IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 21.07.2010 CORAM THE HONOURABLE MR. JUSTICE F.M.IBRAHIM KALIFULLA AND THE HONOURABLE MR. JUSTICE M.M.SUNDRESH C.M.A. NO.486 OF 2009 AND M.P.NOS.1 AND 2 OF 2009 W.P.NO.29129 OF 2008 AND M.P.NO.1 OF 2008 C.M.A.NO.486 OF 2009 The Commissioner of Customs (Exports) Custom House 60, Rajaji Salai Chennai – 600 001. .. Appellant Versus 1.M/s.Biomed Hitech Industries Limited No.475, Old Mahabalipuram Road Sholinganallur, Chennai – 600 119. 2.Customs Excise & Service Tax Appellate Tribunal South Zonal Bench, Shastri Bhavan Annexe 1st Floor, 26, Haddows Road Chennai – 600 006. .. Respondents Civil Miscellaneous Appeal filed under Section 130 of the Customs Act, 1962 to set aside the order of the Tribunal dated 30.09.2008 in Final Order No.1096 of 2008. W.P.NO.29129 OF 2008 M/s.Biomed Hitech Industries Limited Rep.by its Executive Director No.475, Old Mahabalipuram Road Sholinganallur, Chennai – 600 119. .. Petitioner Versus 1.The Commissioner of Customs (Sea Port-Export) Custom House, No.60, Rajaji Salai Chennai – 600 001. https://hcservices.ecourts.gov.in/hcservices/ 2.The Assistant Commissioner of Customs (EPCG) O/o.The Commissioner of Customs (Sea Port-Export) Custom House, No.60, Rajaji Salai Chennai – 600 001. .. Respondents PRAYER : Petition filed Under Article 226 of the Constitution of India praying to issue a Writ of Mandamus, directing the respondents to release the bank guarantees furnished by the petitioner, bearing BG Nos.30103865342, 30103873862, 30103873487, 30103855800, 30103856122, 30103864756 to the petitioner. For appellant in C.M.A.No.486/2009 and : Mr.K.Ravichandra Babu respondents in W.P.No.29129/2008 SCGSC For 1st respondent in C.M.A.No.486/2009 : Mr.V.Ramachandran and petitioner in W.P.No.29129/2008 Senior Counsel for Mr.S.Shankaravadivelu J U D G M E N T M.M.SUNDRESH, J In view of the fact that the parties to both the cases and the issues involved are one and the same, they have been taken up together for disposal. Since the decision in the writ petition depends upon the decision in the appeal, the issue raised in the appeal is taken up for consideration and the parties therein are arrayed as such for the disposal of both the cases. 2.The one and only issue that arises for consideration in the appeal is as to whether an order passed by the Chief Commissioner of Customs as an adjudicating authority is appealable under Section 129-A of the Customs Act, 1962 or not. 3.Facts in brief:- 3.1.The first respondent had imported capital goods under export promotion capital goods (EPCG) Scheme vide Licence No.01500321 dated 21.03.1996, with zero duty issued by the Director General of Foreign Trade (DGFT), New Delhi, in terms of Notification No.111/95 dated 05.06.1995. Alleging that the first respondent has wrongly availed the benefit of the notification, an investigation was done by the Directorate of Revenue intelligence(DRI) and in pursuant to the same, a show cause notice was issued for misdeclaration seeking to impose a duty of Rs.6,38,90,487/- along with interest apart from confiscation. 3.2.A letter was sent by the Central Board of Excise and Customs to the Chief Commissioner of Customs stating that the https://hcservices.ecourts.gov.in/hcservices/ pendency on adjudication matters has gone up at the level of Commissioners / Additional Commissioners / Joint Commissioners / Deputy Commissioners / Assistant Commissioners and therefore the same should be disposed of, within a period of six months. The said letter also indicated that the Chief Commissioner of Customs may take up the adjudication of 4 or 5 cases every month. Therefore in pursuant to the said letter, the Chief Commissioner of Customs adjudicated the case involving the first respondent as per the powers conferred on him under Section 5(2) of the Customs Act, 1962. Accordingly the charges initiated against the first respondent have been dropped. 3.3.However based upon the Review Order No.217/R/02 dated 16.10.2002 passed by the Central Board of Excise and Customs, New Delhi, under Section 129(D) of the Customs Act, 1962, an appeal was made to the Appellate Tribunal to revise the order passed in favour of the first respondent. The Tribunal in and by its order dated 03.09.2008 in CESTAT No.1096 of 2008 has returned the appeal as not maintainable on the ground that an appeal under Section 129-A of the Act would only be maintainable against the order passed by the Commissioner of Customs and not Chief Commissioner of Customs. Challenging the same, the appellant has filed the present appeal by raising the following substantial questions of law: "a.Whether the Tribunal is right in dismissing the appeal as not maintainable since the appeal was filed against an order passed by the Chief Commissioner of Customs? b.Whether the Tribunal is right in ignoring the provisions of Section 5(2) of the Customs Act, 1962 empowering an officer of Customs to exercise the powers and discharge the duties conferred or imposed under the Customs Act on any other officer of Customs who is subordinate to him? c.Whether the Tribunal is right in not considering that in the case on hand the Chief Commissioner of Customs passed the order in appeal exercising is powers as Commissioner of Customs? d.Whether the order passed by the Tribunal is inconsistent with the earlier orders in which the Tribunal entertained appeals against the orders of the Chief Commissioner?" 