By TIOL News Service

NEW DELHI, DEC 23, 2015: CHRONOLOGY of events:

3.1.2007 - Order-in-Original dated 3.1.2007 was passed by Commissioner, holding against exporters. No penalty was imposed on any Customs officers who were alleged to have connived/colluded with exporters in evasion of customs duty.

26.4.2007 - Appeals filed by exporters were allowed by remanding the cases for de novo consideration. No officer was a party in the said proceedings.

2007 - Appeals were filed by Commissioner without making any officer a party but praying that penalty be directed to be imposed on the officers. No notice of these appeals was issued to the officers and none of the officers was heard.

18.6.09 - Final Order was passed, setting aside the O-in-O and remanding the matters for de novo consideration by holding the grievance of the Revenue, as contained in its appeals, to be justified.

21.12.09 -In de novo proceedings, o-in-o passed by the Commissioner imposing penalty upon the officers who were exonerated by the earlier o-in-o.

30.4.10 - Delhi High Court set aside the O-in-O dated 21.12.09 passed by the Commissioner qua the officers who had approached the High Court challenging the said O-in-O.

17.5.10 - Appeals which were filed by the Revenue were taken on board.

8.7.11 - Appeals preferred by Revenue were once again taken on board. On this date, it was also submitted before the Tribunal that Revenue had sought relief against the officers without making them parties. The Tribunal, therefore, observed that Revenue was required to amend its appeal memo to include the officers as necessary parties and serve them the appeal memo. Six weeks time was granted to cure the defects and serve copies of appeal memo on the officers.

18.4.12 - In the appeal preferred against the Commissioner's order dated 21.12.09, Tribunal directed that the appeal preferred by the Revenue in 2007 requires to be heard first.

27.4.12 - Tribunal vide its Misc. Order noticed the fact that no appeal memo of the Revenue against the officers has come up. There was no instruction with the Registry from Revenue as to whether they have filed any appeal against them. The Registry was also directed to search the records as to whether any appeal has been filed by the Revenue against the petitioners.

Incidentally, on 22.7.2011, the CESTAT in its Misc. Order No. C/169/2011 in paragraph 3 had reasoned as follows:

"Keeping in view the direction of the Hon'ble High Court, Revenue is required to amend its appeal memo to include these three respondents as necessary party and serve them appeal memo. Learned DR seeks six weeks time to cure the defect as stated above and also to serve copy of respective appeal memo on the above three respondents. Accordingly, we direct that the process of amendment of appeal memo and service of copy thereof should be completed by 29th August, 2011."

In its further order No. 90-95/2015 dated 8.4.2015, the CESTAT observed:

"5. The crucial issue to be considered, precedent to determination of the appeals, is the threshold issue whether Revenue's appeals filed in 2007 could be considered as having been duly instituted according to law since necessary parties were not impleaded. Other issues are whether applications filed in 2012 for impleadment of the necessary parties, the effected officers could be considered without determination of existence of justifiable reasons for failing to implead them in the first instance; and whether the Misc. applications for impleadment could be heard without notice to the effected officers, sought to be now impleaded.”

The Bench also sought a chronology of events and which is as mentioned at the outset.

The AR inter alia submitted -

++ The threshold issue concerning curing of the defects in filing the appeal by Revenue having been settled by the CESTAT as far as in July 2011, cannot be re-opened again when Revenue has filed appeals in pursuance of the CESTAT order dated 22.7.2011. The arguments regarding non-impleadment of necessary parties was a matter taken cognizance of by the Delhi High Court on 30.4.2010 and yet the Hon'ble High Court directed the CESTAT to pass fresh order in the appeals of the department against the petitioner after giving opportunity for hearing to the parties. This was carried out by the CESTAT when it passed its Misc. order dated 22.7.2011. The defect having been cured by virtue of CESTAT's own Order of 22.7.2011, the appeals should be considered on their merits after adverting to the facts of the case, the issues involved and the law applicable and not disallowed on the technical ground of non impleadment of necessary parties which was already sought to notice of the High Court.

++ One CESTAT Bench whether headed by its President or anybody else cannot and should not sit in review over the decisions of another coordinate CESTAT Bench. This is impermissible under law.

The Advocates for the officers contended that the Customs officers cannot be allowed to be impleaded so many years after the impugned order of the Commissioner. These appeals were filed in 2007 without naming the Customs officers as respondents and thus, in effect, as far as the Customs officers are concerned, there was no appeal filed with regard to them.

The Bench observed -

+ It is undisputed that in these appeals filed in 2007 the Custom officers were not impleaded. As penalty was sought to be imposed upon the Customs Officers, they were indisputably the necessary parties and not merely proper parties.

+ It is self evident that the Custom officers satisfied both the conditions viz.

(i) There must a right to some relief against such party in respect of the matter involved in the proceedings in question; and

(ii) It should not be possible to pass an effective decree in the absence of such a party.

and, therefore, they are the necessary parties beyond any pale of doubt.

+ As has been consistently held by Supreme Court, in the absence of necessary parties, the appeals would not survive. [ Ishwar Singh.Vs. Kuldip Singh - 1995 Supp. (1) SCC 179 and in J. Jose Dhanapaul Vs. S. Thomas - 1996 (3) SCC 587,Benares Bank Ltd. Vs. Bhagwandas - AIR 1947 Allahabad 18; Prabodh Verma Vs. State of U.P. - [1984] 4 SCC 297] refers ]

+ The High Court [in its order dated 30.4.10] required the Tribunal to pass fresh order in the appeals of the department against the petitioners after giving opportunity of hearing to the parties and the parties were directed to appear before the Tribunal on 17th May 2010. The parties in these appeals are Revenue and the exporters . As regards the Custom officers who were not (made) parties in these appeals, no order imposing penalty on them can be passed in view of the jurisprudential analysis earlier. [Udit Marain Vs. Board of Revenue - AIR 1963 SC-786 refers.]

+ Revenue has adverted to the CESTAT order dated 22.07.2011 and contended that another coordinate bench of CESTAT should not sit in review of that judgement. It is seen that the said order (dated 20.7.2011) of CESTAT required Revenue to amend the appeal memo to include the Customs officers as necessary party and serve the appeal memo upon them. CESTAT gave six weeks to comply with this process and directed Revenue that the process of amendment of appeal memo and service of copy thereof on the Custom officers should be completed by 29th August, 2011. It is seen that the applications for impleadment of officers were made in October 2012 i.e. after almost 15 months from the date of that CESTAT order (dated 22.07.2011) while the time granted was only 6 weeks (up to 29.8.2011). Having thus totally failed to comply with the said order of CESTAT, the Revenue's ability to take shelter thereunder is completely jeopardised.

+ It is also pertinent to point out that Revenue's applications for impleadment of the Custom officers as necessary parties tantamount to filing of fresh appeals against them. Thus the net, indeed the only, effect of such applications for impleadment of customs officers is that these appeals against the Customs officers essentially have to be reckoned as if these were filed on the date of filing of the applications seeking their impleadment. We find that in the applications filed in 2012, no reasons (beyond saying "administrative reasons") even remotely satisfactory have been given to explain the delay of so many years with reference to the date of the impugned order-in-original, or even the delay of more than one year with reference to CESTAT order dated 22.7.2011 against only 6 weeks allowed by CESTAT. Thus we find not even an iota of reasonable ground on the basis of which such inordinate delay can be condoned even by adopting the most liberal approach in this regard.

The applications filed by Revenue seeking impleadment of the Custom officers were rejected. The appeals too were held to be unsustainable and accordingly dismissed.

(See 2015-TIOL-2766-CESTAT-DEL)