IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION CUSTOMS CUSTOMS CUSTOMS APPLICATION NO. 3 OF 2000 APPLICATION NO. 3 OF 2000 APPLICATION NO. 3 OF 2000 The Commissioner of Customs, Trichy No.1, Trichirappalli. ... Petitioner. V/s. Standard Industries Ltd. Bombay. ... Respondent. P.S.Jetly i/b. R.N.Bandyopadhyay for the petitioner. Prakash Shah i/b M/s.PDS Legal for the respondents. CORAM CORAM CORAM : V.C.DAGA AND J.P.DEVADHAR, JJ. : V.C.DAGA AND J.P.DEVADHAR, JJ. : V.C.DAGA AND J.P.DEVADHAR, JJ. DATED DATED DATED : 15th February 2007. : 15th February 2007. : 15th February 2007. JUDGMENT JUDGMENT JUDGMENT : : : (Per V.C.Daga, J.) (Per V.C.Daga, J.) (Per V.C.Daga, J.) -------- -------- -------- . This application is under section 130A of the Customs Act, 1962 ("Act" for short) seeking direction against the Tribunal to state the case and raise and refer the question of law framed in para-4 of the said application arising from paras- 6 to 13 of the impugned order dated 19th August, 1999 passed by the Customs Excise and Gold (Control) appellate Tribunal, West Regional Bench at Mumbai ("Tribunal" for short). - 2 - 2. At the commencement of the hearing of this application, learned counsel for the respondent- assessee raised two preliminary objections. Firstly; relating to the tettitorial jurisdiction of this court to entertain and try the applicationin question. Secondly, relating to the tenability of this application under section 130A of the Act. It has, therefore, become necessary to first decide the preliminary objections before proceeding to hear the application on merits. FACTS FACTS FACTS : ----- ----- ----- 3. The respondent-importer pursuant to the show cause notice issued under Section 28 (1) of the Customs Act, 1962 by the Commissioner of Customs No.1, Trichy-1 dated 20th January, 1998, was called upon to show cause as to why he should not be called up on to pay Rs.1,85,14,512/- for alleged diversion of duty exempt material; imported under two value based advanced licence schemes framed under Notification Nos.159/90 and 203/92 dated 30th March, 1990 and 19th March, 1992 respectively, to produce th goods which were subsequently cleared in Domestic Tariff Area (DTA) and, later on, the requirements of the notifications were sought to be fulfilled to complete export obligations by manufacturing goods - 3 - from duty paid imported material that too after having taken input credit on such goods in violation of the notifications referred to hereinabove. 4. The respondent-noticee replied the aforesaid notice denying all the allegations made in the show cause notice and tried to justify their action or stand taken by them in their reply. 5. The statement of various person representing the respondent- company were recorded and after hearing the parties, the Commissioner of Customs, Trichy, vide his order dated 25th January, 1999 refused to accept the contentions of the respondent-noticee/ assessee that there was no violation of the conditions prescribed in the Notification No.203/92 dated 9th march, 1992 relating to the utilisation of modvat credit used for the export products. 6. The show cause notice was, consequently, culminated in the order-in-original dated 25th January, 1999 passed by the Commissioner of Customs, Trichy; who was pleased to confirm the demand of duty in the sum of Rs.1,85,14,512/- as detailed in the show cause notice. An order of confiscation of - 4 - 2,400 MTS of potassium chloride, although the same were not available for confiscation under Section 111 ()) of the Act, came to be passed. However, option was given to the party to redeem the same on payment of fine of Rs.25 lakh under Section 125 of the Act. He was also pleased to pass consequential orders against the respondent-noticee. 7. Being aggrieved by the aforesaid order, appeal came to be preferred before the Tribunal. The Tribunal by its order dated 19th August, 1999 allowed the said appeal. 8. Being aggrieved by the aforesaid order dated 19th August, 1999 passed in the appeal by the Tribunal, the petitioner herein approached this Court by moving this application raising therein certain substantial questions of law with a prayer to call upon the Tribunal to state, raise and refer the question of law for the opinion of this Court. PRELIMINARY PRELIMINARY PRELIMINARY OBJECTIONS : OBJECTIONS : OBJECTIONS : ---------------------- ---------------------- ---------------------- 9. Mr Prakash Shah, learned counsel appearing for the respondents while raising preliminary objection to the maintainability of the said application before this Court for want of territorial - 5 - jurisdiction contends that the High Court in whose jurisdiction original adjudicating authority is located (in this case, Trichy) will have