4.Similarly seeking the release of bank guarantees furnished by the first respondent, a writ petition was filed by him based upon the order passed in his favour. In order to appreciate the issue involved in the present appeal, the provisions of the Customs Act, 1962 require consideration. 5.Chapter-I deals with the definitions of the words as well as the the authorities covered under the Act. An adjudication https://hcservices.ecourts.gov.in/hcservices/ authority has been defined in Section 2(1) of the Act and the same is extracted hereunder: "2(1) "adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Board, [Commissioner (Appeals)] or Appellate Tribunal." Section 2(8) of the Act defines Commissioner of Customs which is as follows: "2(8) "Commissioner of Customs", except for the purposes of Chapter XV, includes an Additional Commissioner of Customs." A proper officer has been defined under Section 2(34) of the Act which is provided hereunder: "2(34) "proper officer", in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the [Commissioner of Customs]." The above said provisions under Chapter-I regarding definitions would make it clear that a Commissioner of Customs is an adjudicating authority and a proper officer. 6.Chapter-II deals with Officers of Customs. In this, Section-3 of the Act speaks about the classes of Officers of Customs and the same is extracted hereunder: "3.Classes of officers of customs.-There shall be the following classes of officers of customs, namely:- (a) Chief Commissioner of Customs; (b) Commissioners of Customs; (c) Commissioners of Customs (Appeals); [(cc) Joint Commissioner of Customs;] (d) Deputy Commissioners of Customs; (e) Assistant Commissioners of Customs; and (f) such other class of officers of customs as may be appointed for the purposes of this Act." Similarly, Section-5 of the Act speaks about the Powers of the Officers of the Customs, which are as follows: https://hcservices.ecourts.gov.in/hcservices/ "5.Powers of officers of customs.-(1) Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act. (2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who is subordinate to him. (3) Notwithstanding anything contained in this section, [a [Commissioner (Appeals)]] shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV and section 108." A reading of the above said Sections would exemplify the fact that there is an hierarchy of officers in the Customs Department. An officer higher in the rank can exercise the power of the officer immediately lower in the rank. The said power is to be exercised for administrative contingency and convenience and expediency as the case may be. However a Commissioner (Appeals) being an officer dealing with the quasi judicial power of adjudication cannot do the work of the other officers except those specified in Chapter-XV and Section 108 of the Act. 7.Chapter-15 speaks about the Appeals. Section 128 of the Act provides for an appeal to the Commissioner (Appeals). Such an appeal is provided from an order passed by an officer lower in the rank than a Commissioner of Customs. Section 129 of the Act speaks about the Appellate Tribunal. The Appellate Tribunal would consist of judicial and technical members making it clear that it is an appellate adjudicating forum. Section 129-A makes it clear that an appeal would lie against the order of the Commissioner of Customs as an adjudicating authority. In other words, when a Commissioner of Customs is not an adjudicating authority then no appeal would lie and that is a reason why the Commissioner (Appeals) has been excluded from being an adjudicating authority, since he exercise the power as an appellate authority under Section 128 of the Act. 8.Section 129-A provides for Appeals to the Appellate Tribunal and the same is extracted hereunder: "129-A. Appeals to the Appellate Tribunal.- (1) Any person aggrieved by any of the following orders may appeal to the Appellate Tribunal against such order- https://hcservices.ecourts.gov.in/hcservices/ (a) a decision or order passed by the [Commissioner of Customs] as an adjudicating authority; (b) an order passed by the [Commissioner (Appeals)] under section 128A; (c) an order passed by the Board or the Appellate [Commissioner of Customs] under section 128, as it stood immediately before the appointed day; (d) an order passed by the Board or the [Commissioner of Customs], either before or after the appointed day, under section 130, as it stood immediately before that day." 9.Section 129-B of the Act speaks about the Orders of the Appellate Tribunal which shall become final under the Act. 10.Similarly 129-C of the Act provides for the Procedure of Appellate Tribunal which would consist of one judicial member and one technical member. 