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TMI Blog2009 (5) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... hry, Advocate, for the Appellant. S/Shri K.K. Goel, Jt. CDR and Sumit Kumar, DR for the Respondent. S/Shri S.K. Bagaria, Sr. Advocate, L.P. Asthana, Advocate and R.K. Jain, Secretary Bar Association as amicus curie. [Order per : M. Veeraiyan, Member (T)].- This is a very strange case where the referral order containing opinions in favour of the Department came under ferocious attack from totally unexpected quarters lead by the Ld. Jt. CDR. The order was portrayed as illegal on various grounds like lack of jurisdiction of the referral bench, absence of cause for reference, lack of examination of relevant details, not referring judgements favourable to the Department, factual errors in the order. The valiant defence to the maintainability of the referral order also came from unexpected quarters, namely the assessees though the referral order contained opinions against them. 2. When the matters were called, learned Jt. CDR drew our attention to an application filed by the Department seeking adjournment by twelve weeks on the ground that "The Departmental Representative handling these matters has been drafted for Election Duty till 3rd week of May and he has proceeded for the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been passed at the stay stage when the DR would have come prepared only for defending the stay petition and as a result in-depth preparation was not expected. The referral bench had no authority under Rule 4(1) of CESTAT (Procedure) Rules 1982 to decide beyond stay petition as only stay petition was listed before them. (b) Even if both parties consented, the referral bench does not get jurisdiction to decide the appeal at the stay stage. The referral order should not have been made at stay stage and is not only "irregular" but "illegal". (c) Further, there were several judgments in favour of the Department. There was no occasion for citing the same at the stay stage and therefore the same do not find a place in the referral order. In this context, he submits that the following judgments are some which are in their favour: (i) J.K. Cotton Spg. & Wvg. Mills Co. Ltd. v. Sales Tax Officer, Kanpur- 1997 (91) E.L.T. 34 (S.C.) (ii) Union of India v. Hindustan Zinc Ltd. - 2008 (225) E.L.T. 183 (Raj.) (iii) G.S.L. v. C.C.E., Vadodara - 2004 (176) E.L.T. 690 (Tri-Mumbai) (iv) C.C.E., Indore v. Rajaraam & Brothers - 2007 (217) E.L.T. 284 (Tri.-Del.) (v) Remi Metals, Gujarat - 2001 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Larger Bench in para 6. He also submits that the decision of the Larger Bench in the case of Nicholas Piramel (I) Ltd. has since rendered vide order reported in 2008 (89) RLT 566 (CESTAT-LB). He also submits that there is no separate earlier order in favour of the appellant in their own case and according to them it refers basically the stay order passed in this very same case. 6.1.3 He also submits that if the observations and orders in para 8 are found to be erroneous, no remedy lies before the Larger Bench and remedy lies elsewhere. 6.1.4 He also submits that the reference at the interim stage in the present case is proper and legal and is also supported by precedents. In this regard, he relies on the following orders referring to the Larger Bench at stay stage and the subsequent order of the Larger Bench in the said case. "(i) Bosch Chasssis Systems (I) Ltd. v. C.C.E., Delhi-III reported in 2008 (229) E.L.T. 686 - Larger Bench Order reported in 2008 (232) E.L.T. 622; (ii) C.C.E., Pondicherry v. Acer India Ld. v. C.C.E., reported in 2004 (166) E.L.T. 21 (S.C.) - Larger Bench order reported in 2004 (172) E.L.T. 289; (iii) Luminous Electronics Pvt. Ltd. v. C.C.E., New D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmits that he does not agree with the preliminary objection raised by the Department and that he has no objection to the Larger Bench hearing the issues. 6.5 Shri Rohit Chowdhry, Advocate appearing for the appellant M/s. Prakash Industries submits that he does not agree with the preliminary objection raised by the Department and that he has no objection to the Larger Bench hearing the issues. 6.6 Shri K.K. Anand, learned Advocate appearing for the appellant M/s. Salasar Sponge & Power Ltd. supports the view that the reference to Larger Bench is valid. He draws our attention to the submissions of the learned Jt. CDR that there were decisions which were of conflicting in nature even though the said decisions have not been specifically mentioned in the referral order. 7.1 At the request of the Bench, Learned Senior Advocate Shri S.K. Bagaria appearing as amicus curie submits that the law of precedent has to be respected; when a Bench notices conflicting and diametrically opposite decisions of the coordinate Benches, it cannot ignore either of the decisions and should necessarily refer to Larger Bench to resolve the conflict. He submits that such view has been taken by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he President. Section 129C of the Customs Act (made applicable under Section 35B of the Central Excise Act to central excise matters) envisages that power of the Tribunal can be exercised by any Bench of the Tribunal. 