jurisdiction to hear and decide the application under reference since the authority-in-original has decided the matter treating itself bound by the law laid down by the Tribunal and/or High Court under whose jurisdiction the said authority-in-original functions. In his submission, the petitioner was bound by the law as applicable and prevailing in the State of Tamil Nadu, as such the application for reference ought to have been made to the High Court of Madras and not to this Court. He, thus, submits that for want of territorial jurisdiction with this Court to hear this application, it is liable to be rejected with liberty to approach appropriate High Court for seeking appropriate direction or relief, or in the alternative, application is liable to be returned for presentation to a proper High Court. Mr.Shah placed reliance on the judgment of the Delhi High Court in the case of Suraj Woolen Mills v. Suraj Woolen Mills v. Suraj Woolen Mills v. Collector Collector Collector of Custom Bombay of Custom Bombay of Custom Bombay reported in 2000 (123) ELT 471 in support of his submission. 10. Mr.Shah also placed reliance on the short judgment of the Delhi High Court in the case of - 6 - Commissioner Commissioner Commissioner of C.Ex., Delhi-III v. Enkay HWS India of C.Ex., Delhi-III v. Enkay HWS India of C.Ex., Delhi-III v. Enkay HWS India Limited Limited Limited, wherein it was held that reference in terms of Section 25F of the Central Excise Act would lie only to the High Court within whose territorial jurisdiction original adjudicating authority functions. 11. The contention on the above canvas is that site of commissionerate or the appellate authority must determine the jurisdiction of the High Court in view of the earlier decision of the Delhi High Court in Seth Seth Seth Banarsi Dass Gupta v. Commissioner of Income Banarsi Dass Gupta v. Commissioner of Income Banarsi Dass Gupta v. Commissioner of Income Tax Tax Tax (Central) (Central) (Central), (1978) 113 ITR 817 which was subsequently relied upon in the case of Suresh Desai Suresh Desai Suresh Desai and and and Associates v. Commissioner of Income Tax Associates v. Commissioner of Income Tax Associates v. Commissioner of Income Tax, reported in 71 (1998) DLT 772. Similar view was expressed by the Delhi High Court in Central Excise Act Case No.7 of 2000 disposed of on 30th October, 2000, taking note of the decision of the Apex Court in Stridewell Leather (P) Ltd. v. Bhankerpur Stridewell Leather (P) Ltd. v. Bhankerpur Stridewell Leather (P) Ltd. v. Bhankerpur Simbhaol Simbhaol Simbhaol Beverages (P) Ltd. Beverages (P) Ltd. Beverages (P) Ltd. reported in AIR 1994 SC 158 which was relied upon. 12. Per contra, Mr Jetly, learned counsel appearing for the applicant- Revenue submitted that the above application has been filed under Section - 7 - 130A of the Customs Act which enables the Commissioner of Customs or the other party to apply to the High Court with a prayer to direct the Tribunal to refer to the High Court any question of law arising from the order of the Tribunal. He submits that clause (b) of Section 131C defines "High Court" means in relation to any State, the High Court for that State . He submits that the impugned order having been passed by the Tribunal at Mumbai, application under Section 130A read with Sections 130D and 131C will lie before this Court. He vehemently tried to canvass contrary view contending that the order passed by the Commissioner of Customs, Trichy got merged in the appellate order of the Tribunal at Mumbai which is outside the territorial jurisdiction of the Madras High Court. The Madras High Court cannot command the appellate Tribunal at Mumbai directing it to state the case and refer question of law for its opinion. Reliance is placed on the judgment of the Patna High Court in the case of C.I.T. v. Justice S.B.Sinha C.I.T. v. Justice S.B.Sinha C.I.T. v. Justice S.B.Sinha reported in (1999) 237 ITR 268. 13. Mr.Jetly also relied upon the judgment of the Andhra Pradesh High Court in the case of C.I.T. C.I.T. C.I.T. v.v.v. Parke Davis (India) Ltd. Parke Davis (India) Ltd. Parke Davis (India) Ltd., (1999) 239 ITR 820; - 8 - wherein reference application was dismissed by the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT). Facts, relevant subsequent to the disposal of the appeal are that, the files of the assessee (respondent therein) were transferred to Hyderabad. The reference application having been rejected by the Mumbai Bench of ITAT, application under Section 256(2) of the Income Tax Act was filed before the Andhra Pradesh High Court. The Andhra Pradesh High Court while disposing of the said application was pleased to hold that the said application ought to have been filed before the High Court of Bombay only and that the Andhra Pradesh High Court had no jurisdiction to entertain the application to direct reference. 