11.The above said provisions would throw light of the fact that the Customs Act, 1962 has provided an exhaustive mechanism for filing appeals against the orders of the adjudicating authority. Procedures under the Customs Act, 1962 as well as the Customs Appeals 1983 have been provided. 12.Therefore we could safely infer that the object of the legislation is to provide for exhaustive remedy to the parties to deal with all disputes arising from an order of adjudication under the Act. It is also seen that the Tribunal is headed by a judicial member. Keeping the above said provisions in view we have to analyse the contentions made by the learned counsels appearing for both sides. 13.Submissions of the appellant: Mr.K.Ravichandra Babu, learned counsel appearing for the appellant submitted that the power of adjudication lies with the Commissioner of Customs. A Commissioner of Customs would include the Chief Commissioner of Customs as well. A conjoint reading of Sections 2(1), 2(8) and Section 3 and 5(2) of the Act would make it clear that in a given case the Chief Commissioner of Customs can exercise the power of the adjudicating authority namely the Commissioner of Customs. https://hcservices.ecourts.gov.in/hcservices/ The learned counsel further submitted that when the Chief Commissioner of Customs has exercised the power of the Commissioner such a power can only be exercised as a Commissioner of Customs since there is no independent power to exercise such a power. Therefore the Chief Commissioner of Customs has exercised the power as the Commissioner of Customs in the capacity of an adjudicating authority and hence the appeal is maintainable under Section 125-A. The learned counsel also submitted that the Chief Commissioner of Customs has only stepped into the shoes of the Commissioner as an adjudicating authority and the said power has been exercised in pursuant to the direction issued by the Central Board of Excise and Customs. According to the learned counsel in as much as Section 129-A is very clear the appeal is maintainable. The learned counsel further added that in a case where a construction of a provision would lead to manifest contradiction and against the purpose of the enactment the same would be avoided. In support of his contention, the learned counsel has relied upon the judgment of the Apex Court in SURJIT SINGH v. MAHANAGAR TELEPHONE NIGAM LIMTIED [(2009) 16 SCC 722]. Hence the learned counsel contended that the appeal should be allowed by setting aside the order of the Tribunal and to decide the appeal filed before it on merits. 14.Submissions of the respondents: Mr.V.Ramachandran, learned senior counsel appearing for the first respondent submitted that in as much as the order has been passed by the Chief Commissioner of Customs no appeal would lie against such an order since Section 129-A provides for an appeal only against the order of the Commissioner as an adjudicating authority. In other words, the learned senior counsel while conceding that the order passed by the Chief Commissioner of Customs is one within his power, authority and jurisdiction, the same would not amount to an order passed by the Commissioner of Customs. Hence, the learned senior counsel submitted that by giving a literal interpretation the Tribunal was right in refusing to entertain the appeal. The learned senior counsel further submitted that in a given case if the Chief Commissioner of Customs exercises the power of an officer below the rank of the Commissioner then the same cannot be appealed against under Section 128 of the Act, in view of the fact that the Commissioner of appeal is a subordinate authority. According to the learned senior counsel when the Commissioner of appeal cannot decide the order of adjudication passed by the Commissioner (Adjudication) it would go to show that an order passed by the Chief Commissioner of Customs cannot be decided by the Commissioner (Appeals). Therefore it is submitted that in the present case the adjudication order of the Chief Commissioner of Customs is not appealable under Section 129-A of the Act. The learned senior counsel https://hcservices.ecourts.gov.in/hcservices/ also referred to the order of adjudication which has been signed by the adjudicating authority as Chief Commissioner of Customs. In support of the said contention regarding the interpretation of the statute to give literal meaning, the learned senior counsel has relied upon the following judgments: "AIR 1955 S.C. 