CHANDNA IMPEX PVT. LIMITEDversusCOMMISSIONER OF CUSTOMS, NEW DELHI

                        (2011] 8 S.C.R. 1102


A                 CHANDNA IMPEX PVT. LIMITED
                                   V.
          COMMISSIONER OF CUSTOMS, NEW DELHI
               (Civil Appeal No. 1383 of 2010)
                            JULY 06, 2011
B
                 [D.K. JAIN AND H.L. DATTU, JJ.]

          Customs Act, 1962 - s.130 - Statutory appeal against
     the order of Customs Appellate Tribunal - Held: While
C dealing with an appeal under s. 130, the High Court must
     examine each question formulated in the appeal with
     reference to the material taken into consideration by the
  .· Tribunal in support of its finding thereon and give its reasons
     for holding that question is not a substantial question of Jaw.
D
          The appellant, a body corporate, are importers of
     certain goods viz. plywood, MDF laminated boards and
     veneers etc. It was alleged that certain goods imported
     by the appellant had been under-valued. A show cause
E notice was issued to the appellant by the Directorate of
     Revenue Intelligence (ORI) under Section 124 of the
     Customs Act, 1962. Subsequently, the Commissioner of
     Customs (Import & General), ordered the confiscation of
     goods under Section 111 of the Act; confirmed demand
     under Section 28AB of the Act, and also levied a penalty
F under Section 114A of the Act on the appellant.

       The appellant preferred an appeal to the Customs
  Excise and Service Tax Appellate Tribunal, which was
  dismissed. Thereafter the appellant filed an appeal under
G Section 130 of the Act before the High Court raising as
  many as 7 questions, stated to be substantial questions
  of law, for the opinion of the High Court. However, the
  High Court dismissed the appeal by a short order holding
  that no substantial question of law arose from the order
H                           1102
 CHANDNA IMPEX PVT. LIMITED v. COMMISSIONER1103 · -"·.
          OF CUSTOMS, NEW DELHI

of the Appellate Tribunal, for its consideration.                A
      In the instant appeal filed by appellant under Section
 130-E of the Act, the appellant, while assailing the order
·passed by the High Court, urged that the High Court had
 committed a manifest error of law in dismissing the
                                                              B
 Statutory appeal in /imine by a non-speaking order and
 therefore, the case deserves to be remitted back to the
 High Court for decision on merits of the questions
 proposed in the appeal. The appellant contended that all
 the questions, raised by the appellant in their appeal were C
 substantial questions of law and therefore, the High
 Court ought to have examined each of the questions so
 framed instead of dismissing the appeal by a cryptic
 order, by merely observing that the Tribunal had dealt
 with each and every argument urged on behalf of the
 appellant and that they were in agreement with the D
 reasons recorded by the Tribunal. Relying on a recent
 decision of this Court in Commissioner of Customs v.
 Sayed Ali, the appellant asserted that in any event one of ·
 the questions: "whether the Addi. Director General in ORI
 is "proper officer" within the meaning of section 28 of the E
 Act" is a substantial question of law, which should have
 been examined by the High Court.

     Partly allowing the appeal, the Court

       HELD:1.1. There is some merit in the submission of        F
 the appellant that while dealing with an appeal under
 Section 130 of the Customs Act, 1962, the High Court
 should have examined each question formulated in the
·appeal with reference to the material taken into
 consideration by the Tribunal in support of its finding         G
 thereon and given its reasons for holding that the
 question is not a substantial question of law. Every
 litigant, who approaches the court for_ relief is entitled to
 know the reason for acceptance or rejection of his prayer,
                                                                 H
    1104     SUPREME COURT REPORTS             (2011] 8 S.C.R.


A particularly when either of the parties to the lis has a right
  of further appeal. Unless the litigant is made aware of the
  reasons which weighed with the court in denying him the
  relief prayed for, the remedy of appeal will not be
  meaningful. It is that reasoning, which can be subjected
B to examination at the higher forums. [Para 8) [1110-A-D]

        1.2. It was expected of the High Court to record some
  reason, at least briefly, in support of its opinion that the
  order of the Tribunal did not give rise to any substantial
  question of law. In this behalf, the language of Section
C 130 of the Act is also significant. It contemplates that on
  filing of an appeal under the said Section either by the
  Commissioner of Customs or the other party aggrieved,
  the High Court has to record its satisfaction as to whether
  or not "the case involves a substantial question of law".
D In the instant case, it is clear from the order of the High
  Court that it does not meet the requirement of stating
  reasons for coming to the conclusion that the order of
  the Tribunal did not give rise to any substantial question
  oflaw including the question "whether the Addi. Director
E General in ORI is "proper officer" within the meaning of
  section 28 of the Act". [Para 8) [1110-G-H; 1111-A-B]

