Monday, August 02, 2010

IS ”L.CHANDRA KUMAR v. UNION OF INDIA” APPLCABLE TO CEGAT?

By

K.Vijay Kumar, M.A.,B.Ed., B.L.,

SUPERINTENDENT OF CENTRAL EXCISE


 


 

    This has reference to Mr.M.V.S. Appa Rao's article, "Revamp the Tribunals- A Rejoinder" – 1997(96) E.L.T.A94, wherein he disputes the views of Mr.A.J.Raval and emphatically states that Chandra kumar is not applicable to CEGAT as the case applies only to Tribunals created under Article 323! And 323B of the Constitution, like the Administrative Tribunals, Debt Recovery Tribunals etc. and these two Articles do not cover CEGAT and Income Tax Appellate Tribunal, which are creatures of the respective statutes. With all due respects, I beg to differ with the learned Advocate.

His view that CEGAT is not created under Article 323B is not correct. Article 323B reads:

    "323B Tribunals for other matters"


 

  1. The appropriate Legislature may, by law, provide for the adjudication nor trial by Tribunals of any disputed, complaints, or offences with respect to all or any of the matters specified in clause92) with respect to which such Legislature has power to make laws.
  2. The matters referred to in clause (1) are the following, namely :-
    1. levy, assessment, collection and enforcement of any tax;
    2. foreign exchange, import and export across customs frontiers;
    3. …………

………………..    

………………..


 

    It can seen that this article empowers parliament or the State Legislatures, by law, to provide for adjudication or trail by Tribunals. Mr.Appa Rao's contention is that CEGAT being a creation of a separate statute namely the Customs Act, 962, is not a creation as per Article 323B. But the Customs Act is enacted by Parliament and the Tribunal created under Section 129 of of the Customs Act is certainly a Tribunal created under Section 129 of the Customs Act is certainly a tribunal created under Article 323 B. This article only provides that parliament should by law provide for…. Customs Act is law and a Tribunal constituted under the Customs Act is a Tribunal created by law under Article 323B. The Hon'ble Supreme Court in the Mafatlal case had held that even Section 11B of the Central Excise Act constitutes "law" within the meaning of Article 265 of the Constitution. But why go so far ? the learned advocate had only to read para 26 of the Chandra Kumar judgment which reads

"in R.K.Jain V. Union of India…. A Division Bench of this Court consisting of three of us (Ahmedi, CJI, Punchhi and Ramaswamy, JJ) had occasion to deal with complaints concerning the functioning of the Customs, Excise and Gold (control) Appellate Tribunal, which was set up by exercising the power conferred by Article 323B".


 

    So it has been confirmed by the Hon'ble Supreme Court itself that CEGAT is set up by exercising the powers under Article 323B. In fact in the R.K.Jain case the Hon'ble Court had suggested that the possibility of an appeal from the Tribunal to the High Courts be pursued and one of the reasons for the Chandra Kumar judgment was that this suggestion of the Apex Court was not followed up. In the Chandra Kumar case the Hon'ble Supreme Court emphatically held that "all decisions of Tribunals, whether created pursuant to Article 323A or Article 323B of the Constitution, will be subject to the High Court's writ jurisdiction …." CEGAT having been created pursuant to Article 323 B will clearly fall within the purview of this judgment. Though the position is very clear another observation of the Apex Court in the very same Chandra Kumar case is also worth recalling t this stage. In para 91, it is observed "The statute following the settled principle that a Tribunal which is a creature of an Act cannot declare that very act to be unconstitutional". This leaves no doubt that the Supreme Court judgment refers to CEGAT also which is a creation of a particular statute namely Customs Act.


 

    While that is the position, recently even after referring to the Chandra Kumar judgment, two high Courts, Delhi and Bombay have dismissed two writ petitions filed against orders of the CEGAT on the basis of Chandra Kumar judgment.

    Let us study the position.

    Under the Central Excise Act and of course under the Customs Act also), after the CEGAT passes an order the following steps are possible –


 

  1. Request the Tribunal tok refer the matter to the High Court under Section 35G of the Central Excise Act.

    

  1. The Tribunal may refer the matter to the Supreme Court if it is of the opinion that due to conflicting decisions of High Courts it is expedient to refer the matter direct to the Supreme Court. (Section 35H).


 

  1. Appeal to the Supreme Court. Section 35L says that an appeal shall lie to the Supreme Court from any order passed by the Appellate Tribunal.


