[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; that meanwhile the following eight Departmental appeals No. E/1513-1520/2008-EX have also now been listed for hearing before the Larger Bench on 9-4-09 along with the five appeals mentioned above for which the requisite notice has been issued on 31-3-09. ..........
Further, another Stay Application bearing No. E/S/399/09 in Appeal No. E/382/09 - CCE, Raipur v. Orissa Concrete & Allied Industries has also been directed to be tagged with the appeals before the Larger Bench on 9-4-09.
3. The Bench drew his attention to the fact that referral order has been passed on as early as 17-6-08; that the Larger Bench was constituted by the Hon’ble President vide order dated 2-1-2009; that after notice, five appeals were listed before LB for hearing on 6-2-09 when a preliminary objection was raised by the revenue represented by Ld. Jt. CDR Shri K.K. Goel and Ld. SDR Shri Amit Jain stating that the reference has been made at the interim stage on the basis of prima facie view of the referral Bench; that Ld. Jt. CDR sought for time for making detailed submissions on the maintainability of the referral order. Shri R.K. Jain, representing Bar Association and appearing as amicus curie also sought for further time to present his views on the matter including on the preliminary objection. The request for adjournment was acceded to and the matter was specifically fixed for 9-4-2009. Other appeals i.e. E/4090 & 5006/04, E/633/07-Kol., and E/01/08-Kol. were also adjourned to the same date.
4. The Bench noted that the Learned Jt. CDR himself represented the Department on 6-2-2009 when the preliminary objection was raised and specifically adjourned to 9-4-2009. Further, several advocates including some out station advocates will be put to inconvenience if the adjournment sought for was granted. As the referral order was passed in June 2008 and it was listed before LB on 6-2-09 and adjourned at the request of Ld DR granting sufficient time and much inconvenience is caused to the parties including out station advocates, the Bench did not find any justification to grant adjournment and accordingly, the Ld. Jt. CDR was advised to proceed with his submission on the preliminary objection.
5. Learned Jt. CDR made the following submissions on the maintainability of the referral order :
(a) The facts of the case have not been examined in detail in the referral order and the referral order has 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 - (S.C.)
(ii) Union of India v. Hindustan Zinc Ltd. - (Raj.)
(iii) G.S.L. v. C.C.E., Vadodara - (Tri-Mumbai)
(iv) C.C.E., Indore v. Rajaraam & Brothers - (Tri-Del.)
(v) Remi Metals, Gujarat - (T)
(d) The para 8 of the referral order indicates that the first issue stands referred to Larger Bench in the case of Nicholas Piramel (I) Ltd. [ (Tri. - LB)]. There is a mention in para 8 of the referral order that the same issue has been decided in their own case and the Tribunal has not given any reference to the order so passed and therefore, they are handicapped in arguing the referred points.
(e) The observation in para 5.3 of the referral order, about the view of the Tribunal in Bhushan Steel Strips [ (Tri. - Mumbai) is factually incorrect inasmuch as the decision of Tribunal in the case of the Bhushan Steel Strips (in paragraph 1) clearly records that Commissioner himself has allowed credit on several items treating them as capital goods and the party has not come in appeal and that the findings in paras 6.1 and 6.3 of the said order, appears to be for items different from what is referred in para 1 as allowed by the Commissioner.
(f) The decision in the case of Bhushan Steel & Strips dealt with the issue relating to eligibility of credit as capital goods and in the present case, the credit has been claimed, in some cases, in respect of the very same items, both as capital goods and as inputs.
(g) The department has preferred an appeal against the order of the Tribunal in the case of Bhushan Steel & Strips cited surpa.
(h) No final order was passed by the referral order and therefore, no ROM is possible; that no statutory remedy is available against the referral order. No appeal has been filed against the referral order before the Hon’ble High Court.
(i) By referring at the stay stage, the appeal has been taken up for out of turn disposal which is not warranted.
(j) The difference in opinion is a precondition for making a reference to the President. An interim order is not conclusive and not a precedent. Therefore, a prima facie view taken, that too at prima facie stay stage, can not held to be in conflict with any precedent decision of the Tribunal.
6.1.1 Learned Advocate for the appellant M/s. Vandana Global Ltd. submits that the issues referred by order dated 17-6-08 are contained in para 6 and the issues directly arise from the facts of the case discussed in earlier paragraphs.
6.1.2 He submits that para 8 relates to grant of stay which has no direct relevance to the issues referred to 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 - Larger Bench Order reported in ;
(ii) C.C.E., Pondicherry v. Acer India Ld. v. C.C.E., reported in (S.C.) - Larger Bench order reported in ;
(iii) Luminous Electronics Pvt. Ltd. v. C.C.E., New Delhi, reported in (Tri-LB) [Stay Order No. 1/2001-B, dated 4-1-2001].”
