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TMI Blog2025 (1) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 131 - SUPREME COURT ] are followed, and the CESTAT s approach is contrary to the law declared by the Hon ble Supreme Court. The CESTAT should have considered the rectification application in the facts of this case. The ROM application tried to bring to the notice of the CESTAT that factual issues were raised, and they were not decided. The CESTAT s attention was drawn to the material on record, which was not even referred to in the single paragraph order and was much less considered. Failing to address vital issues or even look into crucial material is grounds for judicial review. Accordingly, the impugned order dated 22 February 2008 warrants interference. Conclusion - The appellate Court must reflect its conscious application of mind, and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for the decision of the appellate Court. The three substantial questions of law answered in favour of the revenue and against the assessee. - M.S. SONAK JITENDRA JAIN, JJ. APPEARANCES For the Petitioner: P. S. Cardozo Adv,. For the Respondents: M. H. Patil, a/w Adv Viraj Reshmawalla, a/w Adv Kiran Chavan, i/b. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. Quite reasonably, such an objection was not even raised on behalf of the assessee. 8. Still, considering the revenue s challenge to the CESTAT s order dated 16 October 2007, we propose following the discipline under Section 35G of the Said Act. This Section, inter alia, provides that an appeal would be allowed only if the High Court is satisfied that the case involves a substantial question of law. We propose to consider the challenge to the impugned order dated 22 February 2008 by applying the usual parameters of judicial review. 9. On hearing the counsel for the parties, we are satisfied that the challenge to the order dated 16 October 2007 raises substantial questions of law because the records show that the assessee classified the same type of goods under headings 3197 when cleared/removed officially and under 8424 when cleared allegedly unofficially or clandestinely. The classification under heading 3197 entails duty/tax @ 20%, whereas 8424 was exempt. However, the CESTAT did not consider this substantial issue or the impact of such contradictory declarations concerning the same goods. 10. Mr Patil explained that the assessee was forced to classify the goods under headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities of the goods were unofficially or clandestinely cleared. On apprehension, the assessee claimed that the very same goods were classifiable under heading 8424 and hence were exempted goods not exigible to any tax or duties. 16. Therefore, a show-cause notice giving full particulars was issued on 26 February 1999. The notice alleged that the assessee evaded duties/taxes of Rs. 8,91,58,843/ on the clandestinely removed goods (Exhibit C ). The assessee responded. After considering the reply and the material on record and hearing the assessee, the Commissioner confirmed the demand in the show-cause notice by a detailed order dated 24 October 2006(Exhibit D ). The Commissioner also recorded a finding of fact about the clandestine clearance of the goods without payment of any duty. 17. The assessee appealed, and the CESTAT, by the impugned judgment and order dated 16 October 2007, allowed the appeal by passing virtually a single-paragraph order . The entire order comprises five paragraphs. The first paragraph introduces the order impugned in the appeal, and paragraphs 3 and 4 contain the single-sentence conclusions. The so-called reasoning is in paragraph 2, which reads as follows: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the above-quoted paragraph 2 of its order dated 16 October 2007, has not at all addressed itself to the central question of the impact of the assessee classifying the goods under Heading 3917 and paying duty of 20% when such goods were officially declared and cleared but avoiding to pay any duty whatsoever on the very same goods when they were allegedly unofficially or clandestinely cleared. The CESTAT, in our opinion, was required to address this central issue, and the assessee s appeal could not have been summarily allowed without even adverting to this central issue. 20. Mr. Patil submitted that despite the Supreme Court s judgment in favour of the assessee, the revenue authority forced the assessee to classify these goods under Heading 3917. He submitted that the goods are classifiable under Heading 8424 and exempt from any duty payment. It is impossible to note from the CESTAT s order whether such a plea was ever raised. At least the CESTAT has not considered this plea of the revenue authority allegedly forcing the assessee to classify the goods under Heading 3917. 21. In any event, even assuming that such a plea was raised, a decision was necessary on this issue. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prejudice the rival parties at this stage because an appeal before the CESTAT is a valuable right. The CESTAT is the final fact-finding authority. This being a case for reversal, the CESTAT was duty-bound to come into close quarters with the reasoning of the Commissioner s order before setting it aside in a single paragraph order . The CESTAT should have gone into all these issues, and on account of the failure of CESTAT to go to these issues, the impugned orders deserve to be set aside. 26. In Santosh Hazare v. Purushottam Tiwari (supra), the Hon ble Supreme Court noted that; the first appellate Court has, in a very cryptic manner, reversed the finding on the question of possession and dispossession as alleged by the plaintiff as also the question of adverse possession as pleaded by the defendant. The appellate Court has the jurisdiction to reverse or affirm the findings of the trial Court. First appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. The judgment of the appellate Court must, therefore, reflect its conscious application of mind, and record findings supported by reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 30. The CESTAT should have considered the rectification application in the facts of this case. The ROM application tried to bring to the notice of the CESTAT that factual issues were raised, and they were not decided. The CESTAT s attention was drawn to the material on record, which was not even referred to in the single paragraph order and was much less considered. Failing to address vital issues or even look into crucial material is grounds for judicial review. Accordingly, the impugned order dated 22 February 2008 warrants interference. 31. For all the above reasons, we answer the three substantial questions of law referred to in paragraph 11 above, in favour of the revenue and against the assessee. We quash and set aside the impugned orders and remand the matter before the CESTAT to consider the assessee s appeal afresh and in accordance with the law. 32. The CESTAT must now address all the issues, including the above three issues, that arise in the Appeal and pass a reasoned order dealing with all the issues. Both parties must be given full opportunity of hearing before the CESTAT disposes of the remanded appeal. All contentions of the parties are left open. Parties should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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