 

This was the position before the Chandra Kumar judgment. But now it is totally different. In Chandra Kumar the Hon'ble Supreme Court held:


 

"We hold that all decisions of Tribunals whether created pursuant to Article 323Aor Article 323B of the Constitution, will be subject to the High Court's writ jurisdiction under Article 226/227 of the Court within whose territorial jurisdiction the particular Tribunal falls. (para 89 end)

    The Hon'ble Court added in para 90

"We may add here that under the existing system, direct appeals have been provided from the decisions of all Tribunals to the Supreme Court under Article 136 of the Constitution. In view of our above-mentioned observations, this situation will also stand modified. In the view that wer have taken, no appeal from the decision of a Tribunal will directly lie before the Supreme Court under Article 136 of the Constitution; but instead o, the aggrieved party will be entitled to move the High Court under article 226/227 of the Constitution and from the decision of the Division Bench of the High Court the aggrieved party could move this Court under Article 136 okf the Constitution.

    Thus the Hon'ble Supreme Court had very clearly directed that even though direct appeals have been provided, in view of this decision, this situation stands modified and there shall be no direct appeal to the Supreme Court on an order from the Tribunal, even though Section 35L of the Cental Excise Act provides for such an appeal. In effect Section 35L is no more in vogue.

    But the Hon'ble Delhi High Court in Shalimar Rubber Industries and Another v. union of India observed:

    "The order of the Tribunal dated 9th April ,1996 is appealable before the Supreme Court as provided in section 35L of the Act.


 

    In view of these alternate remedies we do not think it is a fit case where we should exercise our jurisdiction under Article 226 of the Constitution. Mr. Chandrasekharan, learned Counsel for the petitioner relies upon a recent decision of the Supreme Court n the case of L.Chandra Kumar's v .Union of India [1997 (92) E.L.T.318(S.C.) = (1997)3 SCC 261]and in particular paragraphs 91 and 92 of the said decision in support of the contention that now appeal under Section 35L does not lie and only writ petition under Article 226 of the Constitution can be filed. We do not agree. In our opinion there is substance in the submission of Mr.Miisra, learned Counsel appearing for the Government that the ration of Chandra Kumar's decision is not to take away right of appeal provided under Section 35L of the Act."

    

And the writ petition was dismissed.

    In another recent judgment, in Color-Chem. Ltd. V. Union of India, the Bombay High Court held:

"The admitted position in this cases is that an appeal is provided against the impugned order of the Tribunal to the Supreme Court under Section 35L of the Act. Since the Legislature has provided appeal against certain orders only to the Supreme Court, in our opinion, it is not open to the aggrieved person to bypass the remedy provided by the legislature by way of appeal to the supreme Court and come to the High Court and try to challenge the same before the High Court in its writ jurisdiction. We are of the clear opinion that in such a situation, the High Court should not entertain the writ petition challenging the order against which appeal is provided only to Supreme court because it would amount to usurping the powers of the Supreme Court in the guise of exercise of writ jurisdiction.


 


 

And this petition was also dismissed.

    In both the above cases, the High Court dismissed the wit petitions against orders of the Tribunal on the ground that Section 35L of the Act provides for appeal to the Supreme Court. But perhaps para 90 of the Chandra Kumar judgment was not brought to the notice of the Hon'ble High Courts. In this para, the Hon'ble Supreme Court had categorically stated that in spite of a provision for the direct appeal to Supreme Court, in view of this order there shall not be a direct appeal to the Supreme Court from the Tribunal. Thus it appears that the two judgments referred to above are in conflict with the Supreme Court Judgment in the Chandra Kumar case.

    However, these two judgments appear to be correct as of now. Does it look as if I am contradicting myself? Let me explain:

    In para 92 of the Chandra Kumar judgment it was held that the "directions regarding decisions of Tribunals being amenable to scrutiny before a Division Bench of the respective High Courts will however come into effect prospectively i.e. will apply to decisions rendered hereafter". The Chandra Kumar judgment was delivered on 18-3-1997 and so will apply to decisions of Tribunal delivered after 18-3-1997.The decision of the Tribunal in the first referred to case above was delivered on 9-4-1996 and 5-2-1997; so in thils case Chandra Kumar is not applicable but the date of the second case is not known.

    In any case, even the two High Courts have not emphatically ruled that Chandra Kumar is not applicable to CEGAT.

EXCISE LAW TIMES – 15.10. 1996 – A 75

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