Case: Navin Chemicals Manufacturing &amp; Trading Company Limited Vs. Collector of Customs

1. This is an appeal by special leave against the judgment and order of the Customs, ExciseGold Control Appellate Tribunal (hereinafter referred to as CEGAT). The order which granted special leave expressly confines it to the question whether a member of CEGAT sitting singly could in law have heard the appeal before it2. The appellant was granted an advance import licence for the import of crude emetine under a duty exemption scheme (C.E.E.D.) which required the appellant to export the goods after processing them. The goods that were imported by the appellants were found, on chemical analysis performed at the request of the Customs authorities, to contain emetine hydro chloride, moisture and other impurities. The Additional Collector of Customs held that the goods imported being emetine hydrochloride, the licence was not valid for the same. Inasmuch as the importation had been made without the cover of a valid licence, an offence under Section 111(d) of the Customs Act, 1962 (hereinafter called the said Act) read with Section 3 of the Import and Export (Control) Act, 1947 was established against the appellant. He ordered thus:?Taking all the circumstances into account and in view of the fact that this is not an importation for individual sale and profit in India, but an importation under D.E.E.C. Scheme who importers are bound tot Emetine Hydrochloride, B P. Grade, I take a lenient view and order that the goods in question shall be confiscated under Section 111(d) of the Customs Act, 1962 read with Section 5 of the Import and Export (Control) Act, 1947. I, however, allow under Section 125 of the Customs Act, 1962, an option to pay in lieu of such confiscation a fine of Rs. 10,000 (Rupees ten thousand only) and clear the goods into town.?There against the appellant preferred an appeal to CEGAT and it was listed for hearing before a member thereof, sitting singly. The appeal was rejected and the Additional Collectors order confirmed.

Court's reasoning:
Section 130 (1) states that the Collector of Customs or the other party may require CEGAT to refer to the High Court any question of law arising out of an order under appeal before it provided it is not an order relating among other things to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment. Clause (b) of SectionE provides that an appeal shall lie to the Supreme Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment9. The importance of the present appeal lies not so much in deciding which appeals can be heard by a member of CEGAT sitting singly and which by a Special Bench thereof as in determining where a reference can be made by CEGAT to the High Court and in which cases an appeal against an order of CEGAT can be filed directly before the Supreme Court. Where an appeal lies to the Supreme Court, the necessity of a reference on a question of law to the High Court is obviated. An appeal to this Court is provided where, as aforementioned, the questions in issue, relating to the rates of duty or the value of goods for the purposes of assessment, have relevance not only for the parties there concerned but for other importers as well11. It will be seen thatn 5 uses the said expressionn of any question having a relation to the rate of duty or to the value of goods for the purposes of assessment and the Explanation thereto provides a definition of it for the purposes of this. The Explanation says that the expression includes the determination of a question relating to the rate of duty; to the valuation of goods for purposes of assessment; to the classification of goods under the Tariff and whether or not they are covered by an exemption Notification; and whether the value of goods for purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Although this Explanation expressly confines the definition of the said expression ton 5 of Section, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly. The statutory definition accords with the meaning we have given to the said expression above. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption Notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to cases where, for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods12. This, then, is the test for the purposes of determining whether or not an appeal should be heard by a Special Bench of CEGAT, whether or not a reference by CEGAT lies to the High Court and whether or not an appeal lies directly to the Supreme Court from a decision of CEGAT: does the question that requires determination have a direct and proximate relation for the purposes of assessment, to the rate of duty applicable to the goods or to the value of the goods13. The order of the Additional Collector under appeal before CEGAT in the present case did not have any direct or proximate relation, for the purposes of assessment, either to the rate of duty applicable to the said goods or to the value thereof. All that the Additional Collectors order did was to confiscate the said goods allowing to the appellant the option of redeeming them upon payment of a fine of Rs. 10.000. That the appellant might avail of the option, pay the fine and clear the said goods, when questions as to the rate of duty and value for purposes of assessment might possibly arise, is far too remote a contingency to satisfy the test that is laid down.