7.3.2 Section 129C(5) of the Customs Act specifically deals with the manner of resolving differences of opinion when the Members are equally divided. He draws our attention of the judgement of the Hon'ble Supreme Court in the case of Paras Laminates reported in 1990 (49) E.L.T. 322 (S.C.) which has dealt with issues relating to the constitution of Larger Bench. 7.3.3 Reference can be made only when there are conflicting decisions of coordinate Benches and when correctness of previous binding decision is doubted and the Bench is incapacitated in deciding the issue on hand or there is impediment in deciding the appeal. The Bench of the Tribunal hearing a matter comes to a firm conclusion that there are conflicting decisions and require that the matter deserves to be considered by the Larger Bench, then Bench can order accordingly and thereafter, President, CESTAT, shall be bound by such Judicial order passed by the Bench and requires to constitute the Larger Bench. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch which is not regular. Certain observations of the Tribunal in para 8 of the referral order are either incorrect or unclear. Such observations are outcome of mis-representation obviously by the appellant. 8. Though the appellants have been granted the benefit of unconditional waiver of dues as per the impugned orders which were against them, members of the bar who represented the parties submitted that the reference to larger bench has been validly made and that they did not support the view of Department on the preliminary objection. They are of the unanimous opinion that the conflict in decisions has been brought out in the order of the referral bench. They were keen to go ahead and argue on the merits on various issues referred to the Larger Bench. Shri R.K. Jain, Secretary of the Bar association, however, supports the view of Department on the preliminary objection. 9.1 We have carefully considered the various submissions on the preliminary objection. In the present case, the two member Bench consisting of Hon'ble Justice S.N. Jha the then President and one of us (Shri M. Veeraiyan Member Technical) while considering the stay petition connected to appeal by M/s. Vandana Gl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion. In such a situation, it envisages that formulating the point or points of differences and referring to the President. The President may himself hear the point of difference and he will be express his views and the views taken by the majority view among the views of the differing Members and the President will become the decision. The President instead of hearing himself, may refer the case for hearing to a one or more of the Members of the Appellate Tribunal. It is to be noted that when the two Members of a Division Bench are equally divided, then there is no decision on the disputed point. It is merely two different opinions on the point or points. The decision is taken only after the President/Members nominated for the hearing the difference of opinion conclude the hearing and the views of the majority of the these Members become the decision. 10.4 The above legal provision is not strictly applicable to two existing decision of the two different Benches which are in conflict with each other. In such a situation, 129C(5) cannot be invoked as President himself cannot consider the differences in decisions and choose one of the decisions of the Division Benches as correct. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute the Larger Bench in the interest of healthy functioning of the Tribunal. This is approved as "a power which is implied in the express grant authorising the President to constitute Benches of the Tribunal for effective and expeditious discharge of its function." 11.4 In other words, the convention followed by the Tribunal regarding referring to a Larger Bench before differing on precedent decision of a coordinate Bench has duly been approved by the Hon'ble Supreme Court in the case of Paras Laminates reported in 1990 (49) E.L.T. 322 (S.C.). In the said Judgment, the Hon'ble Supreme Court has prescribed the guiding principles which are as follows. "9. It is true that a Bench of two members must not lightly disregard the decision of another Bench of the same Tribunal on an identical question. This is particularly true when the earlier decision is rendered by a Larger Bench. The rationale of this rule is the need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of Tribunals or Courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our view, the Bench of two members acted within their power in stating the points of law which required clarification and the President acted equally within the bounds of his power in constituting a Larger Bench to hear and decide those points. 