6.1.5 He also submits that reference to Larger Bench can be made on the basis of a prima facie view taken when the same was found to be contrary to prevailing view. It is not mandatory that the referral Bench should come to a firm conclusion which is in conflict with the decision by another Bench before referring to the Larger Bench. He also submits that such practice of referring to Larger Bench on a prima facie view is being adopted by the Hon’ble Supreme Court as in the case of C.C.E., Pondicherry v. Acer Ltd. reported in (S.C.). At any rate, there is no prohibition in referring to Larger Bench on a prima facie view of the referral Bench.
6.2 Shri M.P. Singh, learned Advocate in Orissa Concrete and Allied Industries in Appeal No. E/382/09 which also stands referred to Larger Bench sought permission and made his submissions. He submits that any Bench of the Tribunal is required to follow the decision of Co-ordinate Bench (except when the decision of the Bench was per incuriam), as the same is a binding precedent. He also submits that law has no conflict but the decisions taken based on facts applying the law may be in conflict and the conflicting decisions of the Coordinate Benches should be resolved by the Larger Bench in the interest of judicial discipline, as held in the case of Union of India v. Paras Liminates (P) Ltd. - (S.C.). He was also of the opinion that at the stay stage, it is not the general practice to go in depth on the issues in the appeal but he is not sure as to whether the facts have been examined fully in the case of Vandana Global Ltd. He also submits that conflict of decision cannot be considered de hors facts as held by the Hon’ble Supreme Court in the case of C.C.E., Bangalore v. Srikumar Agencies reported in (S.C.) = (S.C.).
6.3 Shri Kartik Kurmy, learned Advocate for Vikram P. Ltd. submits that he does not agree with the preliminary objection raised by the Department and has no objection to the Larger Bench deciding the issues referred to by the referral order. He, however, submits that facts of the case in Vikram P. Ltd. are not the same as in the case of Vandana Global Ltd.
6.4 Shri S.P. Ojha, Consultant appearing for the appellant Anjani Steel Ltd. 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.
6.5 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 Supreme Court. He also submits that even if there is only one decision vis-a-vis a coordinate Bench hearing substantially the same matter, the Bench may come to the conclusion that the decision is not correct for the reasons that it was rendered per incuriam i.e. without appreciating certain legal provision or without noticing a judgment on the issue or the reasoning adopted by the coordinate Bench is not acceptable to the present Bench. He was of the view that merely because the reasoning by the Coordinate bench is not appealing to the Bench considering the same matter, there is no reason to ignore the same without referring to the Larger Bench. Otherwise, it will lead to rule of precedent being given a go-by Once the decision is taken which is in conflict with the precedent decision whether the wording used in the order of the referral bench is “prima facie view” or “final view” is immaterial as long as inconsistency in the earlier judgment has been brought out.
7.2 Learned Advocate Shri L.P. Asthana submits that there are similar cases where he represented and stay petitions have been allowed and those cases have not been referred to Larger Bench. He sought permission to appear as amicus curie and submitted that normally, the Bench should follow the decision of the coordinate Bench as it is bound to follow. However, if it feels strongly that said decision is not legal or right, and is hesitant to follow the precedent decision, it just can not ignore and take a different view but it is bound to refer to a Larger Bench. The stage at which reference is made is not relevant.
7.3.1 Shri R.K. Jain, the Secretary, Bar Association appearing as amicus curie strongly supports the objection by the Revenue Department on the maintainability of the referral order. He first made detailed submissions on general issues and thereafter submissions on as to why this referral order is not maintainable in the light of his general submissions. He referred to the different category of benches envisaged for the Tribunal. The Bench consisting of a Judicial Member and a Technical Member (known as Division Bench) is the norm and the Single Member Bench is an exception. When there is a difference of opinion, a third Member or members can be nominated for the purposes of hearing the difference of opinion. There is also special Bench for hearing Anti-Dumping matters presided over by the 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 (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. When the referral Bench merely refers to the President for considering constituting a Larger Bench by the President, such an order cannot be treated as a judicial order.
7.3.4 When there is decision of the Supreme Court, High Court and by a Larger Bench on the issue under consideration no reference can be made to Larger Bench. No reference can be made when disputed facts are involved or to review an earlier decision or for answering hypothetical questions or academic issues. Further, no reference can be made to a Larger Bench disagreeing with the decision of a Bench whose strength was numerically higher than the strength of the referral Bench. In other words, a Two Member Bench cannot refer the decision of a three Member Bench to a Five Members Bench as held by the Supreme Court in the case of Pradeep Chandra in (S.C.).
7.3.5 Reference made to a Larger Bench can be returned to the referral Bench on grounds like incomplete reference, reference having already been made or it was not necessary in the facts and circumstances of the case, or in the meanwhile, some authoritative decision has come on the issues referred.
7.3.6 The decision in the Bhushan Steel is per incuriam and same has been passed overlooking many decisions of the Tribunal including the one authored by the author of decision of the Bhushan Steel.
7.3.7 The referral Bench had jurisdiction only to deal with stay petition as the cause list has listed only the stay petition and not the appeal and the Bench has not got it listed.
