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TMI Blog2024 (9) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... under Article 136 of the Constitution of India holding that ' Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.' Thus, the impugned order of the CESTAT has merged into the order of Judgement and Order passed by the Apex Court under Article 136 of the Constitution of India. In view of the applicability of doctrine of merger, it is not required to consider the impugned order of the CESTAT on merits vis-a-vis contention raised by learned advocate for the applicant on the ground of perversity of the impugned order or the jurisdiction of the CESTAT to levy the penalty under section 112 or the legitimacy of discretion exercised by the CESTAT for levy of penalty of Rs. 50 lakh upon applicant. No question of law arises from the impugned order of the CESTAT and therefore the application stands dismissed. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHTA Appearance: For the Applicant(s) No. 1 : Mr Chetan K Pandya (1973) For the Respondent(s) No. 1 : Deepak N Khanchandani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 9. At the outset, learned advocates for both the sides have drawn our attention to the order dated 02.08.2017 passed by the Hon ble Supreme Court of India passed in Civil Appeal No. 10347-10392/2011 preferred by the Commissioner of Customs (Adjudication), Mumbai, respondent herein against M/s. R.K. International and others wherein the impugned order 25.06.2003 passed by the CESTAT was challenged. The Hon ble Supreme Court by the aforesaid order dismissed the Civil Appeals confirming the order dated 25.06.2003 as under: 1. Heard learned counsel for the parties and perused the relevant material. 2. The appellant, Commissioner of Customs (Adjudication), Mumbai had set the law into motion by issuing a show cause notice dated 13.12.1994 alleging that in respect of consignment imported into the country under Bill of Entry No. F-4316 there was a mis-declaration of the imported goods by the importer - M/s. Ram Metal Industries. There were three addend as to the aforesaid show cause notice, dated 23.04.1998, 15.05.1998 and 25.08.1998 In the aforesaid show cause notice similar allegations were levelled with regard to import by two other entities i.e M/s. Natraj Metals and M/s. R.K Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Tribunal. 6. Be that as it may, naturally, this Court would expect serious and substantial question (s) of law arising from the order of the learned Tribunal to be agitated by the Revenue before this Court. Even on this score the Revenue has failed to satisfy the Court inasmuch as the learned Tribunal, which is the last fact-finding authority, in its impugned order dated 25.08.2003, has held that insofar as the Bill of Entry Nos. F-4120 and 3058 are concerned, there is lack of conclusive proof with regard to actual identification of ball bearings. Coincidentally, the case of the Revenue was/is that the imported goods were declared as lead scrap whereas the goods actually imported were ball bearings attracting a higher rate of duty. 7. The learned Tribunal in paragraph 70 of its order further held that the Revenue had failed to prove the presence of ball bearings in the two consignments covered by the aforesaid two Bill of Entries. Insofar as the liability for goods imported under Bill of Entry No. 4316 in the name of M/s. Ram Metal Industries is concerned, on an similar appreciation of the evidence on record, the learned Tribunal has held that in addition to Solly Perumal, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . contained ball bearings in the guise of lead scrap as was found in the case of import made in the name of M/s. Ram Metal Industries under 8ill of Entry dated 30.7.93 and whether import of ball bearing was made in the guise of lead scrap or attempted to be made in the guise of lead scrap with the acknowledge and connivance of the noticee officers. 60. It is the case of the Revenue that Om Prakash Punjabi who is admittedly the importer under Bill of Entry Gated 4.6.93 in the name of R. K. International was the real importer under the fictitious name M/s. Natraj Metal Pvt. Ltd. and Ram Metal Industries. The adjudicating authority was not inclined to accept the above case put forward by the Revenue. It is contended before us by the Revenue that the Commissioner has erred in the above finding. After going through the entire amount of evidence in this case we find that there are sufficient materials to connect Shri On Prakash Punjabi with the imports made in the name of fan Metal Industries and Natraj Metal Pvt. 61. It is true that the main evidence on the issue lies in the statements made by Soly Perumal. We are not inclined to accept the contention that Soly Perumal s evidence has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that Om Prakash Punjabi was mankind desperate attempt to get in touch with Soly Perumal on coming to know about the investigation by DRI. Om Prakash Punjabi has admitted that Suresh Kumar Dhoka is close associate in business. 64. According to Soly Perumal on 2.9.93 Shri Om Prakash Punjabi visited at Hotel Natraj, Ahmedabad and talked with him for about 15 to 20 minutes. Om Prakash Punjabi specifically asked as to how the customs people got the information in respect of the illicit import of ball bearing and Soly Perumal was asked not to reveal his name. There was also discussion regarding seeking anticipatory bail and other legal matters. It is true that Om Prakash Punjabi denies any Connection with the consignment imported in the name of Ram Metal Industries. It is relevant to note that immediately after the seizure of the goods Om Prakash Punjabi had gone abroad and he was available for questioning only on 1.9.93. 65. We will now examine the case put forward by the Revenue connecting Shri Om Prakash Punjabi with the import in the case of M/s. Natran Metal which is also admittedly a non-existing firm. Goods alleged to be lead scrap were imported under Bill of Entry dated 21.7.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raft for a large amount against cash, draft was got prepared from State Bank of Bikaner and Jaipur on the basis of cheque issued by Ahmedabad Cooperative Bank. 67. The overwhelming evidence as above connecting Om Prakash Punjabi in arranging the draft for clearing the Consignment of M/s. Natraj Metal Pvt. Lid. cannot be ignored, Apart from the above, no reason was placed before us by the learned counsel appearing on behalf of Om Prakash Punjabi to show that the above mentioned Bank Officers had any active to give statements connecting Om Prakash Punjabi with the issue of the draft. 