2025 (1) TMI 438 - AT - Customs

Maintainability of an appeal before the Commissioner (Appeal) against a letter received from the department enclosing SVB s Investigation Report - Investigation Report (IR) - HELD THAT - The power of the Government to issue instructions has been recognised by a Constitution Bench of the Hon ble Supreme court in SANT RAM SHARMA VERSUS STATE OF RAJASTHAN ANR. 1967 (8) TMI 117 - SUPREME COURT . The Hon ble Court held that while statutory rules cannot be amended by Executive instructions but if the rules are silent on any particular point, Government can fill up the gaps by issuing executive instructions, in conformity with the existing rules. The Circular per se is not under challenge. It deals with the subject; Procedure for investigation of related party import cases and other cases by the Special Valuation Branches . In the instant case, the appellant has not been able to demonstrate that the IR is a quasi-judicial decision or order issued under the statute and that they are an arraigned party having a legal grievance , that they satisfy the criteria stated in the above judgment, inasmuch as the IR has wrongly deprived them of something, or wrongly refused them something, or wrongfully affected their title to something. Hence they cannot be stated. The appellant has also not demonstrated any real prejudice caused to them by the investigation report. Merely being disappointed or dissatisfied is not enough. Further the IR is the product of a consultative process between the department and the appellant as the facts are known only to the appellant. It is a compilation of evidence gathered, and subjective conclusions reached by the investigators. The appellant had ample opportunity to put forward his views orally and in writing - They involve a quasi-judicial procedure with inbuilt safeguards of natural justice and procedural fairness. The appellant has a fair chance to represent his case including assailing the investigation report, which is not binding on the Original Authority while deciding the lis and if he is still aggrieved by the final decision, the appellant can take up the matter in further appeal as provided in the statute. Hence the appellant has not made out a case for quashing the impugned order and the same is upheld. Conclusion - The impugned order holding that the IR is not an appealable order is legal and proper. The right to appeal is a statutory right, not a constitutional one, and is subject to the conditions set forth in the statute. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment addresses several core legal questions:

Whether the Investigation Report (IR) issued by the Special Valuation Branch (SVB) is an appealable order under the Customs Act.
Whether the appellant has the right to challenge the IR based on principles of natural justice and procedural fairness.
Whether the procedural framework established by Circular No. 05/2016 is applicable to the appellant's case.
Whether the appellant is considered a "person aggrieved" by the IR, thereby justifying an appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Appealability of the Investigation Report

Relevant legal framework and precedents: The Customs Act, particularly Section 128, outlines the right to appeal decisions or orders made by customs officers. The court referenced precedents such as the Supreme Court's decision in Vijay Prakash D Mehta, which establishes that the right to appeal is statutory and can be limited by the conditions of the statute.
Court's interpretation and reasoning: The court determined that the IR is not an appealable order as it is not a quasi-judicial decision or order. It is an administrative, fact-finding document that does not create immediate legal rights or obligations.
Key evidence and findings: The court noted that the IR was prepared following Circular No. 05/2016 and was not intended to be a final determination affecting the appellant's rights.
Application of law to facts: The IR functions as an investigative document, not a decision or order under the Customs Act, and thus is not subject to appeal.
Treatment of competing arguments: The appellant's contention that the IR should be appealable was rejected based on the nature of the IR as an administrative document.
Conclusions: The court concluded that the IR is not an appealable order, and the appeal was dismissed.

Issue 2: Principles of Natural Justice

Relevant legal framework and precedents: The principles of natural justice, including the right to a fair hearing, were considered. The court referenced the Supreme Court's decision in P.D. Agrawal, which emphasizes that some real prejudice must be shown for a violation of natural justice to be established.
Court's interpretation and reasoning: The court found that the IR is a preliminary fact-finding exercise, not a final determination, and therefore does not require a personal hearing at this stage.
Key evidence and findings: The appellant had opportunities to present their views during the investigation process, and no statutory right for a hearing at the IR stage was established.
Application of law to facts: The court applied the principle that procedural fairness must be assessed in the context of the specific case, and found no procedural unfairness in the preparation of the IR.
Treatment of competing arguments: The appellant's argument regarding lack of a personal hearing was dismissed as the IR does not constitute a final adjudication.
Conclusions: The court held that there was no violation of natural justice principles in the preparation of the IR.

Issue 3: Applicability of Circular No. 05/2016

Relevant legal framework and precedents: Circular No. 05/2016 outlines procedures for SVB investigations. The court considered the intent and hierarchical structure of the circulars.
Court's interpretation and reasoning: The court affirmed that Circular No. 05/2016 applies to the appellant's case, as it provides a uniform procedure for SVB investigations.
Key evidence and findings: The court noted that the IR was prepared in accordance with the circular, which mandates adherence to specific procedures for related party import investigations.
Application of law to facts: The court found that the appellant's attempt to distinguish between different circulars was unfounded, as the procedures outlined in Circular No. 05/2016 were applicable.
Treatment of competing arguments: The appellant's argument that the circular was inapplicable was rejected based on the circular's explicit instructions.
Conclusions: The court concluded that Circular No. 05/2016 was correctly applied to the appellant's case.

Issue 4: Appellant as "Person Aggrieved"

Relevant legal framework and precedents: The concept of "person aggrieved" was examined through precedents such as Adi Pherozshah Gandhi and Northern Plastics Ltd., which define the criteria for being considered aggrieved.
Court's interpretation and reasoning: The court determined that the appellant did not meet the criteria of a "person aggrieved" as the IR did not deprive them of any legal rights or cause any legal grievance.
Key evidence and findings: The appellant failed to demonstrate that the IR affected their legal rights or title.
Application of law to facts: The court applied the definition of "person aggrieved" and found that the appellant's dissatisfaction with the IR did not constitute a legal grievance.
Treatment of competing arguments: The appellant's claim to be aggrieved was dismissed as they did not suffer any legal detriment from the IR.
Conclusions: The court held that the appellant was not a "person aggrieved" by the IR, and thus had no standing to appeal.

3. SIGNIFICANT HOLDINGS

The court held that the Investigation Report is not an appealable order under the Customs Act, as it is an administrative document that does not create legal rights or obligations.
The court emphasized that the right to appeal is a statutory right, not a constitutional one, and is subject to the conditions set forth in the statute.
The court found no violation of natural justice principles in the preparation of the IR, as it is a preliminary fact-finding exercise.
The court affirmed the applicability of Circular No. 05/2016 to the appellant's case, rejecting the appellant's attempt to distinguish between different circulars.
The court concluded that the appellant was not a "person aggrieved" by the IR, as they did not suffer any legal grievance or deprivation of rights.
The appeal was dismissed, and the court upheld the decision that the IR is not an appealable order.

Order pronounced in open court on 08. 01. 2025

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