7.3.8 The referral Bench became functus officio after passing the stay order and should not have made the referral order.
7.3.9 There was no impediment to the referral Bench in following the decision in the case of Bhushan Steel and therefore no reference should have been made.
7.3.10 The referral bench has prima facie disagreed with the decision of the Tribunal in the case relating to Bushan Steel. The facts of the case relating to Bushan Steel are distinguishable to the case in which referral order was made. The decision of Bushan Steel has been rendered by the bench “per incuriam” as the judgement has been rendered without taking into account the Judgments of the Supreme Court in the case J.K. Cottons and the decision of the Tribunal in the case of Jawahar Mills. The referral order has been made on the basis of a prima facie view of the referral bench 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 Global Ltd noticed that the appeal related to denial of credit on various iron and steel articles used in fabrication of structure and plant and the Ld Advocate of the appellant relied on the decision of the Division Bench of Tribunal in the case of Bushan Steel Ltd. it appeared that the decision of the said case prima facie applied to the facts of the case in hand. But the Division Bench felt that the order of the Tribunal in the case of Bushan Steel Ltd. is contrary to the provisions of Cenvat Credit Rules and the assessee was not eligible to the credit and accordingly referred certain issues for consideration of the LB. The bench also granted waiver of pre-deposit of dues in view of the prevailing decisions which are in favour of the parties. Based on the order referring to larger bench, in several other cases stay has been granted. Some of these cases stand referred to LB, after granting stay in cases decided in favour of the Parties.
9.2 We find that the referral order date 17-6-08 recorded the opinion and the points on which they differ with the Co-ordinate Bench of the Tribunal. It appears that the referral Bench politely differed with the view held by the coordinate benches of the Tribunal by using the words “prima facie”. The view taken by the referral bench is a unanimous one and there is no difference of opinion among the members of the Division Bench to attract the specific provision of Section 129C(5).
10.1 It would be appropriate to examine the statutory provisions, if any, and the case laws relating to constitution of Larger Bench.
10.2 Section 129C (5) reads as follows :
“If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority; but if the members are equally divided, they shall state the point or points on which they differ and make a reference to the President who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of these members of the Appellate Tribunal who have heard the case, including those who first heard it.”
10.3 The above sub section relates specifically to difference of opinion within a Bench and when the Members are equally divided in their opinion. 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.
11.1 The word “Bench” under Rule 2(d)(1) of the CESTAT (Procedure) Rules, 1982 means the Bench of the Tribunal and includes the President and a member sitting singly. The Bench of the Tribunal has powers to regulate the proceedings in terms of Section 129C(6) which reads as follows :
“Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.”
The above powers are wide enough except to the extent restricted by the specific provisions in the Act or in the CESTAT (Procedure) Rules. In other words, in areas where there are no mandatory provisions in the law and where there are no rules governing the same, the Tribunal is empowered to devise its own procedure.
11.2 The proposition that any Bench is bound to follow the precedent decision of a coordinate Bench is not arising out of any mandatory provision of the statute. However, this has been followed as a healthy practice. Judicial discipline requires that, normally, a bench hearing a matter follows the decision of a coordinate bench. However, there are situations that the bench feels strongly that the precedent decision does not deserve to be followed. The concept of judicial freedom is against blindly following the precedent decision even after holding a strong view against the prevailing decision. The precedent can not just be disregarded and at the same time blindly followed. Balancing these two opposing position, a mechanism of reference to LB has been evolved by the Tribunal. It is relevant that the Tribunal has been granted powers by the statue to regulate its own procedure. The LB works on the principle that “three minds working together” is better than “two minds working together” and so on. Such a need for following the precedent decision by the Tribunal has been upheld by the Hon’ble Supreme Court in the case of BSNL v. Union of India - Para 18.
11.3 The concept of the Larger Bench was the one evolved by the Tribunal itself and when the matter was agitated before the Hon’ble Supreme Court, the Hon’ble Supreme Court was pleased to uphold constitution of the Larger Bench and specifically held that President has the powers to constitute 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 (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 cases on identical matters. Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the administration of justice. It is, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings bring to light what is perceived by them as an erroneous decision in the earlier case. In such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a Larger Bench. This is what was done by the Bench of two members who in their reasoned order pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a reference to a Larger Bench.
10. That the President has ample power to refer a case to a Larger Bench is not in doubt in view of sub-section (5) of Section 129C, which we have set out above. That provision clearly says that in the event of the members of a Bench differing in opinion on any point, and the members are equally divided, the case shall be referred to the President for hearing on any such point by one or more of the members of the Tribunal, and such point shall be decided according to the opinion of the majority of the members.
11. It is true that sub-section (5) refers to difference of opinion arising amongst members of a Bench in a particular case, and not specifically where the members of a Bench doubt the correctness of an earlier decision. However, Section 129C confers power of reference upon the President That power should be construed to be wide enough to enable the President to make a reference where members of a Bench find themselves unable to decide a case according to what they perceive to be the correct law and fact because of an Impediment arising from an earlier decision with which they cannot honestly agree. In such cases, it is necessary for the healthy functioning of the Tribunal that the President should have the requisite authority to refer the case to a Larger Bench. That is 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 functions”.
