2017 (1) TMI 789 - HC - Customs

Validity of order of tribunal where the members who have heard the matter got retired - Section 129C(5) of the Act - diversion of exempted goods meant for supply and consumption by an Export Oriented Unit - Held that - Reliance placed in the case of COLOURTEX Versus UNION OF INDIA 2010 (6) TMI 191 - Gujarat HIGH COURT , where similar issue is decided and was held that as both the Members of the Tribunal have retired, the matter is required to be heard by the Division Bench as per the present position prevalent today. The Members who first heard the case are no longer available and hence, an impossible situation has arisen whereby it would not be possible to give effect to the provisions of sub-Page section (5) of section 129C of the Act. The impugned order of the Tribunal to the extent the same relates to the question of imposition of penalty on M/s. Modern as recorded in the difference of opinion between the members is hereby quashed and set aside. The Tribunal is directed to hear the appeal afresh to the aforesaid limited extent without in any manner being influenced by any observations made by the Members in the impugned order. Petition allowed - matter on remand.

Summary

Issues:
Challenge to difference of opinion in the order of Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad regarding penalty imposition and duty demand on a manufacturing unit for diversion of exempted goods.

Analysis:
(1) Challenge to Tribunal's Order:
The petitioners challenged the difference of opinion in the order of the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad dated 21.01.2016. The Tribunal had confirmed duty demand and penalties on the manufacturing unit for diversion of exempted goods meant for an Export Oriented Unit. The order was a result of a common hearing of appeals filed by the unit and co-appellants, where a difference of opinion arose between the Member (Judicial) and the Member (Technical).

(2) Legal Provisions Invoked:
The learned Advocate highlighted Section 129C(5) of the Customs Act, 1962, which mandates that in case of a difference of opinion among Tribunal members, the point shall be decided according to the majority's opinion. If members are equally divided, they must state the points of difference for referral to the President or other Tribunal members for a decision.

(3) Judicial Precedent Reference:
Referring to a Division Bench judgment, the Advocate argued that the issue in the present petition aligns with the legal principles established in the mentioned case. As both Tribunal members had retired, the matter required a Division Bench hearing.

(4) Court's Decision and Rationale:
After considering the submissions, the Court found that the Tribunal's difference of opinion did not specify the points of disagreement as required by law. Citing the legal provisions, the Court emphasized that a reference for decision must be based on stated points of difference. As the original Tribunal members had retired, the Court quashed the Tribunal's order on penalty imposition and directed a fresh hearing in line with statutory requirements.

(5) Conclusion:
The petition was allowed, and the Court made the rule absolute, setting aside the Tribunal's order on penalty imposition. The Tribunal was directed to rehear the appeal specifically on the penalty imposition issue, ensuring compliance with Section 129C(2) of the Act by a Division Bench with territorial jurisdiction.

This detailed analysis of the judgment showcases the legal intricacies involved in challenging a Tribunal's decision based on a difference of opinion and the subsequent legal obligations for a fair hearing and decision-making process.