Case Note & Summary
The appellant, Tejus Proprietary Concern of Tejus Rohitkumar Kapadia, filed an appeal against two orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The first order dated 9 May 2011 directed the appellant to deposit Rs.30 lakhs as a condition for hearing the appeal. The appellant had relied on the Supreme Court judgment in Commissioner of Customs vs. Sayed Ali (2011 (265) ELT 17 (SC)) to argue that the Additional Director General, DRI was not a proper officer under Section 2(34) of the Customs Act, 1962 and lacked jurisdiction to issue the show cause notice. The Tribunal mentioned this judgment but did not apply it. The appellant filed an application for modification, also citing a coordinate bench decision in Nylex Traders vs. Commissioner of Customs (Preventive), Mumbai and the Supreme Court's subsequent decision in Chandana Impex Pvt. Ltd. vs. Commissioner of Customs, New Delhi, which followed Sayed Ali. However, the Tribunal dismissed the modification application on 12 August 2011, relying on a Karnataka High Court decision. The Bombay High Court held that the Tribunal was bound to follow the Supreme Court's decision and erred by not considering it. The court set aside both orders and remanded the matter to the Tribunal for fresh consideration of the waiver application, directing the Tribunal to decide it in accordance with law and in light of the Supreme Court's judgment.
Headnote
A) Customs Law - Predeposit - Waiver - Section 129E of Customs Act, 1962 - CESTAT directed predeposit of Rs.30 lakhs without considering binding Supreme Court precedent on jurisdiction of DRI officer - Held that Tribunal must follow binding precedent and failure to do so vitiates the order - Matter remanded for fresh consideration (Paras 1-5).
Issue of Consideration
Whether the CESTAT was justified in directing predeposit without considering the binding Supreme Court judgment in Commissioner of Customs vs. Sayed Ali regarding the jurisdiction of the Additional Director General, DRI to issue show cause notice.
Final Decision
Appeal allowed. Orders of CESTAT dated 9 May 2011 and 12 August 2011 set aside. Matter remanded to CESTAT for fresh consideration of the application for waiver of predeposit in accordance with law and in light of the Supreme Court judgment in Commissioner of Customs vs. Sayed Ali.
Law Points
- Binding precedent must be followed by subordinate tribunals
- Non-consideration of Supreme Court judgment vitiates order
- Waiver of predeposit under Section 129E of Customs Act
- 1962
Case Details
2011 LawText (BOM) (09) 68
Customs Appeal No.37 of 2011 with Notice of Motion No.2600 of 2011
Dr. D.Y. Chandrachud, A. A. Sayed
Mr. Sujay N. Kantawala with Mr. Brijesh Pathak for the Appellant, Mr. Pradeep S. Jetly for the Respondents
Tejus Proprietary Concern of Tejus Rohitkumar Kapadia
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Nature of Litigation
Appeal against CESTAT orders directing predeposit of Rs.30 lakhs for hearing of customs appeal.
Remedy Sought
Appellant sought waiver of predeposit and setting aside of CESTAT orders.
Filing Reason
CESTAT did not consider binding Supreme Court judgment on jurisdiction of DRI officer while directing predeposit.
Previous Decisions
CESTAT order dated 9 May 2011 directing predeposit of Rs.30 lakhs; CESTAT order dated 12 August 2011 dismissing modification application.
Issues
Whether the CESTAT was bound to follow the Supreme Court judgment in Commissioner of Customs vs. Sayed Ali regarding jurisdiction of DRI officer.
Whether the CESTAT's failure to consider the binding precedent vitiates the predeposit order.
Submissions/Arguments
Appellant argued that the Additional Director General, DRI lacked jurisdiction to issue show cause notice as per Supreme Court in Sayed Ali.
Appellant cited coordinate bench decision in Nylex Traders and subsequent Supreme Court decision in Chandana Impex following Sayed Ali.
Respondents relied on Karnataka High Court decision to justify the predeposit order.
Ratio Decidendi
A subordinate tribunal is bound to follow a binding precedent of the Supreme Court. Failure to consider such precedent while passing an order, even on an interlocutory application, vitiates the order. The CESTAT erred by not applying the Supreme Court's decision in Sayed Ali on the jurisdiction of DRI officers.
Judgment Excerpts
The Tribunal had not considered the principle of law laid down by the Supreme Court though it ought to have followed a binding precedent of the Supreme Court.
Despite these decisions, which were brought to the notice of the Tribunal, the Tribunal by its order dated 12 August 2011, dismissed the application for modification of the earlier order on the ground that a decision of the Karnataka High Court...
The Tribunal was bound to follow the judgment of the Supreme Court.
Procedural History
CESTAT passed order on 9 May 2011 directing predeposit of Rs.30 lakhs. Appellant filed modification application on 12 August 2011 which was dismissed. Appellant then filed appeal before Bombay High Court on 7 September 2011.
Acts & Sections
- Customs Act, 1962: 2(34), 129E