12. In 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 “for resolving 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 (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 powers to refer the matter to the Larger Bench at the stage it considered appropriate. The view expressed by Ld. senior advocate Shri S.K. Bagaria that once the decision is taken by the referral bench which is in conflict with the precedent decision whether the wording used in the order of the referral bench is “prima facie view” or “final view” is immaterial as long as inconsistency in the earlier judgment has been brought out appears reasonable and acceptable. This view is also supported by the other members of the bar (except Shri R.K. Jain) who presented their views before the LB. Shri K.K. Anand, learned Advocate noting the submissions of the learned Jt. CDR that there were decisions of conflicting nature even though the said decisions have not been specifically mentioned in the referral order canvassed the view that there was justification to refer to the Larger Bench.
13. Now, it may be appropriate to consider the specific grounds taken in the preliminary objection against the referral order 17-6-08.
13.1 In the present case, the referral order has recorded the facts of the case, submissions by the learned DR and the submissions by the learned Advocate for the party and also has given the reasoning on the points of differences in para 5.2 as to why the referral Bench felt that their view is in conflict with the decision of the Tribunal in the case of Bhushan Steel & Strips cited supra. Para 5.2 is reproduced below :
“In the present case, we prima facie, find that the steel items like angles, joists, beams, channels, bars, flats, etc. are used in the construction work; the resultant structures are permanently embedded to the earth; they cannot be considered as part of the machinery/equipment; they do not quality to be called as goods; as they cannot be treated as goods; they can not be considered as capital goods. We find that credit has been taken on the same goods on some occasions as capital goods and on other occasions, as inputs. These items, prima facie, can not be considered as inputs in relation to the final products namely, sponge iron ingots, billets manufactured by them. Therefore, prima facie, we are of the view that the credit availed by the appellant may not be admissible.
After recording their opinion as above, the Division Bench referred the following issues to the Larger Bench vide order dated 17-6-08 :
(a) Whether the term “capital 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 many decisions of the Tribunal including the one authored by the author of decision in the case of Bhushan Steel. Ignorance of law is no excuse, however, it may not be possible and correct to say that a Member should remember all the case laws in force and even if the same have not been specifically cited by the parties on either side. Such an interpretation is not at all warranted in an adversarial litigation. If neither side has cited the decision, the Member can not be expected to remember the facts of other cases decided and apply the same to the case on hand. To mention the name of a member and to say that the said member has given a decision which is contrary to other decisions to which the said member was a party may not proper. In this context, we would like to quote views of Justice Bhagwati, former Chief Justice of India from “Judicial Reflections of Justice Bhagwati” by Ram Kishore Chowdhary and Tarpesh Gan Choudhary at page 151 as under :-
“In a free democracy, everybody is entitled to express his opinion about the correctness or legality of judgment or sentence or order of a Court objectively and with detachment in a language dignified and respectable tone with moderation. The liberty of expression, cautions Justice Bhagwati should not be a licence to make personal attack on a judge. Subject to that, an honest criticism of the administration of justice is welcome since justice is not a cloistered virtue and is entitled to respectful scrutiny.”
13.4 The submission that the referral Bench became functus officio after passing stay order and should not have made the referral order is also not acceptable. The order relating to stay petition is in para 8 of the referral order. In the earlier paragraphs, the case and the cause for referring the matter to Larger Bench has been clearly enunciated. At any rate, the referral order and stay order has been passed simultaneously and it cannot be said that the referral order has been passed subsequent to passing of the stay order.
13.5 A submission as no final order has been passed by the referral Bench and therefore, no statutory remedy is available is devoid of merit. They could have moved an application before the referral Bench or challenged the order before a higher forum. A submission was also that in view of the reference having been made at the stay stage, the appeal has been taken up for out of turn 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 after taking evidence from both sides. The Larger Bench has also the powers to call for the entire appeal filed and admit evidence on facts and submission on law relating to issues to be considered by them. The submission that items in para 5.2 are not fully listed and they are not items meant for construction is a matter of fact and the Larger Bench can consider the same after taking the necessary evidence in this regard. If the judgments in favour of the Department have not been cited in the referral order, the Department can definitely present the same before the Larger Bench.
15. We do not agree that there is any illegality or irregularity in the order of the referral bench. Assuming, for arguments sake, that there are defects in the order of the referral bench, we have to keep in mind that the Larger Bench is not a Bench of Appellate jurisdiction to sit in judgement on the decision or....... method followed by the referral Bench. The issues like whether the referral Bench had jurisdiction to pass the order and whether the procedure adopted by the referral Bench is right or wrong, cannot be gone into by a Larger Bench which does not have any Appellate jurisdiction. In other words, LB is not hearing appeal against the order of the referral bench but is required only to consider the issues referred to them. The Larger Bench constituted by the order of the Hon’ble President also can not go into the question of whether the said order constituting Larger Bench by the Hon’ble President is legal and proper. If the applicant was aggrieved about the procedure adopted or decision taken by the Division Bench to refer to Larger Bench, or the decision of the President to constitute the Larger Bench, they ought to have sought remedy from the appropriate forum and not before the Larger Bench by way of raising the preliminary objection. We are not inclined to accept the suggestion to return the reference to the Division Bench or the suggestion for referring this matter to five Member Bench as the same is not well conceived.