830 [TIRATH SINGH v. BACHITTAR SINGH AND OTHERS]; AIR 1985 S.C. 1698 [I.T.COMMISSIONER, BANGALORE v. J.H.GOTLA]; AIR 2002 S.C. 1334 [PADMASUNDARA RAO v. STATE OF TAMIL NADU]; (2007) 3 SCC 169 [S.R.BATRA v. TARUNA BATRA]; 2010 (1) SC 647 [DIRECTOR, CENTRAL BUREAU OF INVESTIGATION AND ANOTHER v. D.P.SINGH]; (2010) 4 SCC 301 [H.S.VANKANI v. STATE OF GUJARAT] and (2010) 4 SCC 772 [RAJ KUMAR SHIVHARE v. DIRECTORATE OF ENFORCEMENT]" The learned senior counsel also submitted that an appeal being a creation of the statute, a right of appeal cannot be contrary to the statute and therefore in the absence of any such provisions a party cannot seek an appeal as a matter of right. In support of the said contention, the learned senior counsel has relied upon the following judgments : "1988 VOL.169 ITR 89; 1995 VOL.213 ITR 46; 2001 VOL.124 STC 285 [STATE OF HARYANA v. MARUTI UDYOG LTD. AND OTHERS]; AIR 2003 S.C. 1515 [MUNICIPAL CORPORATION OF DELHI v. INTNL. SECURITY and INTELLIGENCE AGENCY LTD.]; (2008) 4 SCC 91 [SUMITOMO CORPORATION v. CDC FINANCIAL SERVICES (MAURITIUS) LTD.] and (2009) 10 SCC 531 [SUPER CASSETTES INDUSTRIES LIMITED v. STATE OF UTTAR PRADESH AND ANOTHER]" Hence the learned senior counsel submitted that the appeal will have to be dismissed and consequentially the writ petition will have to be allowed. 15.As discussed above, a conjoint reading of Section 2(1), 2(8) under Chapter-I and Section 3, 5(2) of Chapter-II and Section 122 would make it clear that a Commissioner of Customs is an adjudicating authority except in the case of Commissioner (Appeals). In other words, a Chief Commissioner of Customs is not an adjudicating authority except in a case he exercise the power under Section 5(2) of the Act. Under Section 2(8) a Commissioner of Customs would include an Additional Commissioner of Customs. The contention of Mr.V.Ramachandran, learned senior counsel, based on Section 5(2) of the Act was that if the order of the Chief Commissioner of Customs is to be treated as an order of any other adjudicating authority, that would lead to an anomalous situation whereby the appeal against the order may have to be preferred before the Commissioner of Customs (Appeals) which was not in the contemplation of the Act. The learned senior counsel therefore contended that the order of the Chief Commissioner of Customs can only be taken as his own order and it https://hcservices.ecourts.gov.in/hcservices/ cannot be taken to be an order of Commissioner of Customs as an adjudicating authority. Though, the said contention in the first blush may appear to be very sound, on a close reading of Section 5(2) of the Act, we find that the said contention cannot be accepted. Section 5(2) has been framed in such a way that an officer of Customs may exercise the powers and discharge the duties conferred or imposed under the Customs Act on any other officer of Customs who is subordinate to him. It is relevant to note that the expression used is singular and therefore the said provision can only be read in such a way that an immediately superior officer can exercise the powers and discharge the duties conferred or imposed under the Act of any other officer who is immediately subordinate to him. Therefore, the Chief Commissioner of Customs may exercise the powers and discharge the duties conferred or imposed under the Customs Act on the Commissioner of Customs who is his immediately subordinate officer in the hierarchy as prescribed under Section 3 of the Act. In which event, under Section 128 of the Act, when the Commissioner of Customs (Appeals) as an Appellate Authority has not been empowered to hear any appeal from the orders of Commissioner of Customs, there would be no scope for any anomaly while applying Section 5(2) of the Act. The Chief Commissioner of Customs passing any order as an adjudicating authority of the officer at the level of Commissioner of Customs will be an order which can be subject matter of appeal before the Tribunal as provided under Section 129 of the Act. We are convinced that such an interpretation of Section 5(2) would rule out any such submission of anomaly while considering an adjudication order passed by Chief Commissioner of Customs by stepping into the shoes of Commissioner of Customs. Therefore a Chief Commissioner of Customs also would include a Commissioner of Customs in a case where he exercises the power of the Commissioner of Customs (Adjudication). In such an eventuality the Chief Commissioner of Customs becomes a proper officer and an adjudicating authority. In other words, the Chief Commissioner of Customs steps into the shoes of the Commissioner (Adjudication) and acts in such a capacity. 16.As observed earlier such a provision is made in order to meet a different situation that would arise for exercising such a power. That is exactly the reason why the Central Board of Excise and Customs has requested the Chief Commissioner of Customs to exercise the power of the Commissioner. 