TIME LIMIT TO REFER STATEMENT OF A CASE BY ‘CESTAT’ TO HIGH COURT UNDER SECTION 130(4) OF THE CUSTOMS ACT, 1962

[Mr. M. GOVINDARAJAN]

Orders of Appellate Tribunal

Section 129B of the Customs Act, 1961 (‘Act’ for short) provides that the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary.

CESTAT to refer to High Court

Section 130A(1) of the Act provides that the Principal Commissioner of Customs or] Commissioner of Customs or the other party may, within one hundred and eighty days of the date upon which he is served with notice of an order under section 129B by application in the prescribed form, accompanied, where the application is made by the other party, by a fee of Rs.200/-, apply to the High Court to direct the Appellate Tribunal to refer to the High Court any question of law arising from such order of the Tribunal.  Section 130A(2) of the Act provides that the application shall clearly state the question of law which he seeks to be referred to the High Court and shall also specify the paragraph in the order of the Appellate Tribunal relevant to the question sought to be referred.

Section 130A(3) provides that On receipt of notice that an application has been made under sub-section (1), the person against whom such application has been made, may, notwithstanding that he may not have filed such application, file, within 45 days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order in relation to which an application for reference has been made and such memorandum shall be disposed of by the High Court as if it were an application presented within the time specified in sub-section (1).

Section 130A(3A) provides that the High Court may admit an application or permit the filing of a memorandum of cross-objections after the expiry of the relevant period if it is satisfied that there was sufficient cause for not filing the same within that period.

Section 130A(4) provides that if, on an application made under sub-section (1), the High Court directs the Appellate Tribunal to refer the question of law raised in the application, the Appellate Tribunal shall, within 120 days of the receipt of such direction, draw up a statement of the case and refer it to the High Court.

Time limit under Section 130A(4) mandatory?

The issue to be discussed in this article is as to whether the time limit to refer statement of a case by CESTAT to High Court under section 130A (4) is mandatory or directory.

The Bombay High Court in ASIT C. MEHTA FINANCIAL SERVICES LIMITED (PREVIOUSLY KNOWN AS NUCLEUS NETSOFT AND GIS (INDIA) LIMITED) , VERSUS THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL (CESTAT) FORMERLY KNOWN AS CUSTOMS, EXCISE & GOLD (CONTROL) APPELLATE TRIBUNAL, COMMISSIONER OF CUSTOMS (PREVENTIVE) MUMBAI, UNION OF INDIA - 2022 (11) TMI 171 - BOMBAY HIGH COURT held that the time limit prescribed under Section 130A(4) is directory and not mandatory.

In the above said case the petitioner had furnished a bank guarantee to the tune of Rs.26,86,000/- as per the directions of the Supreme Court for the refund of Rs. 50,72,000/- which had been deposited by the petitioner with the respondents during the course of investigation.  The said amount was released to the petitioner on submission of the bank guarantee ofRs.26, 86,000/-

The High Court, in Customs Application No.28 of 2001, raised some substantial question of law and directed CESTAT to send the statement of case to High Court as expeditiously as possible.  CESTAT has not furnished the same before the High Court.  Therefore the petitioner filed the present writ petition before the High Court.  The petition seeks dismissal and quashing of the case directed to be filed by Respondent No.1 in Customs Application No. 28 of 2001 that was filed by Respondent No.2 and for return of Bank Guarantee of Rs. 26,86,000/- given by petitioner in favor of Prothonotary and Senior Master of this court.

The petitioner contended that he has been renewing the Bank Guarantee since 2002 and till date incurred about Rs.10 Lakhs to keep the Bank Guarantee alive.   Section 130(A)(4) of the Act provides time limit of 120 days to submit the statement of facts and since it has not been submitted the court should hold that it is now time barred and also dismiss the said application for want of prosecution.      

The Commissioner of Customs (Preventive), Mumbai, the second respondent in this case submitted that he has sent letters on 27.05.2014, 11.12.2021 and 18.10.2022 to CESTAT       to submit the statement of facts to the High Court.  The Respondent No.2 has been pursuing the matter with Respondent No.1 (CESTAT) and even provided the papers in 3 out of 8 matters, one of which was that of petitioner. Therefore, the court should not hold Respondent No.2 does not wish to prosecute the matter.

The High Court appointed one Amicus Curiae.  The amicus curiae have tendered brief synopsis and some judgments for the benefit of the court.  The High Court has considered the synopsis and the provisions of law referred thereto as well as the judgments referred therein.  The High Court considered the documents put forth by the parties to the High Court.  The High Court came to the conclusion that  the  Respondent No.2 had not abandoned the said Application.  It appears that in three out of eight references, one of which is that of petitioner herein, papers have been submitted to CESTAT.  Even the petitioner has also directly given a copy to CESTAT to Respondent No.2. 

The High Court held that the time limit of 120 days prescribed in Section 130(A)(4) of the Act , should be construed as being directory only and not imperative.  The CESTAT, Respondent No.1 is a judicial body and over its actions Respondent No.2 has no control.   In those circumstances, to construe the time limit for the submission of the case as mandatory might be to deprive Respondent No.2 of its right to have a question of law considered by the High Court which the Customs Act intends to be so considered. A party should not be deprived of a statutory right for no fault of its own, but for the fault of a public body over which it has no control.   Respondent No.1 has no excuse for not filing the statement of case at least with regard to the three files made available, one of which is of petitioner herein.  The High Court directed CESTAT to submit the statement of case within six weeks of receiving a copy of this order. The High Court also directed Commissioner of Customs (Preventive) give all details to Respondent No.1.

The petitioner prayed for the release of bank guarantee since he is in severe liquidity crisis and there has been tremendous turmoil of the business of petitioner.  The High Court held that it is not possible to direct return of the Bank Guarantee.  After receiving the statement of facts from CESTAT, if the Customs Application at reference No. 28 of 2001 is not disposed within one year, the petitioner may apply again to court for return of the Bank Guarantee and substituting it with some satisfactory security. The High court will consider the application on merits at that time.