14. Mr.Jetly also placed reliance on the judgment of the Calcutta High Court in the case of C.I.T. C.I.T. C.I.T. v. A.B.C. India Ltd. v. A.B.C. India Ltd. v. A.B.C. India Ltd., (2005) 272 ITR 321; wherein the assessee’s assessments were transferred from Gauhati to Calcutta by order dated 28th July 1997. A reference application was made to the Appellate Tribunal at Gauhati which came to be rejected. Consequently, application under Section 256 (2) of the Income Tax Act was made to the Calcutta High Court, which came to be allowed. On an - 9 - application for recall of the order, Calcutta High Court was pleased to set aside its own order and application seeking direction to make reference came to be rejected on the sole ground that the Calcutta High Court lacked territorial jurisdiction to direct the Tribunal to make reference. 15. Mr.Jetly also placed reliance on another judgment of the Calcutta High Court in the case of C.I.T. C.I.T. C.I.T. v. J.L. Morrison (India) Limited v. J.L. Morrison (India) Limited v. J.L. Morrison (India) Limited reported in (2005) 272 ITR 321; wherein the High Court was pleased to hold that the Calcutta High Court could not assume jurisdiction in respect of the matter reaching finality before the appellate tribunal at Mumbai. 16. Mr.Jetly also placed reliance on the judgment of the Apex Court in the case of L.Chandra L.Chandra L.Chandra Kumar Kumar Kumar v. Union of India v. Union of India v. Union of India, (1997) 92 ELT 318 and laid emphasis on paragraph 77 thereof; wherein the Apex Court was pleased to observe that power vests in the High Courts to exercise judicial superintendence over the decisions of all Courts and Tribunals within their respective jurisdictions is a part of the basic structure of the Constitution. - 10 - 17. Mr.Jetly also relied upon the judgment of the Apex Court in the case of Collector of Customs v. Collector of Customs v. Collector of Customs v. East East East India Commercial Co.Ltd India Commercial Co.Ltd India Commercial Co.Ltd. reported in AIR 1963 SC 1124 to contend that once the order of the original authority is taken in appeal to the appellate authority, located beyond the territorial jurisdiction of its High Court, then it is the order of the latter authority that operates after the appeal is disposed of. It was thus held that the High Court cannot issue a writ against the appellate authority who is not within its territorial jurisdiction. It is further held that it may be open to it to issue a writ to the original authority which may have been within its territorial jurisdiction but once the appeal is disposed, though it may be that the appellate tribunal or authority confirmed the order of the original authority and dismissed the appeal. 18. Mr.Jetly also placed reliance on some of the judgments of this Court in the case of Kishore Kishore Kishore Rungta Rungta Rungta v. Punjab National Bank v. Punjab National Bank v. Punjab National Bank, 2003 (151) ELT 502; Varun Varun Varun Shipping Co. Ltd. v. Deputy Collector of Shipping Co. Ltd. v. Deputy Collector of Shipping Co. Ltd. v. Deputy Collector of Customs Customs Customs, 2003 (154) ELT 34; G.P.Dave & Sons G.P.Dave & Sons G.P.Dave & Sons (Shipping) (Shipping) (Shipping) v. Collector of Customs and C.Ex., v. Collector of Customs and C.Ex., v. Collector of Customs and C.Ex., - 11 - Ahmedabad Ahmedabad Ahmedabad, (2003) 156 ELT 824; J.M.Baxi & Co. v. J.M.Baxi & Co. v. J.M.Baxi & Co. v. Dy.Collector Dy.Collector Dy.Collector of Customs of Customs of Customs, (2003) 156 ELT 961; Kantilal Kantilal Kantilal Parekh v. Union of India, Parekh v. Union of India, Parekh v. Union of India, (2003) 158 ELT 618; and South India Corpn. (Agencies) Ltd. v. South India Corpn. (Agencies) Ltd. v. South India Corpn. (Agencies) Ltd. v. Addl.Collector Addl.Collector Addl.Collector of Customs, Ahmedabad of Customs, Ahmedabad of Customs, Ahmedabad, (2003) 160 ELT 145 to reiterate his submissions. 19. Another preliminary objection raised by Mr.Shah, learned counsel for the respondent is that the application filed by the revenue is not maintainable before this Court as the issues involved herein relate to the interpretation of the clauses in an exemption notification which ultimately relates to the value of the goods for the purpose of assessment and, therefore, as per Section 130E of the Customs Act, the appeal would be maintainable before the Apex Court. 