16. From the above, the following emerges :
(a) The preliminary objection taken by the Department is not grounded on any violation of mandatory provisions. The challenge to the order of referral bench through the preliminary objection is unjustified as the objection does not serve any interests of the revenue.
(b) It has not been shown that the procedure 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, we do not find any merits in the preliminary objection raised by the department.
18. We also direct the Registrar to forward copy of this order to Chairman, CBEC and the Revenue Secretary for their kind information and for considering issue of appropriate guidelines to the Departmental Representatives.
(Pronounced in open Court on .............. 2009)
| | | Sd/- M. Veeraiyan Member (Technical) |
19. [Order per : D.N. Panda, Member (J)]. - I have advantage of reading the decision recorded by my learned brother Sri Veeraiyan. The stage at which reference was made to the Larger Bench directly by the division Bench was whether proper and the manner in which such reference was made was whether in accordance with law was anxiety in this matter as preliminary questions. In view of the law laid down by Apex Court in Union of India v. Paras Laminates (P) Ltd - (S.C.) in this regard, Role of judicial decorum, judicial independence, jurisdiction of Larger Bench, its locus standi, judicial discipline involved in the matter and significant citations made by Revenue and Bar, I felt it necessary to record my decision and reason of decision separately, respectfully disagreeing with the reasons of decision and decision recorded by my learned brother. The stage at which the matter was directly referred to Larger Bench by the division Bench needs emphasis. Questions were framed by the division Bench while hearing and disposing a stay petition without the appeal being heard. The questions so framed were directly referred by that Bench at that stage by a judicial order to the Larger Bench for which Hon’ble President of Tribunal had made present reference.
20. Following Apex Court’s decision in Appeal (Civil) No. 1117 of 2001 in Santosh Hazari v. Purushottam Tiwari decided on 8-2-2001, Revenue’s sensible argument was to be a question of law involving in the case there must be first a foundation for it laid in the pleading and the question should emerge from substantial findings of fact arrived at by a Court of facts and it must be necessary to decide that question of law for a just and proper decision of the case (Ref: Annexure I, page 6 of Paper Book of Revenue). Therefore Principal grievance of Revenue was that while hearing stay application, the Bench on its own should not have framed the questions and referred to the Larger Bench hurriedly without hearing the 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 Hon’ble Supreme Court in J.K. Cotton’s case - (S.C.) and in Jawahar Mill’s case - (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 of Revenue’s Paper Book).
21. Following its tradition, when the Larger Bench heard the Bar Association, Sri R.K. Jain, on behalf of Bar, repeatedly emphasized need of consistency, certainty, uniformity and impartiality in justice delivery system. According to him, expectation of bar is that dispensing of justice should ensure recording of reasons of decision by the Bench on totality of consideration of entire pleadings of both sides, settling of facts with relevant evidence and application of statutory law as well as judicial precedents to such, facts by process of hearing of appeal so that a rational conclusion is drawn. A decision without such feature being present is not a precedent. If conclusion and reasons of decision departs from the past, decisions of Tribunal or such past decision causes impediment to the present decision, the order should self speak why such difference arises and whether such difference warrant recommendation to the Hon’ble President for reference to Larger Bench for exercise of his judicious discretion u/s 129C (5) of the Act and following of such healthy practice is ordain of justice.
22. Making a significant citation, Sri Jain’s submission was also that no party to litigation should go with a notion from the Court that due process of justice was not followed. While hearing the appeal of Vandana Global Ltd’s case, had the matter in controversy been examined according to law laid down by Apex Court in J.K. Cotton’s case - (S.C.) and in Jawahar Mill’s case - (S.C.), there may not have arisen controversy. But before hearing the appeal, premature reference of questions to Larger Bench directly, has prejudiced interest of justice. He advocated that Bhusan Steel & Strips Ltd case was decided by Bombay Bench per incuriam, failing to consider the law laid down in above two judgments of Apex Court. Accordingly, decision of Bombay Bench has not ipso facto given rise to a reference to Larger Bench by the Division Bench which was hearing stay application of Vandana Global Ltd., so also when the Division Bench had observed in Para 8 of the stay order that the first question framed in Vandana Global’s case was before a Larger Bench in the case of M/s. Nicholas Piramal (India) Ltd. Sri Jain placing page 47 of his paper book, pointed out that in Ambica Prasad v. State of U.P. AIR 1980 SC 1762 Krishna Iyer 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 - (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 because it was badly argued, inadequately considered and fallaciously reasoned. His stress was that decision in Bhusan Steel & Strips Ltd’s case having been delivered by Bombay Bench per incuriam that fails to provide basis to make the present reference when aforesaid two judgments of Apex Court holding the field were not considered by that Bench in that case. Further, many cases having been clubbed with the present reference, at what stages these case have been clubbed is not known. Fate of each case depends on its own peculiar facts, special features and circumstances as held by Apex Court in the case of Commissioner of Central Excise, Bangalore v. Sri Kumar Agencies - (S.C.). Accordingly present reference should revert back to the Division Bench to consider entire appeal exercising appellate jurisdiction by that Bench which had referred the matter to the Larger Bench directly since Larger Bench has no jurisdiction to decide appeal recording evidence. So also all matters clubbed with the present reference should go back to the respective Benches to decide their fate on the basis of aforesaid judicial precedents.
