ctltst,ruatiott, the appL{cutiott I.S rJi-srnis.sed.'

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Tl'rc petitioner i\ ('n( beti>rc the Appellate Tribunal. 'l'he Appcllzrte Tnbun:rl after- ('lttertairtrng the ce1se. rcl,\ ing ul)on th.r ciecision ol thr'^()utjarat [{igh Court in the case of Commission.et oJ Cen.ttul Dxcise Versus Ginsh B. Mishraj allov,'ed the appeal ol tlte appellant and remanded the matter bacl< to the Clticl Cornmissioner to pass a frcsh order aJter giving ar-r opl)ortunitv to the appellant to mal<e oral as s'ell as rvritLen submissions along s,ith docume ntan' evidcnce il-ar-r,v. Ir is ihis order passed bl Lhe Appellate Tribunal on 05.O21.2023 which is under challenge in the presen t appeal.

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Ret'erring to Sectior.r I29 ol the Customs Act, 1962, the contention of the learnecl counsei for the appellant \ ras that the matter \ /as one, u hich could not had been entertained bl the Appcllate Tribunal, as the order under Section I37 of the Act is not an appealable order. Moreover, the order passed uncler Section 137 ol rhe Act is also not tl-re one_rvhicl-r could be subjectcd to test under Section 129

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'^{2013SCCOnt-ine} Guj 9021 : (2016) 339 ELT 67

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of the Act belore the Appellate Trrbunal. And that the onl,r, remecly available to the respondent w.as that of a u,rit remedy

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According to the learned counsel for the appellant, the Appeilate Tribunal has committed an error in law in deriving jurisdiction, when the statute does not provide for Lhc same. L{ence, the order is bad in law. It was further conLendcd that the order passed by the Chief Commissioner under Section 137 was not in the capacity of an adjudicatory authority, nor does a decision passed undcr Section 137 be accepted to be an order passed in an adjudication by an adjudicatory authority. Relying upon the case of the M/ s Noble Agencg V/ s Commissioner of Customs, lltlumbat-2)12 (142) ELT 84 (Ti-lulum) where it was held that since the Tribunal is a creature ol statute, which could not have entertained the matter which otherwise does not lall rl,ithin its^{jurisdiction.}

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In short, what the core issue to be adjudicated in the prescnt appeal is, AS to "whether the Appellate Tribunal has the j urisdiction / authority/ po',rrer to entertain an apppal

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.rgainst an order passed under Section 137 of the^CLlstoms Act, 1962". In orcler to unclerstal-rci the aforesaid issue.^it rvould bc relevant at this .juncture to refcr [o^ccrtain provisions of larv under the Custom s Act. First, u'e^u'ottld llke to rcfer to the provision ol iau, under Section^{137 (3),} rvhich for readv reference is reproduced hereunder:

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"Ang oJfence. un.der tltis Chapter mag, either beibre or aJler the irlsti|lttbn ctf prosea.Llion, be ccmpottrtdeci bg the Chief ()ommissioner o,f (.iuslonr.s on patttncrtt. br1 Llrc person uc:cused oJ tlrc ofJbru:e Lo ihe^{(-.entral (iouenttnen!,r-tJ} lsuch corrtpoundingl atnount an.cl itt suclt tnatlner oJ cctrnpouncling^jcts mctg br: speafed bg rules.l lProuided th.et nothulg contain'ec7 ln^thi.s -sub-.secliort^shaLl ttpplg to

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(a) a person ttho has beert alioiued to contpourtd once ut. respect of an11 oJfence under seclions 135 and i35A;

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(b) persctn tuho hos been accused of com mitting an offen.ce under this Act tuhich i-s also an offence under^an11 of^the lollowing^{Art s. namely:}

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(i) the Narcotic Drugs and Pstlchotropic SubstdrLces^AcL, 198s (61 of 1985)

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(it tlrc Che:mical Wectpons Conuention Act, 2()00 (34 of 2000)

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(iii) the Arms Act, 1959 (5a of 1959)

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(*) tLrc Wild Life lProtection) Act, 1972 153 of 1972)

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(t) goods specified in tlu:^l-lst ctf Special Chenticols, Organlsms, Mateials, Equipment ctnd^{Technology irt} Appendix 3 to Schedule 2^{(Export.PoLicg} )^{of ITC(HS)} ClcLssification of Dxport and^{Imporl ltems ofthe} Foreign Trade Po[icy, as^ctrrtended Jrom^{flnll' to} ti,lle\

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Yre

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issued uncler sectton 5 of the Foreiqn Trade (De,L;eiopment (nd Regulation) Ac| 1992 (22 of 1992); (i, goocis tuhich are specit'krl as prohibited ite ms for LmparL attd export in th.e ITC (IIS) ClasstJication of Expoi ctnd lolpori ltems of the Foreign Trade Policg, cts cunend-ed from time to time, issued under section 5 oJ th.e Fore-ign^'l'rade (Deuelopment and Regulation) Ac| 1 992 (22 of 1992);

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(iit ang other good.s or doanntents, which are tikelg to affect fiendlg relation^s uith a foreign State or are derogatory to netionol h.onour;

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(d) a person tuhl: has been a.U.otue,d to compound once in respect of rny offence- under thls Chapter for goods of ualue exce,e,di.ry1 rupees on"- crore;

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(e) a person utho hrts be.en r:onurcted under thts Act on or aJl.er the 3oth drry of December, 2005.1"

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Thus, from a plain perusal of the statutory provision under Section 137 of the Customs Act, it would clearlv reveal that an application for compounding of any offence under this chapter has to be placed before the Chief Commissioner of Cu stoms