20. Relying upon a decision of the Apex Court in the case of Navin Chemicals Mfg. & Trading Co. Ltd. V./s Collector of Customs reported in 1993 (68) ELT 3 (SC) and two decisions of this Court in the case of Commissioner of Customs & C. Ex. V/s. Primella Sanitary Products (P) Ltd. reported in 2002 (145) ELT 515 (Bom) and Union of India V/s. Auto Ignation Ltd. reported in 2002 (142) ELT 292 (Bom), - 12 - Mr.Shah submitted that the application filed before this Court is not maintainable. 21. Mr.Jetly, learned counsel appearing on behalf of the appellant tried to distinguish the aforesaid judgments and relying upon the decision of the Apex Court in the case of ITC V/s. Collector of Central Excise reported in 94 ELT 456 (SC) and the decision of the Apex Court in the case of Commissioner of Central Excise V/s. Amar Bitumen & Allies Products Pvt. Ltd. reported in 202 ELT 213 (SC) submitted that the application filed by the revenue is maintainable before this Court. THE THE THE ISSUES : ISSUES : ISSUES : ---------- ---------- ---------- 22. Both the learned counsel appearing for the rival parties, representing rival views based on deep research made by them, very strongly and effectively canvassed their rival views giving rise to the following issue : (A) "Whether this Court has territorial jurisdiction to entertain, try and decide the application under Section 130A of the Customs Act and to call upon the Tribunal to state, raise and refer the questions of law raised in the subject application? - 13 - (B) Whether the application filed by the Revenue is not maintainable under section 130A of the Act beforel this Court, as the issues involved therein relate to the value of the goods for the purpose of assessment and therefore as per section 130E of the Act appeal would be maintainable before the Apex Court? CONSIDERATION CONSIDERATION CONSIDERATION : : : ------------- ------------- ------------- Issue- Issue- Issue- A : A : A : -------- -------- -------- 23. Having heard the strongly canvassed rival views giving rise to the aforesaid issue, needless to mention that both views have their strong friends to support; making the job of this Court little difficult to decide. It compelled this Court to make its own research to answer the question raised. 24. The facts are not in dispute. T proposition of law canvassed is debatable, especially, in absence of any authoritative decision of the Apex Court. - 14 - 25. Jurisdiction may be defined to be the power or authority of a court to hear and determine a cause, to adjudicate and exercise any judicial power in relation to it. In other words, by jurisdiction is meant the authority which a court has to decide matters that are litigated before it or to take cognizance of the matters presented in a formal way for its decisions. (See, Official Trustee, W.B. v. Official Trustee, W.B. v. Official Trustee, W.B. v. Sachindra Sachindra Sachindra Nath Nath Nath, AIR 1969 SC 823) Thus, jurisdiction of a court means the extent of the authority of a court to administer justice prescribed with reference to the subject matter, pecuniary value and local limits, as held by the Apex Court in Raja Soap Raja Soap Raja Soap Factory Factory Factory v. Santharaj, v. Santharaj, v. Santharaj, AIR 1965 SC 1449. Jurisdiction of a court may be classified into various categories; such as (i) territorial jurisdiction; (ii) pecuniary jurisdiction; (iii) jurisdiction as to subject matter, etc. Every Court has its own local or territorial limits beyond which it cannot exercise its jurisdiction. 26. The question of territorial jurisdiction of this Court needs to be decided on the provisions of the Customs Act. The interpretation of clause (b) of Section 131C of the Act falling under Chapter V which defines "High Court" to mean: - 15 - (i) in relation to any State, the High Court for that State; (ii) in relation to a Union Territory to which the jurisdiction of the High Court of a State has been extended by law, that High Court; (iii) in relation to the Union Territories of Dadra and Nagar Haveli and Daman and Diu, the High Court at Bombay; (iv) in relation to any other Union Territory, the Highest Court of civil appeal for that territory other than the Supreme Court of India" 27. The above clause was a subject-matter of legal debate before the Delhi High Court in the case of M/s.Suraj Woolen Mills’ case M/s.Suraj Woolen Mills’ case M/s.Suraj Woolen Mills’ case (supra), wherein it was noticed that there was no provision either in the Act or Rules or Orders specifying the High Court of which State should hear a petition under any of the sub-sections of Section 130 of the Act in the event of an occasion arising for the purpose. It was also noticed in the said judgment that the appellate Tribunal is one for the entire country with its Benches in different States, but the adjudicating authorities in original with their appellate forums - 16 - are spread and scattered throughout the country falling within the territorial jurisdiction of different High Courts. 