        State of Orissa v. Dhaniram Luhar (2004) 5 SCC 568:
    2004 (2) SCR 68 - relied on.
F     2. The appellant had framed in their appeal before the
  High Court, as many as seven questions as substantial
  questions of law. It is manifest from a bare reading of the
  six questions, that none of the questions can be said to
  be a substantial question of law, in as much as they do
G not proceed on the premise that the decision of the
  Tribunal on the issues raised therein is perverse, in the
  sense that the findings of fact, arrived at by the Tribunal
  are not based on the material placed before it or that the
  relevant material has bee_n ignored by it. It is trite law that
H
CHANDNA IMPEX PVT. LIMITED v. COMMISSIONER 1105
         OF CUSTOMS, NEW DELHI

a finding of fact may give rise to a substantial question      A
of law, inter-alia, in the event the findings are based on
no evidence and/or while arriving at the said finding,
relevant admissible evidence has not been taken into
consideration or inadmissible evidence has been taken
into consideration or legal principles have not been           B·
applied in appreciating the evidence, or when the
evidence has been misread. [Para 9) [1111-D-G]
     West Bengal Electricity Regulatory Commission v. CESC
LTD. (2002) 8 SCC 715; Metroark Ltd. v. Commissioner of
Central Excise, Calcutta (2004) 12 SCC 505; Commissioner       C
of Customs (Preventive) v. Vijay Dasharath Patel (2007) 4
SCC 118: 2007 (3) SCR 738; Narendra Gopal Vidyarthi v.
Rajat Vidyarthi (2009) 3 SCC 287: 2008 (16) SCR 961 and
Hero Vinoth (Minor) v. Seshammal (2006) 5 SCC 545: 2006
(2) Suppl. SCR 79 - relied on.                                 D
    Sir Chunilal V. Mehta & Sons Ltd. v. CenturySpinning
& Manufacturing Co. Ltd. AIR 1962 SC 1314: 1962 Suppl.
SCR 549 - referred to.
     3. The order of the Tribunal, wherein the material        E
referred to by the Commissioner in his order has been
extensively analysed, does not give rise to the five
questions, proposed by the appellant in this appeal, as
questions of law, much less substantial questions of law.
None of the said questions seek to challenge the findings      F
of the Tribunal or that of the Commissioner, on the issue
raised in the questions, as perverse. It is not within the
domain.of the High Court, in appeal under Section 130
of the Act, to investigate the grounds on which the
findings were arrived at by the Tribunal, the final court of   G
fact. In that view of the matter, the Court did not consider
it expedient to remit the case to the High Court, in so far
as these five questions are concerned. [Para 11] [1112-
F-G; 1113-A]
                                                               H
    1106     SUPREME COURT REPORTS              [2011) 8 S.C.R

A       4. The issue relating to the jurisdiction of the ORI to
    issue a show cause notice under Section 28 of the Act
    as a "proper officer" is a substantial question of law, and
    requires to be examined afresh particularly in light of the
    decision of this Court in Sayed Ali & Anr., where the
. B question as to who is a "proper officer" in terms of
    Section 2(34) of the Act has been examined. [Para 13)
    [1113-D-F]
       Commissioner of Customs v. Sayed Ali & Anr. (2011) 3
    sec 537 - referred to.
c
                        Case Law Reference:
        (2011) 3 sec 537          referred to    Para 6, 13, 14
        2004 (2) SCR 68           relied on      Para 8
D       (2002) 8 sec 115          relied on      Para 9
        (2004) 12 sec 505         relied on      Para 9
        2007 (3) SCR 738          relied on      Para 9
        2008 (16) SCR 961         relied on      Para 9
E
        2006 (2) Suppl. SCR 79 relied on         Para 10
        1962 Suppl. SCR 549       referred to    Para 10
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
F   1383 of 2010.
        From the Judgment & Order dated 2.9.2009 of the High
    Court of Delhi at New Delhi in C.U.S.A.A. No.7 of 2009.
     A.K. Sanghi, Bindu Saxena, Aparajita Swarup, Shailendra
G Swarup for the Appellant.
        Bishwajit Bhattacharya, ASG, Harish Chander, T.A. Khan,
    B. Krishna Prasad for the Respondent.
        The Judgment of the Court was delivered by
H       D.K. JAIN, J. 1. Challenge in this appeal under Section
 CHANDNA IMPEX PVT. LIMITED v. COMMISSIONER 1107
          OF CUSTOMS, NEW DELHI

130-E of the Customs Act, 1962 (for short "the Act"), by the        A
importer, is to the final order dated 2nd September, 2009,
passed by the High Court of Delhi at New Delhi in CUSAA No.
712009. By the impugned order the High Court has dismissed
appellant's appeal under Section 130 of the Act on the ground
that no substantial question of law arises from the order of the    B
Customs Excise and Service Tax Appellate Tribunal (for short
"the Tribunal") in appeal Nos.C/920-22/2005, for its
consideration.

