Supreme Court

ITC Ltd. Vs. Commissioner of Central Excise, Kolkata IV

MANU/SC/1284/2019

18.09.2019

Customs

Refund claim cannot be entertained unless order of assessment is modified

Present appeals have been preferred by the Assessees as well as by the Union of India aggrieved by the judgment and order passed by the High Courts and Customs, Excise and Service Tax Appellate Tribunal. The question involved in present appeals is whether in the absence of any challenge to the order of assessment in appeal, any refund application against the assessed duty can be entertained.

The Tribunal has in the case of ITC Limited opined that, unless the order of assessment is appealed, no refund application against the assessed duty can be entertained. On the other hand, while interpreting provisions contained in Section 27 of the Customs Act, 1962, the High Court has opined that when there is no assessment order for being challenged in appeal, which is passed under Section 27(1)(i) of the Act, because there is no contest or lis and hence, no adversarial assessment order, the cases would be covered by the provision of Section 27(i) (ii) and refund applications can be maintained by the assessee even in the absence of filing appeals against the assessed bill of entry. The High Court of Madras has opined similarly.

Right to appeal is available to any person i.e. to the department as well as to importer/exporter against an order of self-assessment. Until and unless assessment order is modified and a fresh order of assessment is passed and duty re-determined, the refund cannot be granted by way of refund application. The refund authorities cannot take over the role of Assessing Officer. The officer considering refund claim cannot reassess an assessment order. An assessment order has to be questioned within the stipulated period of limitation. The refund application cannot be entertained directly under Section 27 unless the order of assessment is appealed against and is modified.

The provisions under Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or reassessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund.

On considering overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, present Court is of the opinion that, the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceeding. It would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act. The order(s) passed by Customs, Excise, and Service Tax Appellate Tribunal is upheld and order passed by the High Courts of Delhi and Madras to the contrary is hereby set aside. The applications for refund were not maintainable. The appeals are accordingly disposed of.

Tags : Assessment Refund claim Maintainability

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Supreme Court

Maheshwary Handling Agency Private Limited Vs. Board of Trustees of Kandla Port Trust and Ors.

MANU/SC/1275/2019

17.09.2019

Customs

Traffic Manager has discretion to prohibit discharge of goods which are likely to obstruct traffic, cause congestion or hinder convenient movement at Port

In present case, the Appellant is a private limited company engaged in the business of clearing, forwarding and transporting of cargo for import and export as a steamer agent. The issue raised by the Appellant relates to validity of Circular dated 31st August, 1998 issued by the Traffic Manager, the second Respondent, made effective from 1st October, 1998.

The impugned Circular stated that, due to congestion and over stacking at the Kandla Port, problems had cropped up with regard to accounting, stacking and delivery of cargoes etc. and non-availability of adequate storage space for export cargoes. To overcome this problem, storage of cargoes would not be allowed for more than two months and auction of such cargoes would be made under the Customs Act, 1962 and the Port Trusts Act. Further, no renewals would be considered for the areas allotted on rental/warehousing terms, if the cargo had remained stored for more than sixty days.

Aggrieved and challenging the Circular dated 31st August, 1998, the Appellant had approached the High Court with the prayer that the first Respondent should refund the amount collected as penalty rent in terms of the impugned circular. The Civil Application was dismissed by the Single Judge and the Appellant also did not succeed before the Division Bench which had dismissed the Letters Patent Appeal vide impugned judgment.

The Notification dated 4th November, 1993 had specified rent/usage charges for open space, covered space, containers, office accommodation, etc., which charges were payable dependent upon the space and the length of time used for storage. Note 1 to the Notification stated that, a person wanting to use the rental space was required to make an application for storage of goods to the Traffic Manager. It was also specified that, any unauthorised occupation of rented space shall make the person liable to pay double the rent as penalty.

The Traffic Manager of the Port is obligated to control and manage the port operations, check obstructions to traffic movement and remove hindrance for efficient and proper use of berths, landing and shipping of goods and storage in the sheds and open area. Loading and unloading of vessels was subject to control of the Traffic Manager who had the discretion to prohibit discharge of goods which are likely to obstruct traffic, cause congestion or hinder convenient movement at the Port.

