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TMI Blog2005 (10) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 33024/9-9-93 32391 Mts. 4 30810/27-8-93 35004 Mts. 5 32091/3-9-93 14959 Mts. 6 33233/10-9-93 18304 Mts. The above exemption order entitled TNEB to clear at Customs a total quantity of 2 million tons of coal falling under Heading 27.01 of the First Schedule to the Customs Tariff Act, 1975 on payment of Basic Customs Duty at the concessional rate of 30% ad valorem vis-a-vis the then prevailing tariff rate of 85% ad valorem. [A similar exemption order was simultaneously issued by the Government in favour of Karnataka Power Corporation Ltd.]. The exemption order also exempted such import from payment of Auxiliary Duty of Customs leviable thereon under sub-section (1) of Section 111 of the Finance Act, 1992. The exemption order was effective from 15-9-92 to 15-9-93. As the imported coal was urgently required by TNEB, a request was made for release of the goods upon provisional assessment in terms of Section 18 of the Customs Act, for which the requisite Bonds were executed and Bank Guarantees furnished by TNEB. After drawing representative samples of the six consignments in the presence of TNEB off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing appeals as not tenable . The order of the Collector (Appeals) was set aside by this Tribunal and the lower appellate authority was directed to dispose of, on merits, TNEB s appeals pertaining to the first five Bills of Entry. Pursuant to the Tribunal s remand order, the Commissioner (Appeals) disposed of the five appeals of TNEB by Order-in-Appeal No. 457 to 461/2002 dated 30-9-2002, wherein it was held that the coal imported by TNEB satisfied the conditions of the exemption order dated 15-9-92 of the Central Government and accordingly the orders of the Asst. Collector were set aside. Thus TNEB s appeals relating to the first five Bills of Entry were allowed with consequential relief. The present appeals of the Revenue are against the order of the Commissioner (Appeals). 2. Heard both sides. A preliminary objection was raised by learned Counsel for the respondent (TNEB). It was submitted that, before the appeals were taken up for hearing, the impugned order of the lower appellate authority required to be complied with by Revenue as the application filed by them for stay of operation of the said order was rejected by the Tribunal. However, ld. counsel did not press the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chose to rely on the findings of the Criminal Court. According to ld. Sr. Advocate, the lower appellate authority ought to have taken a decision without reference to the Criminal Court s judgment. In this connection, reliance was placed on the following decisions :- (1) Macherlappa and Sons v. Govt.of Andhra Pradesh, 1958 (9) S.T.C. 156 (Andhra Pradesh High Court) (2) V. Datchinamurthy and Another v. Asst. Director of Inspection (Intelligence), I.T. Dept., and Another, 1984 (149) ITR 341 (Madras High Court) (3) N. Jayathilakan v. Additional Secretary, 1987 (31) E.L.T. 47 (Mad.) (4) Sultanali A. Lalani v. Collector of Customs, 1989 (39) E.L.T. 596 (Tribunal) Ld. counsel for the respondent relied on the Supreme Court s judgment in Kuldip Singh v. State of Punjab Ors. (1996) 10 SCC 659 and argued that the lower appellate authority was entitled to rely on any evidence, no matter wherefrom it was obtained. The strict rules of evidence enacted in the Evidence Act were not applicable to the proceedings under the Customs Act. Counsel pointed out that certain evidentiary aspects of the case dealt with by the Criminal Court were relevant to the proceedings before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the charge against the accused relating to the import of coal by TNEB, the court considered the exemption order as Finance Ministry s unconditional permission to import coal. After reading the text of the exemption order, it observed : This itself will eliminate the charge of conspiracy in toto vide para (81) of the court s judgment. The learned special Judge largely relied on the depositions of witnesses (including the two Assistant Collectors) to come to the conclusion that the exemption order was absolute and unconditional. The learned Judge also found enough documentary evidence to hold that Indonesian coal and Australian coal were of good quality. The criminal court s interpretation of the exemption order was essentially based on evidence, documentary and oral. The court was working under the Code of Criminal Procedure and assessing evidence in terms of the Evidence Act. It did not invoke the principles laid down by the Supreme Court as to interpretation of exemption notifications/orders. It is also debatable as to whether, in the criminal case, it was necessary for the learned special Judge to step upon interpretation of the exemption order at all. The respondent s counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cited by TNEB s counsel is relevant to the present case. What was held in that case was that the strict rules of the Evidence Act were not applicable to departmental/disciplinary enquiries and that, in both civil and criminal cases, any evidence relevant to the matters in issue was admissible, no matter how it was obtained. We have already found that the evidence taken by the criminal court in the conspiracy case is not relevant to interpretation of the exemption order by the assessing authority. On the other hand, one of the judicial authorities cited by the Revenue s counsel is worth mentioning in the present context. In Datchinamurthy s case, the Madras High Court found consensus between Indian, British and Canadian courts on the relation between Revenue proceedings and adjudication by courts of justice. That consensus is that the Revenue has to perform its allotted task under the statute and it cannot be fettered in the discharge of its functions by any adjudication by courts of justice in private litigation even where that adjudication might impinge on the issue which the Revenue has to face and determine. This judicial view which has arisen from cases where civil or criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coal was minimum GCV of 6400 K.Cals./kg., while TNEB s criterion for such coal was minimum GCV of 6000 K.Cals./kg. Since any of the consignments did not meet either of these criteria, none was eligible for the benefit of the exemption order. 