2010 (1) TMI 526 - HC - Customs

Import of capital goods second hand goods order of tribunal reasoned order Held that - The Higher Courts are expected to read the mind of the Lower Authority. In absence of reasons, it become difficult for the higher Courts to consider the issue involved in the case and the view taken therein. Reasons substitute subjectivity by objectivity. - . One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. The inscrutable face of a sphinx is ordinarily incongruous with a judicial or quasi judicial performance. matter remanded back for denovo decision

Summary

Issues:
- Interpretation of whether a second-hand reconditioned Wartsila Vasa Basic Engine qualifies as "capital goods" under Foreign Trade Policy 2004-2009 for import without a license.
- Consideration of whether the engine, when attached to an alternator, becomes operational and qualifies as a complete machine.

Analysis:
1. Interpretation of Capital Goods:
The appeal involved determining if a reconditioned Wartsila Vasa Basic Engine could be considered "capital goods" under the Foreign Trade Policy. The respondent argued that the engine was a complete machine capable of running a factory independently, while the Revenue contended it was not a capital good and required an import license. The Commissioner held that the engine was not a capital good as per the policy, leading to the confiscation of the goods and imposition of penalties. The Tribunal, however, allowed the appeal, stating that the engine was essential for electricity production and thus qualified as capital goods.

2. Judicial Review and Natural Justice:
The High Court criticized the Tribunal's order for lacking detailed discussion and reasoning, breaching principles of natural justice. The Court highlighted the importance of providing reasons for decisions to facilitate judicial review. The Court referred to previous cases where judgments were set aside due to insufficient reasoning. Emphasizing the need for a thorough consideration of the issue, the Court quashed the impugned order and remanded the case to the Tribunal for a fresh decision, stressing the importance of a reasoned order and adherence to natural justice principles.

3. Precedents and Legal Interpretation:
The Court noted that the Tribunal failed to address or distinguish a previous judgment that contradicted its decision on the classification of the diesel engine as capital goods. Drawing on legal precedents, including judgments from the Apex Court, the Court underscored the importance of consistency in legal interpretation and the need to consider each case on its merits. The Court highlighted the duty of judges to make the law predictable and effective, urging the Tribunal to provide a reasoned decision in line with legal principles.

4. Remand for Fresh Consideration:
Based on the lack of detailed discussion and reasoning in the Tribunal's order, the High Court set aside the impugned decision and remanded the case for a fresh consideration. The Court stressed the significance of recording reasons for decisions to ensure transparency and facilitate effective judicial review. By remitting the matter back to the Tribunal, the Court left the question of law open for reconsideration, directing the Tribunal to decide the appeal with a reasoned order following principles of natural justice, while keeping all arguments open for further evaluation.