11.5 Hon'ble Supreme Court has not only approved the "a reference when members of a Bench find themselves unable to decide a case according to what they perceive to be the correct law and fact" but also a reference by "stating the points of law which required clarification" 12. We find that there are no specific provisions in the statue regarding the constitution of LB " conflict in decisions" among co-ordinate Benches, its powers and functions, what matters can be referred who can refer such matters to LB, at what stage the matter can be referred. Further, no specific case law has been cited to say that the referral Bench cannot refer the matter on a prima facie view taken by them, it is seen that the Hon'ble Supreme Court in the case of Paras Laminates reported in 1990 (49) E.L.T. 322 (S.C.) held that power under Section 129(5) would be construed wide enough to refer the case to a Larger Bench. The referral Bench therefore has all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l goods" can include plant, structures embedded to earth? (b) Whether the goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures can be treated as 'inputs' in relation to their final products as inputs for capital goods, or none of the above? (c) Whether the credit can be allowed in respect of goods like angles, joists, beam, channels, bars, flats which go into fabrication of such structures and plant? 13.2 The submission that the referral Bench had jurisdiction only to deal with stay petition is not correct as the stay petition cannot be considered in isolation but has to be considered only with reference to the appeal. The registry being office of the Tribunal exercises the assigned functions of the Tribunal. The Bench constituted by the President has the necessary powers and can deal with the stay petition as well as appeal and it cannot be a case that only on the registry listing the appeal specifically the Bench gets the jurisdiction. Inherent power of the Bench of Tribunal in this regard cannot be doubted. 13.3 A submission has been made that the decision in the Bhushan Steel is per incuriam and same has been passed overlooking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n disposal which is not warranted. Such a submission is devoid of merit. The referral Bench has the powers to suo motu give priority over important matters as considered by them. 13.6 The submission that there was no impediment to the referral Bench in following the decision in the case of Bhushan Steel is contrary to the submission that the said decision has been made per incuriam by overlooking many other precedent decisions. There is definitely impediment to the referral Bench to follow the precedent decision after expressing a contrary opinion. To follow the said decision shall be against judicial freedom and to take a contrary decision shall be against to judicial discipline. 13.7 We also hold that the other grounds challenging the maintainability of the order of the referral Bench are also not sustainable. 14. The Larger Bench, like any other Bench of the Tribunal, has powers to regulate the proceedings in terms of Section 129C(6) on the points of difference between the Benches. The rival submissions about the correctness or otherwise of any facts which are relevant to the issues which have been referred for consideration can definitely be gone into by the Larger Bench aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure adopted by the referral Bench has caused any harm or prejudice to the Department. (c) The issues referred to larger bench arise out of facts discussed in the referral order. (d) It appears that the opinion of the referral bench is in conflict with the decision of the Tribunal in the case relating to Bhushan Steel against which (decision in Bhushan Steel) the Department has gone on appeal. (e) The observations in para 8 of the referral order relate to order waiving pre deposit of dues and has no direct bearing on the issues referred to the LB. If the Department was of the view that there were errors/mistakes in the order they could have filed an application before the Division Bench; if they were aggrieved of the referral order, they were also free to challenge the same before competent forum. (f) The department has not made any application before the referral Bench on the issues raised before us. They have also not challenged the referral order as well as subsequent stay orders following the said order before any higher forum. On the other hand, they have readily accepted the orders of stay granted in several cases in view of reference made the LB. 17. In view of above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of both sides granting fair opportunity to each and settling the facts and satisfying other requirement of Apex Court decision in Santosh Hazari's case (supra). Tribunal being a highest court of facts should not have framed questions at a premature stage when decision in Bhusan Steel & Strips Ltd. was rendered per incuriam without considering law laid down by Hort'ble Supreme Court in J.K. Cotton's case - 1997 (91) E.L.T. 34 (S.C.) and in Jawahar Mill's case - 2001 (132) E.L.T. 3 (S.C.) and other several judgments