2025 (11) TMI 1375 - HC - Customs

Writs Allowed: DFIA Exemption Restored, Officers Bound by CESTAT Classification Despite Section 131BA(3) Argument Raised

M/s. Parry Enterprises India Limited, M/s. Fame Shipping Agency Versus The Additional Commissioner of Customs O/o. The Commissioner of Customs, Chennai

HC held the writ petitions maintainable and quashed the impugned orders denying exemption under the DFIA licence. It held that, in view of the CESTAT's ... Maintainability of petition - availability of alternative remedy - Jurisdiction to pass impugned orders - respondent is bound by the order passed by the CESTAT on the same issue - Classification of goods - imported wheat flour and Wheat Gluten fall under the same classification or not - no correlation established for the inputs used in the export product and the imported goods - whether the respondent who is bound by the decision taken by CESTAT can ignore the same and take an independent decision - HELD THAT:- It is informed to this Court that the larger Bench is yet to be constituted to go into that issue. In any case, the language that is used in Section 131BA(3) of the Act, uses the term 'No person, being a party in appeal, application, revision or reference', makes it clear that it will confine itself only to those parties to the proceedings and will not apply across the Board to all persons. The impugned orders have been passed only on the ground that Wheat Gluten is not covered under DFIA Licence and therefore, the petitioner is not eligible to claim exemption. If the CESTAT has already taken a view that Wheat flour and Wheat Gluten fall under the same classification, the entire proceedings of the respondent cannot be sustained, since all the other findings hinges upon only this issue. This Court finds that the respondent who was bound by the decision taken by CESTAT, cannot be permitted to take a different view, in the light of judgment of the Apex Court referred supra. Thus, the impugned orders passed by the respondent, suffers from lack of jurisdiction. It goes without saying that if the Department, in an appropriate case, is aggrieved by the decision taken by CESTAT, and since it involves substantial questions of law on the classification, it will be left upon to the Department to file an appeal and agitate their case. Till that is done, the Assessing Officers will be bound by the findings rendered by CESTAT. The impugned orders passed by the respondent in all the writ petitions stand quashed - Petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the respondent was bound by the view of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) that Vital Wheat Gluten falls within the description of Wheat Flour for the purpose of import against Duty Free Import Authorisation (DFIA) and attendant exemption notification. 2. Whether the respondent, having regard to the binding nature of appellate orders, could ignore or reopen the question of classification and deny DFIA exemption, confiscate goods and demand duty, interest and penalty. 3. Whether the availability of an alternative remedy of appeal bars entertainment of writ petitions under Article 226 where the adjudicating authority is alleged to have acted contrary to binding appellate decisions. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Binding effect of CESTAT findings on classification (Wheat Gluten as Wheat Flour) Legal framework: The assessment and grant of DFIA exemption are governed by the Foreign Trade Policy and the exemption notification; classification for purposes of DFIA benefits depends on description of 'materials' as defined under the policy and on tariff/commodity classification. Administrative and judicial discipline requires subordinate adjudicating authorities to follow appellate orders of higher revenue forums unless set aside or stayed. Precedent Treatment: Multiple decisions of CESTAT and coordinating appellate authorities consistently held that Vital Wheat Gluten (or wheat gluten flour) is wheat flour with specific technical characteristics and thus covered by the description 'Wheat Flour' for DFIA and exemption purposes. Board and DGFT circulars and technical communications were taken into account by those tribunals. The Apex Court's jurisprudence on the obligation of subordinate revenue officers to follow appellate orders was applied by The Court. Interpretation and reasoning: The Court treated the consistent line of tribunal decisions as authoritative on the classification issue and noted that technical data and communications from competent administrative offices supported the classification. The Court emphasized the doctrine of judicial/administrative discipline: an assessing/adjudicating officer must follow the order of the Tribunal and not reopen the same issue absent a higher court's reversal or suspension. The Court rejected the respondent's contention that non-filing of departmental appeal in some matters (on monetary grounds) permits inconsistent treatment in other matters, finding that the statutory scheme and settled jurisprudence require adherence to tribunal findings unless lawfully challenged and reversed. Ratio vs. Obiter: Ratio - The Tribunal's consistent determination that Wheat Gluten is covered by the