It is clear from the Notes that, the Notification had empowered and left it to the Traffic Manager to deal with the question of unauthorised occupation, including the time limits or period during which the goods could be authorised to be stored. The Notification had not specified when and in what circumstances use of the storage area would be treated as unauthorised. This was left to the wisdom of the Traffic Manager who was the person in-charge and responsible for efficient and proper functioning of the port operations and mandated to take the need based decisions on the basis of prevalent facts and circumstances. This latitude was necessary as the Schedule of rates fixed vide Notification dated 4th November, 1993 were applicable till a new Notification or amendment was made by following the procedure prescribed vide Section 52 of the Port Trusts Act, which would require approval from the Central Government.

Prescribing different slabs or rates for storage of cargo for different periods was meant to fix rates for the rent payable and not to deny or curtail the power of the Traffic Manager to authorise and permit use of sheds and space for storage of cargo/containers. As per the Notes, the Traffic Manager, on an application by the owners or their agents was to grant permission for authorised storage. Storage without the permission or contrary to the permission was unauthorised. Further, the space allotted was to be vacated on notice from the Traffic Manager. On failure to comply, and vacate the space, the use was treated as unauthorised occupation and the person in default was liable to pay double the rent for unauthorised use.

The Traffic Manager had authority and discretion for allotment of space for storage on rent and to withdraw allotment of space depending on the availability and to ensure that the port operations were not hindered and obstructed due to congestion and shortage of space. The Circular had brought about uniformity, clarity and transparency in the use of storage facilities at the Kandla Port. The Circular though issued on 31st August, 1998 was made effective and applicable from 1st October, 1998. Therefore, the parties were given time to take steps to avoid the usage of the storage facility from being declared as unauthorised.

The impugned Circular specifically recorded that, there was congestion at the Port which had necessitated issuance of the Circular stipulating that storage of goods beyond the period of sixty days would be treated as unauthorised occupation. The said circular ensured uniformity and equal treatment without discretion as upper time limit of sixty days was prescribed for storage of goods failing which penalty was payable. Period of sixty days is sufficient and long and cannot be termed as unreasonable and violating Article 14 of the Constitution. The appeal fails and is dismissed.

Tags : Circular Issuance Validity

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Supreme Court

Karnataka Power Transmission Corporation Limited Vs. C. Nagaraju and Ors.

MANU/SC/1262/2019

16.09.2019

Service

Acquittal by a Criminal Court does not preclude a Departmental Inquiry against delinquent officer

The judgment of the High Court by which the order of dismissal of Respondent No. 1 from the service was set aside is the subject matter of this Appeal. Respondent No. 1 was appointed as a Meter Reader-cum-Clerk in the Karnataka Power Transmission Corporation Limited (KPTCL) in the year 1974. He was promoted as a Junior Engineer in the year 1997. Additional Registrar of Enquiries-I, framed a charge against the Respondent.

The Respondent submitted his explanation to the charge. After conducting an inquiry, Additional Registrar of Enquiries-I, who was nominated as the Inquiry Officer, held that, the charge against Respondent No. 1 was proved. The Lokayukta examined the inquiry report and approved the findings of the Inquiry Officer. Having regard to the serious misconduct committed by Respondent No. 1, the Lokayukta imposed the penalty of dismissal from service under Clause VIII of Regulation No. 9 of Karnataka Electricity Board Employees (Classification, Discipline, Control and Appeal) Regulations, 1987.

Aggrieved by the order of dismissal from service, Respondent No. 1 filed a writ petition in the High Court of Karnataka which was allowed by a learned single Judge by a judgment. The Writ Appeal filed by the Appellant was dismissed by the Division Bench. Dissatisfied with the judgment of the High Court, the Appellant is before this Court.