17.Similarly, a proper reading of Chapter-XV would show that an appeal would lie against the adjudicating authority namely the Commissioner (Adjudication) to the Tribunal. Much importance will have to be given the word "as an adjudicating authority". In as much as the adjudicating authority is the Commissioner and the Chief Commissioner takes up such a power of the Commissioner of adjudicate he becomes the Commissioner (Adjudication). That is a reason why Section 129-A speaks specifically about the Commissioner as an adjudicating authority. Therefore it is very clear that as the Chief https://hcservices.ecourts.gov.in/hcservices/ Commissioner of Customs is not an adjudicating authority but only acts as a Commissioner of Customs. Therefore Section 129-A specifically provides for an appeal against the order passed by the Chief Commissioner of Customs while exercising the power of the Commissioner (Adjudication). 18.The mere fact that the Chief Commissioner of Customs has signed the original order of adjudication as Chief Commissioner of Customs cannot make the said order as the one passed by the Chief Commissioner of Customs in its own capacity. But the same has to be construed as the one passed by the Commissioner (Adjudication). In other words, the Chief Commissioner of Customs has stepped into the shoes of the Commissioner of Customs and exercised his power as an adjudicating authority in this case. He has got no independent power of adjudication except to take the power of the Commissioner (Adjudication) under Section 5(2) of the Act. 19.Section 3 of the Act speaks about the hierarchy of the officers. Admittedly a Commissioner of Customs is subordinate to the Chief Commissioner of Customs. As conceded by the learned senior counsel appearing for the first respondent the power of the Chief Commissioner of Customs to act as an adjudicating authority and by exercising the power of the Commissioner has not been disputed but the only objection is that the order is passed by the Chief Commissioner of Customs and therefore the same is not appealable under Section 129-A of the Act. By reading together Section 3 and Section 5(2) it is very clear that a Chief Commissioner of Customs has to exercise the power of the Commissioner (Adjudication). Similarly a Commissioner of Customs can exercise the power of his exercise subordinates. 20.Therefore in the present case the power has been exercised under Section 5(2) of the Act by the Chief Commissioner of Customs in accordance with hierarchy provided under Section 3 of the Act. Hence we do not find any merit in the said contention of the first respondent that the order is one passed by the Chief Commissioner of Customs in the said capacity. 21.The learned senior counsel has also submitted that the power exercised by the Chief Commissioner of Customs is the one akin to the power exercised by the Hon'ble High Court under Section 24 of the Civil Procedure Code. The said contention of the learned senior counsel in our opinion cannot be countenanced. The power exercised by the Hon'ble High Court under Section 24 of the Civil Procedure Code is an independent power exercised as a High Court. In other words, when a proceeding has been transferred or withdrawn a case from a subordinate Court the High Court decides the case as an High Court and not otherwise. However in the present case on hand the Chief Commissioner exercised the power of Commissioner Customs (Adjudication) and not in his own capacity. https://hcservices.ecourts.gov.in/hcservices/ 22.In the present case on hand the Chief Commissioner of Customs decided the case as a Commissioner (Adjudication) and not on his own. The further contention of the learned senior counsel that if the Chief Commissioner of Customs exercises the power of an officer subordinate to the Commissioner (Adjudication) then the same cannot be appealled under Section 128 before the Commissioner (Appeals) if it is construed as an order of adjudication passed by such authority cannot also be accepted since no such issue has come up for consideration before us. Further Section 3 of the Act classifies the hierarchy of the officers and we are in respectful agreement with the submissions of the learned counsel for the appellant that the powers of a subordinate officer below the rank of the Commissioner is to be exercised by the Commissioner. In any case in order to interpret the provisions an hypothetical question cannot be the basis. 23.Section 122 of the Act speaks about the Adjudication of Confiscations and Penalties. Under the said Section only the Commissioner of Customs has been made as an adjudicating authority. As against the order passed by him an appeal would lie under Section 129-A of the Act. Therefore the mere fact that under Section 129-A does not mention about the Chief