2024 (9) TMI 73 - HC - Customs

Doctrine of merger: lower order merged into higher judgment under Article 136; no question under s.130A(4), penalty merits not examined

Om Prakash Kashmirilal Punjabi Versus The Commissioner Of Customs Adjudication

HC applied the doctrine of merger, holding the CESTAT order challenged before the SC merged into the SC's judgment under Article 136; consequently no ... Doctrine of merger - Imposition of penalty on the appellant by the Appellate Tribunal - whether any question of law arises from the impugned order as provided under sub-section (4) of section 130A the Act as this is not an appeal under section 130 of the Act? - HELD THAT:- Considering the Judgement passed by the Hon’ble Apex Court in COMMISSIONER OF CUSTOMS (ADJUDICATION), MUMBAI VERSUS M/S R.K. INTERNATIONAL AND OTHERS [2017 (8) TMI 348 - SUPREME COURT], the question left with to consider is whether the impugned order of the CESTAT dated 25.06.2003 which was Challenged before the Hon’ble Supreme Court can be said to have merged in the said Judgement and Order or not? - The Hon’ble Apex Court in case of KUNHAYAMMED AND OTHERS VERSUS STATE OF KERALA AND ANOTHER [2000 (7) TMI 67 - SUPREME COURT (LB)] has considered the issue of doctrine of merger regarding the decision of the Kerala High Court in Special Leave to Appeal under Article 136 of the Constitution of India holding that 'Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.' Thus, the impugned order of the CESTAT has merged into the order of Judgement and Order passed by the Apex Court under Article 136 of the Constitution of India. In view of the applicability of doctrine of merger, it is not required to consider the impugned order of the CESTAT on merits vis-a-vis contention raised by learned advocate for the applicant on the ground of perversity of the impugned order or the jurisdiction of the CESTAT to levy the penalty under section 112 or the legitimacy of discretion exercised by the CESTAT for levy of penalty of Rs. 50 lakh upon applicant. No question of law arises from the impugned order of the CESTAT and therefore the application stands dismissed. Issues Involved:1. Whether imposition of penalty on the appellant by the Appellate Tribunal is justified.2. Applicability of the doctrine of merger.3. Jurisdiction of CESTAT to levy penalty under Section 112 of the Customs Act, 1962.4. Legitimacy of the discretion exercised by CESTAT in imposing the penalty.Issue-wise Detailed Analysis:1. Whether imposition of penalty on the appellant by the Appellate Tribunal is justified:The applicant challenged the order dated 25.06.2003 passed by the Custom Excise and Service Tax Appellate Tribunal (CESTAT) under Section 130A of the Customs Act, 1962. The substantial question of law admitted was whether the imposition of penalty on the appellant by the Appellate Tribunal is justified. The Supreme Court had already addressed this issue in Civil Appeal No. 10347-10392/2011, confirming the CESTAT's decision. The Supreme Court found no substantial question of law in the appeals and affirmed the order dated 25.06.2003 passed by the CESTAT, thereby dismissing the appeals of Revenue.2. Applicability of the doctrine of merger:The judgment considered whether the impugned order of the CESTAT merged into the Supreme Court's order. The doctrine of merger was applied, as the Supreme Court's judgment in Civil Appeal No. 10347-10392/2011 involved a detailed examination of the facts and confirmation of the CESTAT's order. The Supreme Court's decision to dismiss the appeals affirmed the findings of the CESTAT, thus invoking the doctrine of merger. Consequently, the CESTAT's order merged with the Supreme Court's judgment.3. Jurisdiction of CESTAT to levy penalty under Section 112 of the Customs Act, 1962:The applicant argued that the CESTAT could not impose a penalty under Section 112 of the Customs Act while exercising its jurisdiction under Section 129 read with Section 129B of the Act. The applicant relied on the Madras High Court's decision in Visteon Automotive Systems India Limited vs. CESTAT, Chennai, which held that the Tribunal has no power to adjudicate the imposition of penalty at the first instance. However, this argument was not considered, given the doctrine of merger applied, and the Supreme Court had already dismissed the appeals, affirming the CESTAT's order.4. Legitimacy of the discretion exercised by CESTAT in imposing the penalty:The applicant contended that the CESTAT's order was perverse and based on contradictory statements of Solly Perumal, an approver by the department. The CESTAT had imposed a penalty of Rs. 50 Lakh on the applicant, considering the evidence and statements on record. The applicant argued that the CESTAT could not have levied the penalty without any basis and without giving an opportunity to the applicant. The applicant also highlighted the financial difficulties and advanced age as reasons to delete or reduce the penalty. However, the court did not consider these arguments on merits due to the application of the doctrine of merger.Conclusion:The court concluded that the impugned order of the CESTAT had merged into the Supreme Court's judgment. Therefore, no question of law arose from the CESTAT's order, and the application was dismissed with no order as to costs.