2022 (6) TMI 505 - HC - Customs

Valuation of re-export consignment - requirement of valuation under Section 14 of the Customs Act, when the impugned consignment was meant for re-export in hard currency, held at customs notified area - Confiscation of goods - violation of principles of natural justice - applicability of Rule 8 of the Customs Valuation (Determination of price of imported Goods) Rules, 1998 - whether appellant is guilty of commercial fraud/money laundering scheme in respect of the impugned consignment, without any such charge either in the show cause notice or its addendum? - levy of penalty when the impugned consignment is neither a restricted nor a prohibited under the EXIM policy or Customs Act - HELD THAT - It is well settled that every member of a tribunal that is called upon to try issues in judicial or quasi-judicial proceedings, must be able to act judicially; and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially, objectively and without any bias. In such cases, the test is not whether in fact a bias has affected the judgment; the test always is and must be, whether a litigant could reasonably apprehend that a bias attributable to a member of the tribunal might have operated against him in the final decision of the tribunal - In S. PARTHASARATHI VERSUS STATE OF A.P. 1973 (9) TMI 101 - SUPREME COURT the Supreme Court has applied the real likelihood test and restored the decree of the trial court which invalidated compulsory retirement of the Appellant by way of punishment. Mr.Madhu Mohan Damodhar, who originally accorded sanction for prosecution against the appellant, based on the adjudication order, ought not to have later heard and decided the appeal filed by the appellant against the very same adjudication order, on the judicial side, as a member of the CESTAT and on this ground alone, the orders impugned herein, are liable to be set aside - the learned Senior Panel Counsel appearing for the respondent fairly conceded the fact that the officer viz., Mr.Madhu Mohan Damodhar, who passed the sanction order for instituting the prosecution against the appellant company, was a member of the CESTAT, at the time of passing of the final order as well as the miscellaneous order in the appeal filed by the appellant and hence, he agreed for remanding the matter to the CESTAT for fresh consideration. Petition closed.

Issues Involved:
1. Valuation of the consignment under Section 14 of the Customs Act.
2. Confiscation of goods based on departmental enquiry and principles of natural justice.
3. Valuation of goods under Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1998.
4. Allegation of commercial fraud/money laundering without specific charges in the show cause notice.
5. Levy of penalty when the consignment is neither restricted nor prohibited under the EXIM policy or Customs Act.
6. Potential bias due to the involvement of the same officer in both sanctioning prosecution and hearing the appeal.

Detailed Analysis:

1. Valuation of the Consignment:
The appellant questioned whether the CESTAT was correct in confirming the decision of the Adjudicating Authority to value the consignment under Section 14 of the Customs Act, despite the consignment being meant for re-export in hard currency and held at a customs notified area. The court did not delve into this issue in depth as the primary focus was on the potential bias of the tribunal member.

2. Confiscation of Goods:
The appellant raised concerns about the CESTAT confirming the order of confiscation based on a departmental enquiry, which they argued violated the principles of natural justice. However, the court did not address this issue explicitly due to the overarching concern of potential bias.

3. Valuation Under Rule 8:
The appellant contested the valuation of goods under Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1998, arguing that the consignment was intended for re-export. This issue was not elaborated upon in the judgment due to the focus on the tribunal member's potential bias.

4. Allegation of Commercial Fraud:
The appellant challenged the affirmation of the finding that they were guilty of commercial fraud/money laundering without such charges being specified in the show cause notice. The court did not explore this issue in detail, focusing instead on procedural fairness and potential bias.

5. Levy of Penalty:
The appellant questioned the levy of a penalty when the consignment was neither restricted nor prohibited under the EXIM policy or the Customs Act. This issue was not addressed in detail in the judgment.

6. Potential Bias:
The central issue addressed by the court was whether the CESTAT violated the rule of law by hearing the case when the same officer who had sanctioned the prosecution also participated in the appeal hearing. The court found merit in the appellant's argument, emphasizing the principle that a person should not be a judge in their own cause, derived from the Latin maxim "nemo debet esse judex in propria sua causa". The court cited several precedents from the Supreme Court, including Ashok Kumar Yadav v. State of Haryana and A.K. Kraipak v. Union of India, to underscore the importance of impartiality and the appearance of justice being done.

The court concluded that the involvement of Mr. Madhu Mohan Damodhar in both sanctioning the prosecution and later hearing the appeal created a reasonable apprehension of bias. Consequently, the court set aside the impugned orders dated 26.07.2017 and 26.03.2018 passed by the CESTAT and remanded the matter for fresh disposal by a differently constituted bench. The court clarified that it had not expressed any opinion on the merits of the case and left other questions of law open for future consideration.

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