JUNE 29, 2020

By Adv. Vijay Shekhar Jha (LLM)

1. Introduction:

Chapter XV of the Customs Act, 1962 is titled "Appeals and Revision". It consists of 23 sections which are to be read with Customs (Appeal) Rules, 1982 to understand Custom Appellate mechanism holistically. The scheme of appellate mechanism as expounded in the Customs Act, 1962 and Customs (Appeals) Rules,1982 is explained in the form of the following flow chart -

Figure 1: Flow chart of Appellate Mechanism

2. Appellate Hierarchy and Timelines for filing appeals

It is paramount to understand the hierarchy of the appellate authorities within which appeals move under the Customs Act,1962.Further, it is also essential the time frame within which appeal can be filed, as any appeal filed beyond this period is liable to be dismissed. With this view, hierarchy of the appellate authority and time frame (as has been stipulated in the Customs Act,1962) within which all appeals are to be filed has been detailed in the table below:

It is pertinent to note that from the perusal of Section 128, 129A,130 and 130E, it can be safely stated that appeals under those provisions can be moved against any order or decision of the adjudicating authority or lower appellate authority as the case may be (as has been shown in Figure 1). But, there is no mention regarding cases where 'Revision Application' can be moved to Central Government u/s 129DD. In this background, it is submitted that revision application u/s 129DD can be filed in the following situations:

a. where no appeal lies from the decision of the subordinate authority. For example- situations enumerated in First Proviso to the Section 129A(1) of the Customs Act, 1962 where no appeal is allowed   if such order relates to, -

"(a)  any goods imported or exported as baggage;

(b)  any goods loaded in a conveyance for importation into India, but which are not unloaded at their place of destination in India, or so much of the quantity of such goods as has not been unloaded at any such destination if goods unloaded at such destination are short of the quantity required to be unloaded at that destination;

(c)  payment of drawback as provided in Chapter X, and the rules made thereunder."

b. where subordinate authority appears to have exercised his jurisdiction not vested in it by law or to have failed to exercise a jurisdiction so vested or to have exercised the jurisdiction illegally or with material irregularity.

3. Standard Operating Procedures on Review and Appellate mechanism:

As per the "Standard Operating Procedures ("SOP")on Litigation in Appellate Forums" issued by 'Directorate of Legal Affairs Central Board of Excise and Customs New Delhi' on November 2015, the decisions to file the appeal against the order of the Commissioner or the Commissioner (Appeal) are now vested in the Committee of Chief Commissioners or the Committee of the Commissioners as the case may be (also refer Section 129D). The whole review and appellate mechanism as elucidated in the said SOP has been explained in the form of flow chart as below:

Figure 2: Flow Chart of Review and Appellate Mechanism

4. Pre-Deposit for filing appeal u/s 129E / Revision u/s 129DD

Note: Percentage mentioned above shows percentage of duty, in case where duty or duty and penalty are in dispute or penalty where penalty is in dispute.

5. Appeal Form No. prescribed under Customs (Appeals) Rules, 1982 to file appeal under Customs Act,1962.

Note - The revision application in Form No. C.A.-8 shall be filed in duplicate and shall be accompanied by an equal number of copies of the following documents, namely:-

(i) order passed by the CoC (Appeals) under section 128A; and

(ii) decision or order passed by the Customs Officer which was the subject-matter of the order referred to in clause (i).

6.Adjournments during Appeal

At any stage of the hearing of the appeal, if sufficient cause is shown adjournment can be granted, for the reasons to be recorded in writing.

7. Rectification of Mistakes ("ROM)" during Appeal u/s 129B(2)

Application for Rectification of Mistakes is filed under section 129B(2) of the Customs Act, 1962 which reads as under:

"(2) The Appellate Tribunal may, at any time within six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub - section (1) and shall make such amendments if the mistake is brought to its notice by the Commissioner of Customs or the other party to the appeal."

It is to be borne in mind that the time period stipulated above shall be counted from the date order has been received by the party to the appeal. This view can be reinforced from the following observation of the Hon'ble Bombay High Court in Allied Fibres vs Commissioner of Customs (Import)-Custom Appeal No.109/2015:

"10.. Any application for correction filed by the appellant, other party, before the Tribunal, is required to be filed within six months from the receipt of the copy of the order, such application may not be dismissed, as not filed, within six months from the date of order."

Further, in the same case Hon'ble Bombay High Court also stated that there is no provision for delay condonation in filing rectification application under Customs Act,1962.

What is mistake apparent from the record?

In case COCE vs ASCU Ltd. - 2002-TIOL-408-SC-CX, Hon'ble Supreme Court clarified this expression in the following manner:

"It is held that "mistake apparent from the record" cannot be something which would have to be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. It has been held that a decision on a debatable point of law cannot be a "mistake apparent from the record".

ROM application has to be considered where tribunal ignored to consider the material evidence, thus, mistake should be rectified

In Jogesh Kumar Bhimsariya vs CEGAT,New Delhi, 2005 (189) ELT 412 -Hon'ble Tribunal observed that:

"The tribunal has ignored to consider material evidence which have been filed along with paper book which were the part of the record in arriving to the conclusion. Thus, there was a mistake apparent on the face of the record and tribunal ought to have been allowed the Misc. Application"

8.Appeal To High Court -Section 130, 130A

An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003, if the High Court is satisfied that the case involves a substantial question of law.

