1967 (7) TMI 61 - SC - Central Excise

Court Upholds High Court Decision on Customs Act Appeal Limitations

The court dismissed the appeals, upholding the High Court's decision to quash the orders and instructing the Collector to hear the appeals by the ... Application of provisions by executive notification under Section 12 of the Central Excises and Salt Act - procedure relating to appeals - substantive right of appeal - requirement of deposit pending appeal - dispensation from deposit pending appeal - jurisdictional challenge under Article 226Jurisdictional challenge under Article 226 - Maintainability of petitions under Article 226 despite availability of revision under the Excise Act. - HELD THAT: - The Court held that the existence of a statutory remedy by way of revision did not oust the High Court's jurisdiction under Article 226. The point was not taken in the High Court and, in any event, where a petitioner challenges the jurisdiction of the Collector (here on the ground that a notification was ultra vires), it was not necessary for the petitioner to pursue revision before invoking constitutional writ jurisdiction. The availability of a statutory remedy therefore did not preclude entertainment of the petitions under Article 226. [Paras 4]The petitions under Article 226 were maintainable notwithstanding the remedy of revision.Requirement of deposit pending appeal - dispensation from deposit pending appeal - Whether the petitioner was precluded from challenging the impugned notification after having sought dispensation from deposit under the applied provision. - HELD THAT: - The Court rejected the contention that by seeking dispensation of deposit under the applied provision the petitioner was precluded from raising a challenge to the validity of the notification. It observed that if the petitioner had not sought dispensation, a contrary contention might have been advanced by the Collector, but since the petitions raised a question of the Collector's jurisdiction to demand deposit (i.e., the validity of the notification), the invocation of the dispensation mechanism did not bar the constitutional challenge. [Paras 5]Invocation of the dispensation provision did not preclude the petitioner from challenging the impugned notification.Application of provisions by executive notification under Section 12 of the Central Excises and Salt Act - procedure relating to appeals - substantive right of appeal - Validity of the notification applying Section 129 of the Customs Act (requirement of deposit pending appeal) to proceedings under the Excise Act. - HELD THAT: - Section 12 empowers the Central Government to apply provisions of the Sea Customs Act (now Customs Act) that relate to certain specified matters, including 'procedure relating to offences and appeals', to like matters under the Excise Act with such modifications as necessary. Section 129 of the Customs Act requires deposit of the duty or penalty pending an appeal and conditions hearing on such deposit (subject to discretionary dispensation). The Court held that that requirement does not merely regulate procedure but effectively 'whittles down' the substantive right of appeal conferred by Section 35 of the Excise Act by making the hearing of an appeal contingent upon payment. Reliance on the decision construing a similar provision in a sales tax statute established that such a requirement affects the substantive right and cannot be treated as mere procedure within the scope of powers conferred by Section 12. Accordingly the application of Section 129 by notification was beyond the scope of Section 12 and invalid. [Paras 8, 9, 10, 11]The notification applying Section 129 of the Customs Act to appeals under the Excise Act was ultra vires and therefore invalid.Final Conclusion: The appeals are dismissed. The High Court's quashing of the orders and direction that the Collector hear the appeals was upheld: the notification applying the deposit requirement of Section 129 of the Customs Act to Excise Act appeals was held invalid, and the petitions under Article 226 were maintainable. Issues:1. Maintainability of petitions under Article 226 without availing revision remedy under Section 36 of the Excise Act.2. Whether invoking Section 129 of the Customs Act bars challenging the notification.3. Validity of the notification applying Section 129 of the Customs Act.Analysis:1. The first issue raised was the maintainability of petitions under Article 226 without availing the revision remedy under Section 36 of the Excise Act. The court dismissed this argument, stating that the existence of a revision remedy does not bar the High Court's jurisdiction under Article 226. The petitioner's claim that the Collector lacked jurisdiction due to the impugned notification made filing revisions unnecessary.2. The second issue questioned whether invoking Section 129 of the Customs Act precluded challenging the notification. The court rejected this argument, emphasizing that the petitions raised jurisdictional questions. It was noted that if the petitioner had not sought dispensation of duty deposit, the respondents might have argued against the maintainability of Article 226 petitions.3. The third issue pertained to the validity of the notification applying Section 129 of the Customs Act. The court examined the relevant statutory provisions, including Section 12 of the Excise Act and the impugned notification. It was observed that Section 129 of the Customs Act mandates duty or penalty deposit pending appeal, potentially hindering the right to appeal. Citing precedent, the court concluded that Section 129 restricts the substantive right of appeal and does not constitute 'procedure relating to appeals' under Section 12 of the Excise Act.In conclusion, the court dismissed the appeals, affirming the High Court's decision to quash the orders and directing the Collector to hear the appeals by the petitioner. The judgment highlighted the limitations imposed by Section 129 of the Customs Act on the right to appeal, emphasizing the distinction between substantive appeal rights and procedural requirements.