description of Wheat Flour is binding on subordinate revenue authorities and is decisive for entitlement to DFIA exemptions until lawfully reversed. Obiter - Observations about the prudence of filing departmental appeals irrespective of monetary limits and policy considerations are ancillary. Conclusions: The respondent was bound by the Tribunal's findings on classification. Because the impugned orders were predicated solely on the contrary conclusion that Wheat Gluten did not fall within DFIA description, those orders lacked jurisdiction and could not be sustained. Issue 2 - Validity of impugned adjudication (confiscation, duty, interest, penalty) after Tribunal precedent Legal framework: Subordinate authorities must implement and give effect to orders of appellate authorities; where an adjudication proceeds upon a contrary view on an issue already decided by the Tribunal, principles of judicial discipline and non-harassment of taxpayers apply. The statutory scheme permits departmental appeals, but absent a legal reversal, appellate authority findings bind assessing officers. Precedent Treatment: The Court relied on higher court authority holding that assessing officers and appellate collectors are bound by appellate and tribunal orders within the appellate hierarchy, and that re-opening settled appellate decisions by subordinate officers produces undue harassment and disorder in tax administration. Interpretation and reasoning: The Court examined the impugned orders and found they were founded solely on disagreement with the Tribunal's classification. Because that classification remained unchallenged and unreversed by a competent forum, the respondent's exercise of power to deny exemption, demand duties and penalties, and to confiscate goods amounted to acting without jurisdiction. The Court also considered the respondent's reliance on statutory provisions permitting the Board to issue directions on monetary limits for appeals, but held that such procedural/monetary policies do not permit departure from the requirement to follow binding tribunal decisions. Ratio vs. Obiter: Ratio - An adjudicating authority cannot pass orders inconsistent with binding decisions of the Tribunal on the same issue; doing so renders the order vitiated for want of jurisdiction. Obiter - Discussion of departmental policies regarding appeal thresholds and Section 131BA procedural mechanics are explanatory rather than determinative of the adjudication's validity. Conclusions: The impugned orders imposing confiscation, duty, interest and penalty were quashed because they were based on a classification view inconsistent with binding Tribunal decisions; therefore the respondent's actions lacked jurisdiction. Issue 3 - Maintainability of writ petitions despite alternative remedy of appeal Legal framework: Writ jurisdiction under Article 226 is discretionary and not ousted by the existence of alternative remedies; however, availability of statutory appeal may be a relevant consideration. The Court must weigh whether interference is warranted where subordinate authorities are alleged to have disregarded binding appellate/tribunal decisions, or where questions of jurisdiction and public law arise. Precedent Treatment: The Court applied settled law that the existence of an alternative remedy is not an absolute bar to writ relief, particularly where the challenge questions the tribunal-binding nature of an official's action or alleges lack of jurisdiction. The Court noted established principles permitting judicial intervention to enforce administrative discipline and protect against harassment where subordinate officers ignore appellate determinations. Interpretation and reasoning: The Court found that the petitions challenged the very authority and jurisdiction of the respondent to reopen an issue conclusively decided by the Tribunal. Given that context, insistence on an appeal remedy would be a self-imposed restriction and inappropriate because it would perpetuate a breach of judicial/administrative discipline. The Court therefore exercised Article 226 jurisdiction to correct the jurisdictional error. Ratio vs. Obiter: Ratio - Availability of an appeal does not automatically bar writ relief where the adjudicatory action is contrary to binding appellate/tribunal decisions and challenges jurisdiction. Obiter - General observations about discretion in entertaining writs where alternative remedies exist. Conclusions: The writ petitions were maintainable; the Court exercised its jurisdiction to quash the impugned orders because the respondent acted contrary to binding tribunal precedent, thereby committing jurisdictional error. Overall Conclusion and Disposition The Court quashed the impugned orders as lacking jurisdiction, holding that subordinate revenue authorities are bound by the Tribunal's consistent view that Wheat Gluten falls within the description of Wheat Flour for DFIA/exemption purposes; until that view is reversed by competent authority, assessing officers must follow it. The writ petitions were allowed and the impugned adjudications set aside. The Court left open the departmental right to challenge tribunal decisions by filing appropriate appeals in cases where the Department chooses to do so.