decided in favour of Revenue. Being aggrieved by Bombay Bench decision in above case, Revenue has gone in appeal before Hon'ble High Court of Bombay. Relying on the Apex Court decision in the case of K. Ajit Babu and Others v. Union of India and Others decided by Hon'ble Supreme Court on 25-7-1997 Revenue's pleading was that consistency, certainty and uniformity in the field of judicial decisions are considered to be benefits arising out of the "Doctrine of Precedents". The precedent sets a pattern upon which a future conduct may be based. One of the basic principles of administration of justice is that the cases should be decided alike Ref : (Annexure-E, page 4 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J. has pointed out that: "Every new discovery or new argumentative novelty cannot undo or compel re-consideration of a binding precedent. In this view, other submissions sparking with creative ingenuity and presented with high pressure advocacy cannot persuade us to reopen what was laid down for the guidance of the nation as a solemn proposition by the epic fundamental rights case." (emphasis supplied). 23. Relying on the judgment of Hon'ble Supreme Court in the case of Ram Jivan v. Smt Phoola (1976) SCC 852 which has pointed out salutary rule, namely, the rule of judicial precedents and referring to Para 9 of the judgment in Asst. Collector of Central Excise, Kalyan Division and Another v. Dipsi Chemicals Pvt. Ltd. and Another - 1987 (32) E.L.T. 556 (Bom), Sri Jain's pleading was that if precedents which are established are allowed to be too easily reconsidered or disturbed, it may well be kind of judicial destabilization. Referring to Salmond's Jurisprudence (11th Edition) the learned judge in the above case has reminded that it was wise to remember that fatal flaws silenced by earlier ruling cannot survive after death because a decision does not loose its authority merely be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd hearing the appeal itself. There is no mandate of statute to frame questions at the stage of hearing of stay application and seek advice or consultation of Larger Bench to hear the appeal thereafter. This shall amount to prejudging the matter resulting in denial of justice for the basic reason that not only justice is to be done but justice must be seemed to have been done to the litigants. Both litigants before a Court are equal and deserve to be dealt equally under law. Every effort should be made to ensure that no prejudice is occasioned to the litigants framing questions prematurely before hearing of an appeal and no disagreement with a decision of an earlier Bench at the interim stage is conceivable without hearing the appeal in entirety. Any question prematurely framed to seek advice of Larger Bench and that too without exercising appellate jurisdiction would affect the right of the parties seriously. This may virtually grant substantial relief to a party which is undue to him without hearing the appeal independently but being bound to apply advice or consultation of larger bench over the matter seized. This may be stated following the ratio laid down by Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reeing Bench as well as points that require to be stated for the president to make a reference to a Larger Bench to resolving the difference. Hon'ble High Court of Calcutta in the case of Govindram Agarwal v. Collector of Customs - 1993 (67) E.L.T. 215 (Cal) has also held that difference is precondition for reference and section 129C(5) allows members of the Tribunal to recommend to the president only when there is difference of opinion. Following the ratio laid by Hon'ble High Court of Gujarat in the case of Colourtex v. Union of India - 2006 (198) E.L.T. 169 (Guj.) = 2008 (9) S.T.R. 426 (Guj.) it may be stated that the Larger Bench can hear the questions referred without deriving any independent jurisdiction and has no power to decide the appeal in entirety. Thus the Larger Bench has neither appellate nor revisionary jurisdiction, but has advisory and consultative jurisdiction derived from the reference made by the Hon'ble President. Only upon reference of the matter by the Hon'ble President, the Larger Bench has locus standi to exercise its jurisdiction. It has neither power to record evidence nor power to re-appraise or re evaluate evidence in absence of appellate or revisionar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law." 32. Similarly Judicial proceedings always require: (i) no man shall be a judge in his own cause, (ii) justice should not be a judge on his own cause, (iii) justice should not only be done but manifestly and undoubtedly seem to be done. These maxims yield the result that no party to litigation can be dealt to the detriment of justice by any premature act. Therefore it has been held by Apex Court in S. Nagaraj & Ors. v. State of Karnataka - 1993 Supp (4) SCC that Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as in flexible in Administrative Law as in Public Law. Even the law bends before justice. If the Court finds that the order was