28. The Delhi High Court was pleased to notice that jurisdiction of different officers under the Customs Act is determined by reference to the nature of powers and functions conferred upon them and not necessarily by residence but by reference to the location of the office of the adjudicating authority in the particular case. The appellate jurisdiction is determined again not by the location of the assessee’s business or residence but by location of case. For example, though an assessee may be in West Bengal, but if he imports the goods at Mumbai and order of adjudication is passed by an officer below the Collector of Customs, Mumbai, then the appeal would lie before the Collector (Appeals) at the office of the adjudicating authority in the particular Mumbai and second appeal filed would be heard by west Regional Bench of the Tribunal at Mumbai though for the sake of convenience the President may direct the matter to be heard by the East Regional Bench. - 17 - 29. The Delhi High Court, relying upon its earlier judgment in the case of Seth Banarsi Dass Seth Banarsi Dass Seth Banarsi Dass Gupta Gupta Gupta (supra) in principle, approved the decision of the High Court of Madras in the case of C.I.T. v. C.I.T. v. C.I.T. v. S.Sivaramkrishna S.Sivaramkrishna S.Sivaramkrishna Iyer Iyer Iyer, (1968) 70 ITR 860 except for a marginal dissent. Madras High Court had held that the reference could be made to the High Court which had jurisdiction over the place at which the assessee carried on business, profession or vocation or resided. 30. The Delhi High Court also held that the basis for determination of jurisdiction should be the location of the office of the assessing authority. No importance was attached to the doctrine of merger, though it was pressed into service by the learned counsel appearing for the petitioner in that case. 31. The Delhi High Court in the above judgment of Suraj Woolen Mills Suraj Woolen Mills Suraj Woolen Mills (supra), ultimately, held that the petitioner may have its factory establishment at Panipat in the State of Hariyana, but that was held irrelevant. The adjudicating authority having been at Mumbai, it was held that the Tribunal was bound by the law laid down under the provisions of the Act or any other law as interpreted by the High Court of - 18 - Bombay. The petitioner was held bound by the law as applicable and as prevailing in the State of Maharashtra whereat the goods were to be imported whereat the proceedings under the Act were concluded. The assessee strongly relied upon the said judgment of Suraj Woolen Mills’ case Suraj Woolen Mills’ case Suraj Woolen Mills’ case. 32. The rival view canvassed by the Revenue is essentially based on the doctrine of merger. In all the cases cited by Mr.Jetly, learned counsel for the applicant-Revenue, the common thread running through all the judgments is that, the orders passed by the authorities in original and first appellate authorities having merged into the appellate order passed by the appellate tribunal; as such location of the Tribunal was considered as basis to decide territorial jurisdiction of the High Court. 33. On the above canvass of the views, in our considered view, applicability of the doctrine of merger would be one of the important parameters to decide the territorial jurisdiction of the High Court. Sometimes location of the authority deciding lis subordinate to the High Court would also be relevant to decide territorial jurisdiction of the High Court. - 19 - 34. In absence of any authoritative pronouncement of the Apex Court on the issue involved in this application, we propose to take into account the question of jurisdiction dealt with by the Supreme Court while interpreting Article 226 of the Constitution prior and subsequent to its amendment. 35. Article 226 as it originally stood had two-fold limitations on the jurisdiction of High Courts with regard to their territorial jurisdiction. Firstly, the power could be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued by the court cannot run beyond the territories subject to its jurisdiction. Secondly, the person or authority to whom the High Court is empowered to issue such writs must be "within those territories" which clearly implied that they must be amenable to its jurisdiction either by residence or location within those territories. (See Election Commission Election Commission Election Commission v.v.v. Venkata Rao Venkata Rao Venkata Rao, AIR 1953 SC 210). 36. In Venkata Rao v. Election Commission Venkata Rao v. Election Commission Venkata Rao v. Election Commission, AIR 1953 SC 210, while reversing the decision of the Madras High Court, the Supreme Court held that Ryots Ryots Ryots - 20 - of