24. Submissions of Revenue as well as the Bar have weighty considerations. There is no second opinion that judicial discipline is indispensable and various doctrines followed in justice delivery add to the majesty of law. Judicial precedents guide decision maker to deliver justice with certainty and without inconsistency to prevent miscarriage of justice.
25. It may be stated that main purpose of passing an interim order at the stage of hearing of stay application is to evolve a workable formula or a workable arrangement to the extent called for by the demands of the situation keeping in mind regarding the frame work of the legislation and the vulnerability of the challenge only in order that no irreparable injury is occasioned. The Court has, therefore, to strike a delicate balance after considering the pros and cons of the matter lest larger public interest is not jeoparadised and institutional embarrassment is eschewed. According to the existing provisions of law under section 129C(5) of Customs Act, 1962 (hereinafter referred to as “the Act”), there is no rule to formulate questions and refer the same directly to a Larger Bench at the interim stage of hearing of stay application without sitting on appellate jurisdiction and 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 Court in Dunlop India Ltd’s case - (S.C.).
26. Interpreting provisions of section 129C(5) of Customs Act, (hereinafter referred to as “the Act”) Apex Court in the case of Union of India v. Paras Laminates (P) Ltd. - (S.C.) has laid down the law to resolve conflict of decisions of different benches of Tribunal on the same issue with better wisdom. It has been held that upon satisfactions of certain conditions, only President of Tribunal has power to refer a case to a Larger Bench in terms of provisions contained in Section 129C(5) of the Act, on the recommendation of a division Bench. Consequently no other authority is empowered to do so.
27. According to the ratio laid down by the Apex Court in Paras Laminate’s case (supra) where members of a Bench find themselves unable to decide a case according to what they perceive to be the correct law and fact because of an impediment arising from an earlier decision with which they cannot honestly agree, the bench so disagreeing may direct the Registry to place such matter before Hon’ble President to consider reference of such matter to a Larger Bench constituted by him by virtue of power which is implied in the express grant of authority on the President u/s 129C(5) of the Act, to constitute Larger Bench of the Tribunal to dispense justice. Hon’ble Supreme Court while laying down the law in the aforesaid case has noticed that the Bench of two members who in their reasoned order had pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a reference to a Larger Bench.
28. It may be stated that under Article 141 of the constitution the law declared by the Hon’ble Supreme Court is law of the land and shall be binding on all Courts within the territory of India and under Article 144 all authorities, Civil or Judicial in the territory of India shall act in aid of the Supreme Court. The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of hierarchical judicial system.
29. According to the law laid down in Paras Laminates’ case (supra) existence of a reasoned order by the disagreeing Division Bench is sine qua non. Such an order has to demonstrate the error of law in earlier decision causing impediment to the perception of correct law and fact by the disagreeing 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 - (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 - (Guj.) = (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 reevaluate evidence in absence of appellate or revisionary jurisdiction. It has to act within the ambit of the facts settled by the Division Bench. Accordingly a Division Bench which formulates questions is bound by law laid down by Apex Court in Paras Laminates’ case (supra) to hear an appeal and record and state the reasons of conflict of decision by a speaking order which is a precondition for making recommendation for reference. In absence of such reason, any reference made would be invalid and shall neither be a mere procedural irregularity nor a curable defect. Apex Court in the case of Commissioner of Income Tax v. Anjum M.H. Ghaswala and others (2002) 1 SCC 633 has held that once an authority is required to act in a particular manner stipulated by the provisions, the authority is bound to act accordingly and cannot deviate from doing so.
30. Judicial discipline and propriety demands that a Division Bench by speaking and reasoned order should state the reason why it considers the decision of earlier Division Bench on the self same issue is incorrect and thereafter follow the judicial decorum of bringing the same to the notice of the Hon’ble President to make a reference by him to a Larger Bench with terms of reference as he may consider appropriate. A direct reference by the disagreeing Bench shall be a total disregard to judicial discipline and results in judicial impropriety. This can be said following the ratio laid down by the Apex Court in the case of Pradip Chandra Parija v. Promod Chandra Patnaik - (S.C.).
