1999 (8) TMI 71 - SC - Customs

Liability of payment of duty - Held that - It is true that the appellant did not in its memo of appeal implead the Respondent No. 2 as a party respondent before the CEGAT. However, the fact remains that the appellant and the Respondent No. 2 had both preferred their separate appeals before the Tribunal. Both the appeals were taken up analogously for hearing. The plea that not the appellant but the Respondent No. 2 should have been held liable for payment of duty was specifically raised and argued before the Tribunal in the presence of the latter. It cannot therefore be said that the Respondent No. 2 did not have the opportunity of meeting the plea. The order of the Tribunal is rendered defective and hence not sustainable in law inasmuch as it does not show application of mind on the part of the Tribunal to all the material available on record as also to the legal consequences flowing from the provisions of Section 147 of the Act. Thus the ends of justice demand the matter being remitted back to the Tribunal to decide the question of liability between the appellant and the Respondent No. 2 Whether both or only one of them, and if so, which of the two, would be liable to pay the duty and penalty as quantified. Appeal allowed.

Issues:
1. Liability of payment of customs duty and penalty between the appellant and Respondent No. 2.
2. Application of Section 147 of the Customs Act, 1962.
3. Defects in the order of the Tribunal and remittance of the matter back for further consideration.

Issue 1: Liability of Payment of Customs Duty and Penalty
The judgment involved a case where a notice was issued to the appellant and Respondent No. 2 under the Customs Act, 1962, regarding duty amounting to Rs. 37,97,434. The Collector of Customs held both parties liable for the duty and imposed a penalty of Rs. 6 lakhs each. The Tribunal partially allowed the appeals but maintained the liability. The appellant argued that as agents, they should not be held liable without proof of wilful act, negligence, or default. However, the Respondent No. 2 contended that the liability was rightfully on the appellant and could be passed on as per their contract. The Supreme Court noted that the matter of liability needed further adjudication to determine who should bear the duty and penalty.

Issue 2: Application of Section 147 of the Customs Act, 1962
The appellant raised the argument based on Section 147 that without proof of wilful act, negligence, or default, they should not be held liable for duty. The Court observed that none of the authorities had made such findings. The Respondent No. 2, on the other hand, claimed that the liability was correctly imposed on the appellant, and any contractual disputes should be resolved separately. The Court emphasized the need to consider Section 147 in determining the liability for duty and penalty.

Issue 3: Defects in the Tribunal's Order and Remittance for Further Consideration
The Supreme Court found defects in the Tribunal's order as it did not adequately address the arguments and documents presented by the appellant regarding the liability. The Court highlighted that both parties had presented their appeals before the Tribunal, and the matter of liability was raised and discussed. The Court decided to remit the matter back to the Tribunal for a comprehensive consideration of all arguments, including the application of Section 147, to determine the party liable for the duty and penalty. The Court also directed that the deposited amounts should remain as a condition for further proceedings.

In conclusion, the Supreme Court allowed the appeals, set aside the Tribunal's order, and remitted the matter back for a detailed consideration of the liability for payment of duty and penalty between the appellant and Respondent No. 2, emphasizing the application of Section 147 of the Customs Act, 1962.

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