The Bombay High Court came down heavily on the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and stated that CESTAT has failed to discharge the first appellate court’s duties by passing a single-paragraph order.
The bench of Justice M.S.Sonak and Justice Jitendra Jain has observed that the CESTAT’s order warrants interference because the CESTAT has not discharged the duties and obligations expected of a first appellate Court in this case. The central and crucial issues were not considered. The findings of fact were not addressed. The CESTAT failed to address, much less come into close quarters with the reasoning of the Commissioner. The order, with respect, is a cryptic single-paragraphed order.
The bench stated that CESTAT should have considered the rectification application in the facts of this case. The ROM application tried to bring to the notice of the CESTAT that factual issues were raised, and they were not decided. The CESTAT’s attention was drawn to the material on record, which was not even referred to in the “single paragraph” order and was much less considered. Failing to address vital issues or even look into crucial material is grounds for judicial review.
Earlier, the Petitioner-department had instituted Central Excise has challenged the CESTAT’s order. However, the co-ordinate bench pointed out that the remedy of the revenue against such an order does not lie in the form of an appeal, but in a writ proceeding under Article 226 of the Constitution.
The appeal was dismissed as not being maintainable on that ground, leaving it open to the Revenue to pursue an appropriate proceeding in accordance with law.
The challenge to the order raises substantial questions of law because the records show that the assessee classified the same type of goods under headings 3197 when cleared/removed officially and under 8424 when cleared allegedly unofficially or clandestinely. The classification under heading 3197 entails duty/tax @ 20%, whereas 8424 was exempt. However, the CESTAT did not consider this substantial issue or the impact of such contradictory declarations concerning the same goods.
The respondent assessee contended that the assessee was forced to classify the goods under heading 3197 even though Supreme Court decisions favoured classification under 8424. There was no clandestine removal as alleged.
However, even these factual issues necessary for the adjudication were glossed over in the CESTAT’s “single paragraph order” by observing that they were “irrelevant”. There is no discussion of why they were irrelevant or why any decision on these issues would not impact the conclusion. The CESTAT order is cursory and does not discuss any findings in the Commissioner’s order.
The court quashed and set aside the CESTAT’s orders and remanded the matter before the CESTAT to consider the assessee’s appeal afresh and in accordance with the law.
Case Details
Case Title: The Commissioner of Central Excise & Customs Versus M/s. Jain Irrigation Systems Ltd.
Case No.: Writ Petition No. 185 Of 2012
Date: 02 January 2025
Counsel For Petitioner: P. S. Cardozo
Counsel For Respondent: M. H. Patil