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Norv we may come to the provision of Section I29-A which deals with the appeals to the Appellate Tribunal. So far as the issue involved in the case, it would be relevant, to refer only to the provision under Section 129-A (1) (a), which for ready reference is reproduced hereunder:

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"Anq person aqqrieued by ang of Lhe follctttirLg orulers tnuy appecLl to the Appellctle Tittunal ctqctinst suclt orcle:r (a) o decisbn or order passe d bg ttte princlpctl (_.onr lrl-ssi,rr rsr ry' (lu-saor/rs or ('omrni.sslorr er oJ Custcms as o.ti ocljLu)ictt]inq authorltA;

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,{ plain reading ol the aforesaid prorrision of lari. u,ould ciearly reflect that an appeal to the Appellarc^.lribunal u oulci lic at the behest of an,v aggrieved pcrson being aggrieved by an1, of the orders as envisaged in sub claruse ,a to d' Sub clause'a'lvhich is relevant for tire prcsenl inarter spcaks of the naturc of orders. One in tl-re lorm of a decrsion and second in the lorm of an order passecl b_y thc Principal Commissioner of Customs or the Commissioner oi Customs as an adjudicating authority. So u.hat is relevant tcr bc considered is l hat an appcal can be liied b_r.. any person aggrieved by any decision or an order passed as an adjudicating authority, u,hich could be the principal Commissiorrer or the Commissioner.

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10, Now r,vhat is relevant to be taken note of is the definition of the adjudicating authoritv as is defined under Section 2(1) u,hich again for ready reference is being reproduced herein:

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"acl.1uclicating euLhoiLLl" mectns^(Lny euthoitLt cootpetelat to the Board, Commissioner {Appeats) or Appellate TribumtL;

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A plain reading of the definition of adjudicating authority u,ould lay to rest many issue s that have been rarsed, mole particularly, as to the authorities who can be brought u,ithin the ambit of an adjudicating authority. If we take into consideration, the liberal meaning of the \rrrordings reflected in the said definition of adjudicating authority, it lr,'ould bv itseif give a clear indicatior-r to the liberal interpretation that it can be given to the said wordings.

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1 1. It u,ou1d be relevant at thrs j uncture to reflect tr,vo three phrases used in the definition. And those are "any authority", "competent to pass an order" arrd or any decision under this Act". This in other words means, any authority that has been conferred rvith the power under the Act to pass an order or to decide upon an application would be al authority competent and thereby r'vould become an adjudicating authority.

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Keeping the aJoresaid delinition in mind, if u,e look at the provisions of Section I29-A (l) (a) which has been

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reproducr:d in the preceding paragraphs,^{u'c.rltlci clcarlr'} rellect that this also is an inclusivc^{provision ii'hici-r h:ts to} be given a ivide interpretation. As the^{section itseif begills} u ilh an-r' person aggricved bl ar-r,r,: ol ihe ordcrs^{arnd thcn} clause 'a'of Section 1 sa1's either be it a^{decisionor be it an} orcler passed by the Principal Commissioner^{of Cllstomsor} the Commissioner of Customs as an adjudicating^{author-ii,t'.} Orrly because sub-clause 'a' does not reflect the Cr:sigr-ratior: o1- Principal Chiel Commissioner, it does noL^{rrean an} aull-iorrlr'^,,r,ouid get automatically exciuded fr-orn the said p rovisiotr oI la',1'.

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The intention of the las, makers u,hile enacting the lau' or anl, authorized officer or a competent authoritli who has been entrusted with a power to decide or adjudicate, automatically becomes an adjudicating authority. Subsection I of Section 129-A in this regard would clearly meal that an adjudicating authority is one who has passed a decisron or an order. They u,ou1d be an authoritl, c.rmpetent and thereby urould become an adjudicating au thoritv

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Nolr, if lr,e look into^{the provisron} of Seclion^{137 (3) ol} the Act, it also would^give an clear indication that^{lor the} purpose ol compounding an offence, an application has to be moved before the Chief^{Commissionerof} Customs^alone, and it is who has to take a dccision. Thus on an application r.r,hich stands decided under Sectio n 137^(3), the Chief Commissioner becomes the adjudicaling authority ora competent authority under lhe^{Act to takea dectston} on^an application bringing him under the^purvieu' of^an adjudicating authority. No^provision under the^Act envisagbs that decision taken under Section 137⁽³⁾ or^for thaL rnatter, a decision taken by the Chief Commissioner would not be an appealable order and that his order would be final, so as to accept the contention of the learned counsel for the appellant that it is only a u,rit remedy that is available to him.

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For all the aforesaici reasons, we do not find any infirmity in the order passed by the Tribunal, nor^does this Court firrd sufficient force in the^at'gr-rments of the^learned counsel for the appellant. Moreovcr, the order of the Tribunal also is not in^{any manner} adverse Tb"{,he interest

of t)rc DeparLrrcnt. ./here the onlv direction given is that ol remandit-rg thc rnaller bacl< [o the competent authority to takc a decisron afresh.

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lr-r thc lacrual backdrop, the appeal thus fails and is

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accor c1u-rgl-r . rejected. There shali be no order as to costs.

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i\s a scquel, miscellaneous petitions, if anv pending,

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shall srand clo scd

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Sd/. M. VIJAYA^BHASKER JOINT REGISTRAR

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//TRUE^COPY//

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SECTION^OFFICER

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to,., . ,n" customs^{Exciseand service Tax Appelrate Tribunal,RegionalBench,} z Hvderabad,rr{."bni"i^{commissionerof Customs' Central Excise and service Tax'} Hvderabad^Zone'

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