passed under a mistake and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Bench which is an essentiality of law declared by Apex Court in Paras Laminates' case (supra). The Bench itself made a direct reference to Larger Bench without the reference being made by the Hon'ble President. When such a judicial order came to existence, President was bound to refer to Larger Bench in exercise of his administrative power. Such a situation is not the sanction of Apex Court Decision in Paras Laminates' case (supra) since following of judicial decorum and judicial discipline is strength of justice delivery system. It is golden rule of law that judicial independence of forum should remain unimpaired and its decision is made without being influenced by Larger Bench advice or consultation at a premature stage. Any departure thereto defeats spirit of justice. Before reaching to a conclusion by its own, on the matter in controversy by a division Bench, no decision of Larger Bench should have been solicited by that Bench to decide the matter adopting Larger Bench advice. 35. A Larger Bench only derives its Power from the reference made to it by the Hon'ble President and it shall act according to the terms of reference. Reference is sole and absolute discretion of Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one by any other means. 36. With utmost respect it may be said that all that what has been said above is not meant to disrespect to the Division Bench which has directly referred the questions to a Larger Bench but that has been said in emphasizing the necessity of self-imposed discipline in such matter in obeisance to such weighty institutional considerations like the need to maintain decorum and comity. So also it is not meant to disrespect to the Division Bench in stressing the need for self-discipline on the part of the Division Bench while exercising its jurisdiction on interim application. Appeals pass through two stages i.e., stage of stay hearing and the stage of appeal hearing as noticed by Apex Court in the case of Alex Enterprises v. Union of India - 2009 (236) E.L.T. 10 (S.C.) in Para 8 of the judgment. Right Of appeal being conditional as held by Apex Court in the case of Vijay Prakash D. Mehta - 1989 (39) E.L.T. 178 (S.C.) = 1988 (4) SCC 402., the first stage is to cross the hurdle of hearing of pre-deposit. Only after that stage, subject to compliance to the interim order, if any, parties get right to be heard on appeal in full length and fair opportunity is granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench to refer the matter directly to a Larger Bench. Neither any statutory provision gives such power to Division Bench or Single Member Bench to do so nor there is any judicial pronouncement vesting such power upon the Division or the single Member Bench, This is essentially to maintain judicial discipline in the administration of justice by the Tribunal. (5) Even in cases where the Division is faced with a situation of having already delivered two different orders on the same issue taking by two different views by two different Benches, the Bench facing such a situation has to formulate the issue which is required to be referred to the Larger Bench and thereupon ask the registry to place the matter before the President to do the needful. 38. Aforesaid rulings made by the Hon'ble President in terms of judicial order uphold the majesty of law and serves useful purpose in justice delivery. These guide lines being in consonance with basics structure of law to maintain judicial discipline and judicial decorum, shall be strength of Tribunal 39. In view of aforesaid depiction of law and rules of justice, it has be come inevitable necessity for the Registry to place the matter before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the President of the Tribunal, albeit the discretion has to be exercised judiciously. (4) There is no power vested with the Division Bench or the Single Member Bench to refer the matter directly to a Larger Bench. Neither any statutory provision gives such power to Division Bench or Single Member Bench to do so nor there is any judicial pronouncement vesting such power upon the Division or the single Member Bench. This is essentially to maintain judicial discipline in the administration of justice by the Tribunal." 45. To sum up, reference of a matter to the Larger Bench or a third Member is entirely in the discretion of the Hon'ble President of the Tribunal. 46. In the present case, it is significant to note that the referral Bench is comprising of the Hon'ble Justice S.N. Jha, the then President and the ld. brother Veeraiyan, who is also Member of the present Larger Bench. So, the Hon'ble President sitting in Division Bench with another Member exercised his discretionary power to refer the matter Larger Bench, which is within the purview of the guidelines as recorded in Order dated 24th April, 2009. A question may raise as to whether the Hon'ble President may refer the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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