Acquittal by a criminal Court would not debar an employer from exercising the power to conduct departmental proceedings in accordance with the Rules and Regulations. The two proceedings, criminal and departmental, are entirely different. They operate in different fields and have different objectives. In the disciplinary proceedings, the question is whether the Respondent is guilty of such conduct as would merit his removal from service or a lesser punishment, as the case may be, whereas in the criminal proceedings, the question is whether the offences registered against him under the PC Act are established, and if established, what sentence should be imposed upon him. The standard of proof, the mode of inquiry and the Rules governing inquiry and trial in both the cases are significantly distinct and different.

Interference with the order of dismissal by the High Court was unwarranted. It is settled law that, the acquittal by a Criminal Court does not preclude a Departmental Inquiry against the delinquent officer. The Disciplinary Authority is not bound by the judgment of the Criminal Court, if the evidence that is produced in the Departmental Inquiry is different from that produced during the criminal trial. The object of a Departmental Inquiry is to find out whether the delinquent is guilty of misconduct under the conduct Rules for the purpose of determining whether he should be continued in service. The standard of proof in a Departmental Inquiry is not strictly based on the Rules of evidence.

The order of dismissal which is based on the evidence before the Inquiry Officer in the disciplinary proceedings, which is different from the evidence available to the Criminal Court, is justified and needed no interference by the High Court. The Appeal is allowed.

Tags : Departmental Inquiry Dismissal Misconduct

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Supreme Court

Punjab Urban Planning and Development Authority and Ors. Vs. Vidya Chetal and Ors.

MANU/SC/1266/2019

16.09.2019

Consumer

Consumer Forum has jurisdiction to adjudicate the legitimacy of statutory dues

In present case, the reference arises out of the order passed by a two-Judge Bench of present Court, wherein they expressed doubt as to the correctness of the judgment rendered in the case of HUDA v. Sunita. Present Court therein held that, the National Consumer Disputes Redressal Commission ("NCDRC") had no jurisdiction to adjudicate the legality behind the demand of "composition fee" and "extension fee" made by HUDA, as the same being statutory obligation, does not qualify as "deficiency in service".

The counsel on behalf of the Petitioner submitted that, the order in the case of Sunita is well reasoned, as it validly holds that, the NCDRC lacks jurisdiction to decide the legitimacy behind the demand of "composition fee" and "extension fee". Relying on the aforesaid holding, the counsel further stated that "statutory dues" cannot be claimed as "deficiency in services". Further, the learned Counsel submitted that although the Consumer Protection Act, 1986 is beneficial in nature, demanding a liberal construction, the same cannot be used to extend the ambit of the Act by bringing in remedies or benefits which were not intended by the legislature. The precise question raised is whether the law laid down by this Court in the case of Sunita is valid.

As per Section 2(1)(g) of Act, meaning of deficiency is explained as any fault, imperfection, shortcoming or inadequacy in quality, nature and manner of performance of any service or supply of goods, in terms of standards set by the parties themselves through contract or otherwise, or imposed by the law in force. The basis for application of the consumer laws hinges on the relationship between the service provider and consumer. The usage of 'otherwise' within the provision subsumes other modes of standard setting alternative instruments other than contracts such as laws, bye-laws, Rules and customary practices etc.

The definition of service under Section 2(1)(o) of the Act is not exhaustive rather the legislature has left the task to expound the provision on a case to case basis to the judiciary. It is inclusive of all those services performed for a consideration, except gratuitous services and contract of personal services. Moreover, aforesaid provision reflects the legislative intent of providing impetus to 'consumerism'. Such a phenomenon has had a benevolent effect on the Government undertakings, wherein a new dynamism of innovation, accountability and transparency are imbibed.

In Ghaziabad Development Authority v. Balbir Singh wherein this Court, relying upon Lucknow Development Authority v. M.K. Gupta , held that, the power of the Consumer forum extends to redressing any injustice rendered upon a consumer as well as over any mala fide, capricious or any oppressive act done by a statutory body.

Therefore, the determination of the dispute concerning the validity of the imposition of a statutory due arising out of a "deficiency in service", can be undertaken by the consumer fora as per the provisions of the Act. The decision of this Court in the case of Sunita, wherein it was held that, NCDRC has no jurisdiction to adjudicate the legitimacy of the aforementioned statutory dues, was rendered without considering any of the previous judgments of this Court and the objects of the Act. Consequently, the law laid down in the aforesaid case does not hold good before the eyes of law, and is thereby overruled. The reference stands answered accordingly. The instant special leave petitions may be placed before an appropriate Bench for considering the case on merits after obtaining orders from the Hon'ble Chief Justice of India.