31. Characteristics of a judicial decision as held in the following words at page 340 in Cooper v. Wilson - 1937-2 K.B. 309 at: pp. 340, 341 has been approved by Hon’ble Supreme Court in Maqbool Hussain’s Case, (S.C.) = 1953 SCR 730 :
“A true judicial decision pre-supposes an existing dispute between two or more parties, and the presentation (not necessarily orally) of then involve four requisites; (1) If the dispute between them is a their case by the parties to the dispute; (2) question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on If the dispute between them is a behalf of the parties on the evidence; (3) A question of law, the submission of legal argument by the parties; and (4) decision which disposes of the whole matter by finding upon the facts in 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 inflexible 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 any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. Technicalities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order.
33. Reasons of decision introduce clarity in an order passed by Tribunal. It is necessary to set forth its reasons in a judicial order, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons renders an order not sustainable. Such proposition of fair play finds support from Apex Court decision in State of U.P. v. Battan and Ors, [(2001) 10 SCC 607], Requirement of indicating reasons has been judicially recognized as imperative which has been reiterated in Jawahar Lal Singh v. Naresh Singh and Ors. [(1987) 2 SCC 222]. Judicial discipline to abide by declaration of law by Apex Court, cannot be forsaken, under any pretext by any authority or Court, be it even the Highest Court in a State, oblivious to Article 141 of the Constitution of India. The giving of reasons is one of the fundamentals of good administration. In Alexander Machinery (Dudley) Ltd. v. Crabtree [1974 LCR 120] it was observed: “Failure to give reasons amounts to denial of justice”. Reasons are live links between the minds of the decision taker to the controversy in question and the decision or conclusion arrived at. Thus to say a difference arises that is to be demonstrated by a reasoned and speaking order as an outcome of hearing both sides on facts and evidence led or relied upon by them.
34. The Division Bench which has formulated questions in the present case in hand was at the prima facie stage of hearing of stay application. It was yet to hear the matter at length exercising its appellate jurisdiction and full opportunity of length of hearing on facts and evidence in respect of the matter in controversy was due. So also no speaking or reasoned order had emerged recording and demonstrating reasons of disagreement with earlier decision of a Division 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’ble President and that is, of course, judiciously exercised. A direct reference to Larger Bench by the Division Bench is contrary to the provisions of the Act and beyond its jurisdiction. A direct reference lacks jurisdiction to seize over a matter even if sanctioned by President under compulsion by virtue of existence of a judicial order passed by a Division Bench. This goes against self imposed discipline and what cannot be done directly that cannot be done indirectly. For the legal infirmity it suffers and without having appellate or reversionary jurisdiction, neither advice nor consultation rendered by such Larger Bench should influence a Division Bench to adopt its advice to the detriment of justice. As held by Apex Court in Rajgopal Naidu v. State Transport Appellate Tribunal, 1964 - 7 SCR 1 = (AIR 1964 SC 1573) it would be legitimate to assume that the legislature intended to respect the basic and elementary postulate of the rule of law, that in exercising their authority and in discharging their quasi judicial function, the tribunals constituted under the Act must be left absolutely free to deal with the matter according to their best judgment. It is of the essence of fair and objective administration of law that the decision of the Judge or the Tribunal must be absolutely unfettered by any extraneous guidance. If the exercise of discretion conferred on a quasi judicial tribunal is controlled by any means, that forges fetters on the exercise of quasi judicial function and the presence of such fetters would make the exercise of such authority completely inconsistent with the well-accepted notion of judicial process. It is true that law can regulate the exercise of judicial powers but not shake judicial independence. It may indicate by specific provisions on what matters Tribunals constituted by it should adjudicate. It may lay down specific provisions and the principles which have to be followed by the Tribunals in dealing with the said matters. The scope of the jurisdiction of the Tribunals constituted by statute can well be regulated by the statute itself and principles for guidance of the said Tribunals may also be prescribed subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provisions of law may legitimately do cannot be permitted to be done 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 - (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 - (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 to both sides to place their case while hearing the appeal on the contentious issues involved. In between there is no stage of consultative process for making reference and disposal of appeal on the outcome of consultation of Larger Bench. Benches of Tribunal exercising appellate jurisdiction is left absolutely free to decide an appeal according to law and decision of such Benches must be absolutely unfettered by any consultation or advice of Larger Bench prematurely before reaching to a conclusion of difference by a speaking and reasoned order on the basis of facts settled on the touch stone of law by such Benches. If exercise of appellate jurisdiction is controlled by any means, that forges fetters on the exercise of such appellate jurisdiction completely inconsistent with the well accepted notion of judicial process. Law regulates exercise of judicial powers but does not interfere to the independence in decision making in any manner.
