1992 (5) TMI 36 - AT - Customs

Appeals on Rice Bran Extractions Classification Adjourned Pending Supreme Court Decision; Dissent on Tribunal's Role.

The appeals concerning the classification of rice bran extractions under the Customs Tariff Act, 1975, were adjourned sine die by a majority decision. The ... Appeal - Adjournment ISSUES PRESENTED AND CONSIDERED 1. Whether rice bran extractions are classifiable as 'Animal feeds' within T.I. Heading 21 of the Second Schedule to the Customs Tariff Act, 1975 for the material period (January-May 1977). 2. Whether a reference before a Larger Bench to resolve conflicting tribunal decisions should be adjourned sine die to await the decision of the Supreme Court in an appeal concerning the earlier Tribunal decision relied upon in the present matters. 3. Related question of institutional power and duty: the scope of the Tribunal President's power to constitute a Larger Bench under Section 129C and whether a Larger Bench is obliged to proceed despite similar matters being pending in the Supreme Court. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification: rice bran extractions as 'Animal feeds' (legal framework) Legal framework: Classification for tariff purposes is governed by the Customs Tariff Act, 1975 and allied rules; the question turns on whether the description and use of the goods fall within T.I. Heading 21 ('Animal feeds') for the relevant period. Precedent treatment: Conflicting tribunal and High Court decisions exist on classification of similar products; a prior Tribunal decision held in favour of treating the goods as animal feed (the decision relied upon by the respondents), while another Bench/decision was treated as favouring revenue in a later case. The correctness of the earlier Tribunal decision has been placed before the Supreme Court in an appeal which had been admitted. Interpretation and reasoning: The referring Bench recognised the existence of contradictory authorities and identified the earlier Tribunal ruling favourable to the respondents as a controlling precedent which was under challenge in the Supreme Court. Given the narrow temporal scope and limited monetary effect of the present appeals, the majority reasoned that waiting for the Supreme Court's determination of the controlling precedent would dispose of the present controversies without further argument and would conclusively settle the conflicting authorities. Ratio vs. Obiter: The present judgment does not decide the substantive classification issue on its merits; the Court's observations about classification and precedent are procedural and interlocutory in character. No ratio on classification is laid down by the Larger Bench in this order. Conclusions: The substantive classification question remains undecided by the Larger Bench in this order and is deferred to the final decision of the Supreme Court in the pending appeal concerning the earlier Tribunal ruling. Issue 2 - Adjournment sine die of Larger Bench reference pending Supreme Court decision (legal framework) Legal framework: Section 129C and the Tribunal's power to regulate its procedure; sub-section (5) contemplates reference to the President where members of a Bench are equally divided; sub-section (6) confers power to regulate procedure. Principles of judicial administration - continuity, predictability, and the duty of a Larger Bench to resolve intra-tribunal conflicts - also inform the question. Precedent treatment: Guidance from the Supreme Court's decision on the Tribunal's constitution and reference power (the Paras Laminates line) was relied on by the dissenting member to construe the President's reference power as a mandate to decide and not to delay indefinitely. Tribunal precedents were cited indicating that adjournments pending Supreme Court consideration are not routinely granted. Interpretation and reasoning (Majority): The majority accepted that, although ordinarily the Tribunal would not adjourn merely because an appeal is pending in the Supreme Court, the particular circumstances here - the Larger Bench was constituted specifically to resolve the conflict involving an earlier Tribunal decision which is itself under active challenge in the Supreme Court, and the present appeals concerned a brief, non-recurring period with small amounts - made it expedient in the interest of justice to await the Supreme Court's decision. The majority emphasised practicality: the Supreme Court's ruling would directly determine the fate of the present appeals without need for further argument and would settle the controversy conclusively. Interpretation and reasoning (Dissent): The dissenting Member accepted the statutory power to refer and the rationale for constituting a Larger Bench but rejected adjournment sine die. The dissent relied on the Tribunal's duty to resolve intra-tribunal inconsistency promptly so that the Larger Bench's ruling can be applied to other pending matters. It held that adjourning to await Supreme Court determination would defeat the very purpose of constituting a Larger Bench, would perpetuate uncertainty, and would be inconsistent with the Tribunal's power and practice to proceed despite proceedings in the Supreme Court. The dissent cited authority holding that a Larger Bench should proceed to decide references and that pending Supreme Court review of an earlier decision is not by itself a sufficient reason for indefinite adjournment. Ratio vs. Obiter: The order contains two competing procedural rulings: the majority's operative decision (binding within this judgment) to adjourn sine die, and the dissent's reasoned objection. The majority's decision is the operative outcome of the Bench; the dissent's reasoning is obiter as to the ultimate procedural rule but constitutes a separate substantive view recorded under Rule allowing separate opinions. Conclusions: By majority, the appeals/references were adjourned sine die to await the Supreme Court judgment in the appeal challenging the earlier controlling Tribunal decision; the dissent recorded a contrary view that the Larger Bench should proceed without such adjournment. Issue 3 - Scope of President's reference power and the Larger Bench's duty to decide (legal framework) Legal framework: Section 129C(5)-(6) (and ancillary powers) empower the President to constitute Benches and to refer points where members are equally divided; the Tribunal has power to regulate its procedure and ancillary judicial powers necessary to effectuate its statutory functions. Precedent treatment: The Supreme Court's exposition (paras cited) recognises the President's wide power to refer matters to a Larger Bench where members find themselves unable to decide because of impediments arising from earlier decisions; it also emphasises the need for continuity and predictability while permitting doubt and reference where earlier decisions are perceived as erroneous. Interpretation and reasoning: The majority invoked these principles to justify awaiting the Supreme Court's pronouncement to settle the conflict efficiently. The dissent invoked the same statutory text and jurisprudence to conclude that the President's reference creates an obligation on the Larger Bench to proceed expeditiously to decide the reference, and that a blanket adjournment pending Supreme Court review of an earlier decision is inconsistent with the purpose of constituting a Larger Bench and the Tribunal's duty to regulate its own procedure. Ratio vs. Obiter: The order does not alter the statutory scope of the President's reference power; it applies the framework to the facts. The majority's procedural choice is a case-specific application; the dissent's broader pronouncement on institutional duty is persuasive but not adopted by the majority. Conclusions: The Tribunal's statutory powers permit constitution of a Larger Bench and require that it exercise discretion in regulating procedure; however, in the present case the majority exercised that discretion to adjourn sine die pending the Supreme Court's decision, while the dissent would have exercised the Tribunal's procedure-regulating power to hear and decide the reference forthwith. Outcome The Larger Bench, by majority, adjourned the appeals sine die pending the Supreme Court's disposal of the appeal challenging the earlier Tribunal decision that bears directly on classification; a single Member recorded a reasoned dissent opposing the adjournment and directing that the reference be heard without awaiting the Supreme Court.