Relevant

Lucknow Development Authority v. M.K. Gupta MANU/SC/0178/1994
; Ghaziabad Development Authority v. Balbir Singh MANU/SC/0282/2004
, HUDA v. Sunita MANU/SC/2801/2005

Tags : imposition Statutory due Consumer fora Jurisdiction

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High Court of Bombay

Anand Ramdhani Chaurasia and Ors. Vs. The State of Maharashtra and Ors.

MANU/MH/2572/2019

13.09.2019

Criminal

Mere storage cannot be construed as an attempt to commit an offence under Section 328 of IPC

The Petitioners, who are arraigned as accused in FIR registered for the offences punishable under Sections 179, 188, 273 and 328 of the Indian Penal Code, 1860 (IPC) read with Section 26(2)(p) read with Section 3(1)(zz)(A) read with Section 59 along with Section 26(2)(4) read with Section 27(3)(d) and Section 27(3)(E) of the Food Safety And Standards Act, 2006 (FSS Act, 2006) have approached present Court for quashing and setting aside the said FIR.

The FIR is registered on the basis of complaint received from the Food Safety Officer i.e. Respondent No. 4 recording that, when the residents and godown of the Petitioners was raided, Gutka and Pan Masala pouches were found to be stored and this storage contravened to the Notification dated 20th July, 2018 issued by the Food Safety Commissioner, State of Maharashtra. Pursuant to the registration of the FIR, the Petitioners came to be arrested and were released on bail. The petition poses a challenge to the action initiated against them by registering the FIR and invoking and applying Section 328 and Section 188 of the IPC.

Whether the violation of order issued by the Food Safety Commissioner in exercise of powers conferred under Section 30(2)(a) of the FSS Act which prohibits the manufacture, storage, distribution, transport or sale of tobacco either flavoured, scented or mixed with any of the said additives and whether known by any name whatsoever, Gutka, Pan Masala, manufactured chewing tobacco with additives, kharra or otherwise, whether packaged or unpackaged and/or sold as one product for its consumption would attract the provisions of Section 328 and Section 188 of the IPC.

Mere storage cannot even be construed as an attempt to commit an offence under Section 328 of the IPC since an act would become an attempt only on a positive act being committed by a person which would have resulted in commission of offence. However, the unforeseen act beyond the control of the accused, can only be an attempt.

In the case of Malkiat Singh, the Apex Court has held that the preparation, according to the Apex Court would consists in devising or arranging the means or measures necessary for the commission of the offence whereas an attempt is a direct movement towards the commission after the preparation was made. The storage of the prohibited substance could not therefore be brought within the purview of an attempt to commit an offence under Section 328 and nevertheless it do not attract Section 328 of the IPC.

A close analysis of the Section 188 of IPC would reveal that, whoever disobeys an order promulgated by a public servant directing to abstain from certain acts, or to take certain orders with certain property in his possession, disobeys such direction, would attract Section 188, if such disobedience causes or tends to cause obstruction, annoyance or injury, or risk of it, to any person lawfully employed and if such disobedience causes or tends to cause danger to human life, health or safety shall be punished under the said section.

The FIR lodged against the Petitioners alleges only storage. Undisputedly, there is a disobedience of an order which prohibits storage of tobacco, Pan Masala and Gutka. Nothing in the FIR attribute any other act to the Petitioners viz. manufacture, distribution or sale. Disobedience of the promulgated order under Section 188 of the IPC is punishable, if it causes or tends to cause danger to human life. The Section do not use the term 'likely to cause', conveying that there has to be a positive evidence of causing or tends to cause danger to human life and in absence, Section 188 is not attracted.