37. My view aforesaid on the authority of Hon’ble President of Tribunal, judicial discipline, judicial decorum and self imposed discipline as well as manner of reference of difference to Larger Bench is fortified from the rulings made on 24-4-2009 by the Hon’ble President by Misc. Order No. 86/09-SM(BR) in ST Appeal No. 532 of 2006 in the case of M/s. Guljag Industries Ltd v. CCE, Jaipur, ST Appeal No. 32 of 2007 in the case of Agauta Sugar & Chemicals v. CCE, Noida - (T) and in ST Appeal No. 88 of 2007 in the case of Jaipur Glass & Potteries v. CCE, Jaipur. The rulings made in Para 12 and 13 of the order may be depicted under :
(1) Whenever there is a difference of opinion amongst the Members of a Bench on an issue, the Bench has to formulate such issue and ask registry to place the matter before the President of the Tribunal to do the needful in terms of Section 129C(5) of the Customs Act, 1962.
(2) It is obvious that it is the prerogative of the President either to refer the matter to third Member or constitute a Larger Bench in case of such difference of opinion or hear the matter himself, and thereafter the majority of the opinion to form the decision.
(3) Reference of matter to a Larger Bench or a third Member is entirely in the discretion of 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.
(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 become inevitable necessity for the Registry to place the matter before the Hon’ble President of the Tribunal to consider as to whether the Larger Bench shall proceed further in the matter or the matter shall revert back to the Division Bench for hearing of the appeal in entirety or any other proposition that the Hon’ble President may consider just and proper in the fitness of the circumstances of the case and pass appropriate order to meet the end of justice.
| | | Sd/- D.N. Panda Member (Judicial) |
40. [Order per : P.K. Das, Member (J)]. - While agreeing with the Order proposed by the ld. brother Veeraiyan, I felt that it is necessary to record my views on certain issues separately.
41. Ld. brother Veeraiyan did not find any merit in the preliminary objection raised by the department. On the other hand, ld. brother Panda held that it has become inevitable necessity for the Registry to place the matter before the Hon’ble President to consider as to whether the Larger Bench shall proceed further in the matter or the matter shall revert back to the Division Bench for hearing the appeal entirety.
42. The matter was heard at length and hearing was concluded on 13th April, 2009. On perusal of the proposed order by ld. brother Panda, it appears that he has come to a conclusion based on the guidelines recorded in Misc. Order No. 86/09-SM (BR) dated 24-4-2009 passed by the Hon’ble President in the matter of M/s. Guljag Indus. Ltd. & Other v. Commissioner of Central Excise, Jaipur. This order was passed after the date of final hearing of Larger Bench on preliminary objection. Obviously, the guidelines were not before the Larger Bench.
43. As per practice in Larger Bench matter, after completion of hearing of this case, there was judicial conference or discussion amongst the Members for exchanging the views on draft order for the purpose that the order of the Larger Bench should be outcome of collective deliberation of the Members. This is known as judicial collectivism. At that time also, the Order dated 24th April, 2009 passed by the Hon’ble President was not known to us.
44. In my view, the guidelines as recorded in the Order dated 24th April, 2009 rest the entire issue in the present case. For the purpose of proper appreciation, the relevant portion of the guideline as recorded in the order of the ld. brother Panda, is reproduced below :-
“(3) Reference of matter to a Larger Bench or a third Member is entirely in the discretion of 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 directly, while sitting in Division Bench, without exercising his administrative power separately. The answer to the question, in my view, is yes. In this connection, I would like to quote the observation of the Larger Bench of the Tribunal in the case of Commissioner of Central Excise v. Lloyd Insulation (India) Ltd. reported in (Tribunal-Larger Bench), as under :-
“The opinion of the bench is that since it is well settled that what cannot be done directly cannot be done indirectly, the reverse is also true that what can be done indirectly, can be done directly also. The bench is of the clear view that a right to authorise an action implied power to act directly also.”
47. So, the Hon’ble President exercised his discretionary power directly, while sitting in Division Bench. Even, assuming that he has not exercised his administrative power separately, on this ground, the order cannot be said to be invalid. Further, when the Hon’ble President referred this matter to the Larger Bench and also constituted Larger Bench to decide the questions framed in the Referral Order, then, in my opinion, there is no reason to place the same matter before the Hon’ble President again.
48. Before parting with this case, I would like to appreciate amicus curie, particularly, Mr. R.K. Jain, Secretary of Bar for the assistance to the Bench with case laws on different issues and detail submissions. It is noticed that Shri Jain during his submission before the Bench expressed his deepest anxiety that there should be guidelines to act as checks and balances in respect of reference to Larger Bench and/or Third Member in order to maintain juridical discipline. In my view, the guidelines as recorded in the Order dated 24th April, 2004 of the Hon’ble President would serve the purpose.
49. With the above observations, I concur with the proposed order of the Ld. brother Veeraiyan.
| | | Sd/- (P.K. Das) Member (Judicial) |
FINAL ORDER
In view of the majority decisions, the preliminary objection raised by the Department is rejected.
(Pronounced in the open Court on 27-5-2009)
| Sd/- M. Veeraiyan Member (Technical) | Sd/- D.N. Panda Member (Judicial) | Sd/- (P.K. Das) Member (Judicial) |