2006 (1) TMI 139 - HC - Customs

DEPB credit - seeking Rectification of Mistake u/s 129B(2) - Appeal against the majority decision of CESTAT - Differences of opinion - Reference to third member - Whether the appeals are required to be rejected as held by the Member (Technical) OR the appeals are required to be allowed as held by Vice-President - HELD THAT - The legislative intent discernible from a plain reading of the provision is to ensure that the appeal or appeals are to be disposed of only by the Bench originally assigned the appeal or appeals as ordered by the President on the administrative side. This becomes clear from a conjoint reading of sub-sections (1) and (4) of Section 129C of the Act. Sub-section (5) of Section 129C of the Act stands out in contrast and does not permit disposal of the appeal. In fact, after the President or the Third Member, who is assigned the case for hearing on the point or points of difference, renders his opinion, the appeal goes back to the Bench which originally heard the appeal and has to be decided in accordance with the majority opinion. This becomes absolutely clear when the concluding portion of the provision is read which talks of deciding according to the opinion of the majority of the members who have heard the case, including those who first heard it. Therefore, the members who expressed dissenting opinions are bound by the statute to state the point or points of difference and make reference after making such a statement. To use the words of the learned President an omnibus order cannot take place of the statement on point or points of difference between the members. The entire appeal(s) cannot be referred. As the facts go to show the petitioner had moved an application before the learned President of the Tribunal. The Registry at New Delhi took it upon itself to direct the petitioner to approach the Bench at Mumbai without appreciating the controversy which was raised by the petitioner and on which it sought an order from the President pursuant to the oral directions made by this Court. Once the application was addressed to the President the Division Bench could not have taken up the said application for hearing and hence the order dated 6-12-2005 is also bad in law on this limited count. The Registry of the Tribunal may be manned by highly competent officers but there are situations where in the peculiar facts of the case, it is necessary to place the application before the authority for whom it is meant and to whom it is addressed, as in this case before the learned President. If that was done, at a proper stage, possibly the litigation could have been avoided, at least this round. The same could have been granted by the learned President only and therefore also the members of the Bench could not have taken up for hearing and disposal, the application addressed to the learned President. In the aforesaid facts and circumstances of the case, not only the order made by CESTAT but also the so called reference made are hereby quashed and set aside, leaving the respective opinions expressed by the members constituting the original Bench untouched. As a consequence any order made by the learned President making a reference to the Third Member, including the case which is pending before Third Member for hearing becomes infructuous. The original Division Bench which heard the appeals and wherein the Member (Technical) and Vice-President expressed dissenting opinions is directed to formulate and state specific point or points of difference and then refer the same to the learned President as required by the provisions of Section 129C(5) of the Act. The petition is allowed accordingly.

Summary

Issues Involved:
1. Validity of the order dated 6-12-2005 by CESTAT.
2. Compliance with Section 129C(5) of the Customs Act, 1961.
3. Proper formulation and reference of points of difference by the Division Bench.
4. Jurisdiction and role of the Third Member and the President of CESTAT.
5. Procedural irregularities in handling the application by the Tribunal's Registry.

Detailed Analysis:

1. Validity of the order dated 6-12-2005 by CESTAT:
The petition challenges the order dated 6-12-2005 made by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai. The Division Bench of CESTAT expressed differing opinions on an appeal, leading to a reference to the President of CESTAT. The Third Member took up the hearing despite a pending Rectification of Mistake Application, leading to a challenge in the High Court. The High Court quashed the Third Member's order and directed compliance with Section 129C(5) of the Customs Act, 1961.

2. Compliance with Section 129C(5) of the Customs Act, 1961:
Section 129C(5) mandates that if members of a Bench differ in opinion, they must state the specific point or points of difference and refer them to the President. The High Court emphasized that this provision is substantive, not merely procedural. The Division Bench failed to comply, as their reference lacked specific points of difference, instead posing a general question on whether the appeals should be allowed or rejected.

3. Proper formulation and reference of points of difference by the Division Bench:
The Division Bench's reference was deemed invalid as it did not state specific points of difference. The High Court highlighted that the legislative intent is to ensure that appeals are disposed of by the original Bench, with the Third Member only resolving specific points of difference. The High Court directed the Division Bench to formulate and state specific points of difference and then refer them to the President.

4. Jurisdiction and role of the Third Member and the President of CESTAT:
The Third Member and the President derive their jurisdiction from the specific points of difference stated by the original Bench. They do not have the authority to decide the entire appeal. The High Court reiterated that the Third Member's role is limited to resolving the stated points of difference, and the appeal must be decided by the original Bench in accordance with the majority opinion.

5. Procedural irregularities in handling the application by the Tribunal's Registry:
The petitioner's application to the President of CESTAT was mishandled by the Tribunal's Registry, which directed the petitioner to file it in Mumbai. The High Court criticized this action, stating that the application should have been placed before the President. The Division Bench's subsequent order on the application was also invalid, as it was addressed to the President.

Conclusion:
The High Court quashed the order dated 6-12-2005 and the reference made on 12-8-2005, directing the Division Bench to state specific points of difference and refer them to the President as per Section 129C(5) of the Customs Act. The petition was allowed, and the rule was made absolute without any order as to costs.