Exception - No Appeal can be filed to HC in the following cases:

a. to the determination of any question having a relation to the rate of duty of customs or

b. to the value of goods for purposes of assessment.

2. Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

3. The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question.

However, nothing shall be deemed to take away or abridge the power of the Court to hear; for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.

4. Appeal shall be heard by a bench of at least two judges.

5. Save as otherwise provided in the Customs Act,162, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.

9.Understanding "substantial question of law"

A Full Bench of the Supreme Court, in Santosh Hazari v Purushottam ¹, held:

"the word 'substantial' as qualifying 'question of law', means having substance, essential, real, of sound worth, important or considerable. It noted that the expression 'substantial question of law' has not been suffixed by the words 'of general importance' as has been done in other provisions such as Section 109 of the Code of Civil Procedure or Art 133 (1)(a) of the Constitution, and therefore, the apex Court held that the substantial question of law on which a second appeal shall be heard need not necessarily be a substantial question of law of general importance."

Hon'ble Court further observed:

To be 'substantial', a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, in so far as the rights of the parties before it are concerned.

The Supreme Court and several High Courts have also laid down that any of the following five tests can be applied to determine whether a substantial question of law is involved. ² A question is a substantial question of law if:

(i) it directly or indirectly affects substantial rights of the parties; or

(ii) it is of general public importance;

(iii) it is an open question in the sense that the issue has not been settled by a pronouncement of the Supreme Court;

(iv) it is not free from difficulty; or

(v) it calls for a discussion for alternate view.

These tests are only illustrative and in no way exhaustive of the powers of the High Court to entertain an appeal under this section; it is desirable not to place a restricted meaning to such a provision. ³ The High Court must make an effort to distinguish the issues between questions of law and substantial questions of law. ⁴ Further, explaining the meaning, the Supreme Court in Vijay Kumar Talwar v CIT ⁵ set out a substantial question of law would inter alia arise when:

1. The findings are based on no evidence;

2. While arriving at the said finding, relevant admissible evidence has not been taken into consideration;

3. While arriving at the said finding, inadmissible evidences have been taken into consideration;

4. Legal principles have not been applied in appreciating the evidence;

5. When the evidence has been misread.

The Supreme Court in Santosh Hazari 's case additionally held that "as a matter of law if the appraisal of the evidence by the trial court suffers from a material irregularity or is based on inadmissible evidence or on conjectures or surmises, the appellate court is en-titled to interfere with the finding of fact".

The Calcutta High Court in CIT v Agarwal Hardware ⁶ held that "a substantial question of law means a question of law which affects the substance of the case, and further held that the order of the tribunal which is not supported by facts is perverse, and the point of perversity can be taken up in an appeal under this section." ⁷

In Kejriwal Enterprises vs CIT ⁸ it was held that

"When an authority draws a conclusion which cannot be drawn by any reasonable person or authority on the disclosed state of facts, then a perverse decision is entered and a perverse decision is wrong in law. Therefore, the court has power under this section to set aside the finding of the tribunal which is perverse."

It was held in CIT VS Nova Promoters ⁹ that the High Court can also set aside the finding of fact by the tribunal if they are based on irrelevant material or have been entered by ignoring the relevant material. ¹⁰

In CIT vs BL Passi ¹¹, the Delhi High Court has summed up the legal position by observing:

"a finding on a question of fact can be challenged as erroneous in law where there is no evidence to support it or it is based on material which is irrelevant or partly relevant and partly irrelevant or it is based on conjectures or surmises or partly on these and partly on evidence or the finding is so perverse or unreasonable that no person acting judicially and properly instructed on law could have arrived at it."

However, the court generally would not interfere with the tribunal's finding of fact. Similarly, sufficiency or adequacy of evidence necessary for reaching the conclusion of fact by the tribunal does not give rise to a question of law. ¹²

10.Appeal to the Supreme Court-Section 130E, 130F

1. An appeal shall lie to the Supreme Court from -

(a) any judgment of the High Court delivered­

(i) in an appeal made under section 130; or

(iii) on a reference made under section 130A, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or

(b) any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment.

2. The provisions of the Code of Civil Procedure, 1908, relating to appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under section 130E as they apply in the case of appeals from decrees of a High Court.

[The views expressed are strictly personal.]

¹ 251 ITR 84

²Arvind P Datar, Kanga & Palkivala-The Law & Practice of Income Tax-Vol-II, 2765, (Tenth edition, Lexis Nexis 2014)

³ibid

⁴ibid

⁵330 ITR 1 - 2010-TIOL-106-SC-IT

⁶248 ITR 155

⁷Supra note 2, pg 2766

⁸260 ITR 341

⁹342 ITR 169 - 2012-TIOL-148-HC-DEL-IT

¹⁰Arvind P Datar, Kanga & Palkivala-The Law & Practice of Income Tax-Vol-II, 2766, (Tenth edition, Lexis Nexis 2014)

¹¹254 ITR 225

¹² Arvind P Datar, Kanga & Palkivala-The Law & Practice of Income Tax-Vol-II, 2766, (Tenth edition, Lexis Nexis 2014)