2024 (3) TMI 506 - AT - Customs

Mumbai tribunal rules HC order doesn't halt all proceedings, directs immediate disposal of show cause notice within four weeks

CESTAT Mumbai held that HC Bombay's order applied only to specific parties and did not mandate cessation of all proceedings. The tribunal ruled that ... Prayer of Out-of-turn disposal of appeal due to indefinite deferment of proceedings - Piecemeal adjudication - correctness of the presumption by the adjudicating authority that the order of the Hon’ble High Court of Bombay was intended to cease further proceedings in entirety - HELD THAT:- It is well-settled in law that an order or judgement, of appellate authority or constitutional court, operates qua the appellant/petitioner and respondent therein and none else even though qualified to be cited as precedent should another identically, or even similarly, situated appellant/petitioner plead for nondiscriminatory applicability for such relief/detriment. Show cause notice, under Customs Act, 1962, is prelude to adjudicating upon proposal to visit detriment on any person or entity which maybe that of recovery of duty, with attendant interest and penalty, of withholding of amount claimed as refund, of confiscation of goods for vesting with the Central Government or of penalty being imposed. Such notices, mandated in proceedings arising from section 27, section 28 and section 124 of Customs Act, 1962, comprise allegations against, as also the proposed consequential detriment prescribed by law to, each of the entities or persons therein. It is worth noting that, even in the same order, some outcomes may flow from ex parte proceedings which stand on an entirely different footing from others in which defence has been offered. Reversion to such natural autonomy, inhering for each noticee, is, thus, neither improper nor is the ‘piece-meal’ disposal that has been judicially frowned upon; it is the partial disposal of issues in a notice, whether in relation to one noticee or all, that jeopardizes the integrity of the proceedings warranting appellate or writ intervention. It is merely the convenience of common adjudication, a privilege that the Central Board of Excise & Customs (CBEC) invoked under the authority of its delegated empowerment in Customs Act, 1962, which enabled collating of the separate imports and, indeed, of the three separate importers in one notice. By no stretch would this be ‘piece-meal’ disposal of the show cause notice. There is no reason to countenance the indefinite transfer of the proceedings, initiated against the appellant, to ‘call book’ as communicated in the impugned order. Furthermore, the impending liquidation of the appellant company, approved by the duly constituted statutory authority, should also not be held to ransom by such extraordinary recourse on the part of an adjudicating authority. Approval thereto would not only impinge upon the intent of the law relating to insolvency and bankruptcy that replaced another which was found to be counterproductive by the supreme legislative organ of the State but also deprive the noticees of prompt appellate remedies should need thereof arise. In short, the appellate process should not be obviated by such peremptory action on the part of the adjudicating authority. The adjudicating authority is directed to dispose of the notice issued to the appellant herein forthwith, and in any circumstances, within four weeks from uploading of this order - appeal disposed off. Issues involved:The issues involved in this judgment include 'out of turn' disposal of appeal, indefinite deferment of proceedings, interpretation of stay order by High Court, impact on liquidation process, and time-bound disposal of notice.Issue 1: 'Out of turn' disposal of appealThe Official Liquidator moved an application for 'out of turn' disposal of appeal filed by M/s Coastal Energy Pvt Ltd (CEPL) against the indefinite deferment of proceedings arising from a show cause notice issued to several entities and persons. The Official Liquidator argued that the plea of limited relief warrants immediate disposal as the liquidation of the appellant-company was jeopardized by the delay in adjudication. The adjudicating authority contended that deferring adjudication was not a detriment to the importer-appellant as liability would only crystallize after adjudication. The Tribunal allowed the application and proceeded with the disposal of the appeal with the consent of both sides.Issue 2: Interpretation of stay order by High CourtThe dispute arose from a show cause notice issued by the Directorate of Revenue Intelligence (DRI) to several importers, including CEPL, for import of coal from Indonesia. The High Court had allowed a stay of proceedings for some petitioners, leading to the transfer of cases to the 'call book' and indefinite deferment. The appellant argued that the stay order did not extend to entities and persons who were not petitioners, and pleaded for time-bound disposal of the notice. The Tribunal clarified that the stay order applied only to the petitioners and not all noticees, emphasizing that the adjudicating authority should not restrict the 'call book' status to those who obtained a stay.Issue 3: Impact on liquidation processThe appellant-company was under liquidation, and the delay in adjudication was affecting the liquidation process. The Tribunal highlighted that the impending liquidation should not be held to ransom by extraordinary actions of the adjudicating authority, as it could impinge upon insolvency and bankruptcy laws. The Tribunal directed the adjudicating authority to dispose of the notice to the appellant within four weeks to ensure the liquidation process was not further jeopardized.Issue 4: Time-bound disposal of noticeThe Tribunal emphasized the importance of time-bound disposal of the notice issued to the appellant to prevent further delays and ensure prompt appellate remedies for the noticees. The principles of natural justice were to be adhered to, and the appellant was directed to participate promptly in the proceedings for an early conclusion. The Tribunal ordered the adjudicating authority to dispose of the notice within four weeks from the date of the order to facilitate a swift resolution.