6. Ld. advocate for the respondent submitted that the exemption order did not speak of quality and mentioned only quantity of coal. In this connection, he referred to Note to the exemption order, which required the Madras Customs House to monitor the quantity of coal imported by TNEB. Counsel pointed out that there was no requirement under the exemption order to monitor the quality of coal and hence there was no scope for chemical test of samples of the goods imported. Contextually, counsel also submitted that any show-cause notice was not issued to TNEB and the test reports were not supplied to them. Had the test reports been supplied, the respondent would have requested for an opportunity to cross-examine those who tested the samples. Natural justice was denied to the respondent by the original authority. Ld. counsel finally contended that, as the exemption order did not lay down specifications for good quality coal , it was not per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tamil Nadu Electricity Board for use in Thermal Power Station, - Reg. Sir, I am directed to say that the State of Tamil Nadu has three coal based thermal power stations at Ennore Mettur and Tuticorin with a total installed capacity of 2340 MW and the requirement of coal for these three stations is about 12 million tonnes per annum. In order to ensure uninterrupted generation of power, adequate stock of good quality coal is required to be maintained. For this purpose, it has been decided to build up a reasonable buffer stock of good quality coal at a reasonable price to take care of any emergent situation arising from non-availability of domestic coal. 2. In view of the above, the Government of Tamil Nadu have requested that the Tamil Nadu Electricity Board may be permitted to import coal as a one time measure at a concessional rate of import duty to provide for uninterrupted generation of power in thermal power stations in the State of Tamil Nadu, (at Ennore, Mettur and Tuticorin). The matter has been examined and considering the prevailing price in the international market, it has been found necessary to reduce the customs duty on such coal. 3. Having regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware of the fact that foreign coal had higher GCV than domestic coal. Nevertheless, they did not specify any GCV limit or other qualitative parameter for coal in their exemption order. At this juncture, we shall look at the Tariff entry. The exemption was for coal falling under Heading 27.01 in Chapter 27 of the First Schedule to the Customs Tariff Act. The tariff entry reads as under : Heading No. Sub-heading No. Description of article Rate of duty Standard (1) (2) (3) (4) 27.01 Coal; briquettes, ovoids and similar solid fuels manufactured from coal - Coal, whether or not pulverised, but not agglomerted : 2701.11 -- Anthracite 85% 2701.12 -- Bituminous coal 85% 2701.19 -- Other coal 85% Sub-heading Notes (1) and (2) to Chapter 27 of the CTA Schedule are also relevant and the same are reproduced below : 1. For the purposes of sub-heading No. 2701.11 anthracite means coal having a volatile matter limit (on a dry mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own parameters like GCV in the operative part of the exemption order. 10. Ld. Senior Advocate argued that the meaning of good quality coal referred to in the exemption order should be understood in terms of GCV specified by TNEB to the foreign parties for supply without attracting the penalty clause in the contract. He even suggested that appropriate words be added to the text of the exemption order to make it meaningful and harmonious. In this connection, he relied on the Supreme Court s judgment in M.J. Exports Ltd. v. CEGAT, 1992 (60) E.L.T. 161 (S.C.). Ld. counsel for the respondent has countered these arguments by submitting that it is not possible for any court or Tribunal to make up any deficiency in the language of an Exemption Notification. He has drawn support from the Madras High Court s decision in ACCE v. New Horizon Sugar Mills (P) Ltd., 1980 (6) E.L.T. 10 (Mad.). In our view, neither of the citations is apposite inasmuch as there is no deficiency or ambiguity in the language of the special exemption order under consideration. Ld. counsel for the respondent has also argued that the exemption order should be interpreted in such manner that the beneficiary is not pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natural justice and wrong interpretation of the exemption order. Woefully enough, the authors of those orders virtually conceded before a criminal court that they were under oral instructions from their superiors to adjudicate the dispute that way! We feel that it is a charity for the appellate authority to have thrown away those orders. The officers who were required by law to discharge the quasi-judicial function of assessing Bills of Entry independently chose mindlessly to follow oral directives of their superiors thereby denying the assessee a benefit which the latter was entitled to in terms of the plain language of the exemption order. They were so keen to follow, or overawed by, such imprudent directives that they did not, or could not, follow even the principles of natural justice while finalising the provisional assessments against TNEB. They along with the superiors whom they referred to, under oath; before the criminal court were turning the quasi-judicial process into a mockery. Their depositions before the criminal court brought the episode to a disgraceful finale for quasi-judicial functionaries under the Customs Act. 12. Ld. Commissioner (Appeals) has adequately e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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