It is not in doubt that, the tobacco and its products are dangerous to human life and safety. However, mere possession or storage cannot fall within the purview of 'Danger' contemplated under the said section. The goods, as long as they remain stored, do not pose any danger. The goods will have to be moved beyond the store to be sold-'to be purchased for consumption' and mere storing a food item would not pose the intended danger to human life. The gap between the storage and the consumption by a consumer will have to be bridged before the danger or the hurt contemplated under Sections 328 and Section 188 of the IPC get attracted and it is only when the prosecution proves that it is the Petitioners who are the one who did it, their prosecution would be a success.

The Apex Court in Joseph Kurian Philip Jose, has succinctly drawn a distinction in the two terminologies applied by Section 328 of the IPC in the form of direct and indirect methods and the said judgment continues to be an authoritative and binding precedent till date. Resultantly, the FIR registered against the Petitioners only to the extent it registered offence against the Petitioners under Sections 328 and 188 of the IPC is quashed.

Relevant

Joseph Kurian Philip Jose vs. State of Kerala MANU/SC/0869/1994
; Malkiat Singh and Anr. vs. The State of Punjab MANU/SC/0056/1968

Tags : FIR Proceedings Quashing of

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Customs, Excise and Service Tax Appellate Tribunal

Vandevi Texturisers (P) Ltd. and Ors. Vs. C.C.E. & S.T., Surat-I

MANU/CS/0193/2019

12.09.2019

Excise

Once goods were certified to be warehoused by consignee, consigner cannot be held responsible for contravention of law

The brief facts of the case are that, the Appellants are engaged in the manufacture of Polyester Knitted Fabrics from Polyester Yarn. They are clearing their finished goods to other 100% EOUs against CT-3 certificates. During the relevant period, they had cleared goods to EOU unit Sunshine Overseas, Navsari which is also an 100% EOU. Investigations were carried out.

Based upon the investigation, show cause notice was issued demanding duty amounting to Rs. 34, 86, 256 on 231415.217 kg of Polyester Yarn alleging the same was not used in manufacture of fabrics but were diverted in the open market. It was also proposed to confiscate the same and to impose penalty under Section 11AC of Central Excise Act, 1944 and Rule 26 of Central Excise Rules, 2002. Penalty on other Appellant was also proposed. Vide Adjudication Order, the demands as proposed were confirmed and penalty was imposed. The diverted goods were also ordered to be confiscated with an option to redeem the same on payment of redemption fine. Against the said order, the Appellants filed the appeal before the Commissioner (Appeals), who vide impugned order-in-appeal upheld the Order-in-Original against the present Appellants.

Once the statements has been made basis for alleging clandestine clearance, the adjudicating should have granted cross examination. The Appellant during the adjudication proceedings, had sought cross examination of the persons, whose statements were relied upon in the show cause notice. The same was necessary in terms of Section 9D of the Central Excise Act which was not allowed. When the demands and the allegation of removal of Polyester Yarn was based upon the statements of the persons in that case, it was mandatory for the adjudicating authority to grant the cross examination of such persons whose statements are sole evidence to make allegations against the Appellant. In absence of same the statements cannot form basis for alleging contravention of law by the Appellant.

Further, the Appellant Unit has cleared the goods against CT-3 Certificates and the goods were certified to be warehoused by the jurisdictional Excise authority of M/s. Sunshine Overseas. The documentary evidences in the form of CT-3, AR-3, D-3 Declarations, maintenance of statutory registers, filing periodical returns, which are undisputed clearly shows that, the manufacture and supply of finished goods to Sunshine Overseas has not been negated by the Revenue with the assistance of any corroborative evidences. Even during the investigation, no buyer of Polyester Yarn has been brought on record to show that, the Appellant had cleared said raw material clandestinely to any person.

There is no evidence of transportation of any raw material or sale of goods to any buyer or unaccounted receipt of any cash amount from any person on account of sale of raw material. Once the goods were certified to be warehoused by the consignee, the consigner, i.e. the Appellant, cannot be held responsible for contravention of law. In such case, no demand can be made against the Appellant. The demand against the Appellant Unit and penalty against all the Appellants are not sustainable. The impugned order is set aside. Appeals allowed.

Tags : Demand Penalty Confirmation

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