68. We find merit in contention of the Revenue that there are conspicuous similarities between the three imports. Eight items of such similarities have been referred in the earlier portion of this order (paragraph 33). It is relevant to note that Om Prakash Punjabi had not replied to the show cause notice which culminated in the adjudication order dated 5.1.94 confiscating the goods imported in the name of M/s. Ram Metal Industries. His conduct was one which would justify an adverse inference against him even though it was not so dealt with in the adjudication order dated 5.1.94. Taking into consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Madras High Court in case of Visteon Automotive Systems India Limited vs. CESTAT, Chennai reported in 2018 (9) G.S.T.L 142 (Madras) wherein it is held as under: 15. But unfortunately, the Tribunal has fallen into grave error in imposing penalty against the importer under Section 112 (a) of the Customs Act. The inspiration was drawn by the Tribunal on the basis that the show cause notice has proposed to impose the penalty under Section 112 (a) of the Act, against the importer. The Tribunal ought to be aware that it has been kept outside the scope of expression adjudicating authority under sub-section (1) of Section 2 of the Act. Consequently, the Tribunal has no power to adjudicate at the first instance, any imposition of penalty leviable under the Act, either against the goods or the person concerned. If at all the adjudicating authority has omitted to take action under Section 112 of the Act against an importer, that could be for valid and tenable reasons. It could be, in the present case, for the reason that the goods have been cleared for home consumption by the proper officer without proper verification. Therefore, the blame is apportionable between the importer, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was therefore submitted that the order of the Hon ble Apex Court cannot be made applicable to the facts of the applicant and therefore, CESTAT may be directed to draw up a statement of the case on the question of law proposed by the applicant. 12.8 In support of his submissions, reliance was placed on the decision of the Madras High Court in case of State of Madras vs. Madurai Mills reported in 1966 SCC Online SC 140 wherein, it is held that the doctrine of merger cannot be invoked in circumstances where the subject matter of revision before the Deputy Commissioner of Commercial Tax was not the subject matter of the assessment made by the Deputy Commercial Tax Officer. 12.9 It was therefore submitted that in the facts of the case, as the Hon ble Apex Court was not considering the levy of penalty by the CESTAT upon the applicant and the aspect of levy of penalty was not the subject matter of the appeals before the Hon ble Apex Court, this application is required to be decided independently without taking into consideration the observation made in the order passed by the Hon ble Apex Court. 12.10 Learned advocate Mr. Pandya in support of his submissions referred to and relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61. We refer in this connection the decision in Merck Spares v. Collector of Central Excise Customs, New Delhi, [1983] ELT 1261;Shama Engine Valves Ltd. Bombay v. Collector of Customs, Bombay,[1984] 18 ELT 533 and Madhusudan Gordhandas Co. v. Collector of Customs, Bombay, [1987] 29 ELT 904 wherein it has been held that in imposing penalty the requisite mens rea has to be established. It has also been observed in Hindustan Steel Ltd. v. State of Orissa, [1970] 1 SCR 753 by this Court that: The discretion to impose a penalty must be exercised judicially. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or is guilty of contumacious or dishonest conduct, or acts in conscious disregard of its obligation; but not, in cases where there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. 12.12 Referring to the above decision it was submitted that in the facts of the case there is no evidence against the applicant which could have been considered appropriate for levy of penalty under section 112 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) and Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151(SC)). It is no doubt true that in order to find out as to whether the Tribunal has discharged its obligation the impugned order in question is not to be scrutinised sentence by sentence with a view to discover the minor lapses here or there, but it has to be read as a whole (See Bhaichand Amoluk Co. v. CIT [1962] 44 ITR 511(SC)). Having read and re-read the order of the Tribunal, we are of the opinion, with respect to the Tribunal, that it has not fulfilled its role as envisaged by the Supreme Court. We may, with respect to the Tribunal, point it out to bear in mind what the Supreme Court has observed per curiam in CIT v. S. P. Jain [1973] 87 ITR 370 at p.372 , since this would otherwise expose the taxpayers as well as tax collectors to the vagaries of protracted litigation. As the Tribunal has failed to consider each and every fact for and against the assessee and did not give its finding in respect of the evidence which has been adduced, nor has it considered, as it ought to have, the reasoning which compelled the Appellate Assistant Commissioner to reach the findings, we think that the grievance of the assessee before us th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts received by him, for arranging clearance. After all, even after exposing the connection of the documents with Shri Punjabi the plan of smuggling was successful. [If Shri Solly Perumal is to be believed] And there was really no need for anyone to conceal the identity of the importer. Instead, for other consignments, fictitious importers are created. Where was the need to create such suspicious importers? DRI also did not deem it necessary to question Solly on this aspect? If to avoid detection was the real purpose then Punjabi would have taken precaution right at the time of the first consignment and made import in the name which would not get connected to him. Shri Solly Perumal also asks his staff to stamp the Bills of Entry as Self and one employee is asked to sign the documents in a pseudonym and then he handles the document for its clearance. In case the documents were to belong to Punjabi, he would have followed the same set of procedure, as was done in the case of M/s. R.K. International. Why should Punjabi change the mode of documentation for subsequent consignments when the first consignment could be cleared successfully. In these circumstances it is difficult to underst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court. 42. To merge means to sink or disappear in something else; to become absorbed or extinguished; to be combined or be swallowed up. Merger in law is defined as the absorption of a thing of lesser importance by a greater, whereby the lesser ceases to exist, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. v) If the order refusing leave to appeal is a speaking order, i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the apex court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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