     2. To appreciate the controversy involved a brief reference    C
to the facts, as found by the Tribunal, would be necessary.
These are:

      The appella·nt, a body corporate, is engaged in the
 business of import of plywood, inlays, MDF laminated boards
 and veneer sheets etc. On 22nd May, 2000, one of the directors     D
 of the appellant, namely, Rakesh Chandna, was apprehended
 by the officers of the Customs department at Calcutta Airport.
 He was found in possession of US $45,000/- and Indian
 currency of Rs. 9,000/-, alongwith several incriminating
 documents, which fuelled further follow up action by the           E
 Directorate of Revenue Intelligence (for short "the ORI"). On
 23rd May, 2000, in search operations, ·certain goods were
 seized from the premises of the appellant; as no documentary
"evidence was allegedly produced for their legal acquisition. The
 value of the goods so seized was determined at Rs. 24,26,234/      F


      3. Statements of Rakesh Chandna and one Sanjeev
Murgai, Manager of the appellant and also of some other
persons were recorded, which revealed that the goods
imported by the appellant viz. plywood, MDF boards and· G
veneers etc. had been under-valued. Based on the incriminating
documents recovered during the course of investigation, a
show cause notice dated 16th May, 2001 was issued to the
appellant by the ORI under Section 124 of the Act, detailing the
Bills of Entry, wherein there was mis-declaration of quantity/ H
      1108      SUPREME COURT REPORTS               [2011) 8 S.C.R.


 A description and value of the goods. The appellant was asked
   to show cause as to why duty, amounting to Rs. 3,95,58,229/-
   , be not recovered; goods be not confiscated and a penalty be
   not levied on them. Taking into consideration the explanation
   furnished on behalf of the appellant in their written submissions
 B and the documentary evidence available on record, including
   the fax messages sent by Rakesh Chandna to his overseas
   suppliers, the Commissioner of Customs (Import & General),
   vide order dated 17th September, 2004, ordered the
   confiscation of goods valued at Rs. 3,04,98,365/- under Section
 c 111 of the Act; confirmed the demand, amounting to Rs.
   1,45,85,446/- under Section 28AB of the Act, besides levying
   a penalty, amounting to Rs. 1,45,85,446/- under Section 114A
   of the Act on the appellant. The Commissioner also levied
   personal penalty of '10 lakh and '5 lakh on Rakesh Chandna
   and Sanjeev Murgai respectively.
 0
            4. Being aggrieved, the appellant preferred an appeal to
      .the Tribunal, which was dismissed vide order dated 26th-27th
      June, 2007.

 E         5. 11aving failed in their appeal before the Tribunal, as
      aforestated, the appellant filed an appeal under Section 130
      of the Act before the High Court raising as many as 7 questions,
      stated to be substantial questions of law, for the opinion of the
      High Court. One of the questions so framed in para 3 of the
. F   application was as follows:

          "(a)-Whether the Addi. Director General in Directorate of
          Revenue Intelligence is "proper officer" within the meaning
          of section 28 of the Act?"

 G        However, as already stated above, the High Court has
      dismissed the appeal of the appellant by a short order, which
      reads thus:

          "We have heard the learned counsel at length and have

 H
CHANDNA IMPEX PVT. LIMITED v. COMMISSIONER 1109
   OF CUSTOMS, NEW DELHI [D.K. JAIN, J.]

      also gone through the orders passed by the Tribunal. The        A·
      arguments before us are the same, as it was raised before
      the Tribunal. We find from the orders of the Tribunal that
      each and every argument has been dealt in detail and we
      agree with the reasons recorded by the Tribunal.
                                                                      B
      Therefore, we are of the opinion that there is no substantial
      question of law for our consideration in this case, which is
      accordingly dismissed."

     6. Mr. AK. Sanghi, learned senior counsel appearing for
the appellant, while assailing the order passed by the High           C
Court, strenuously urged that the High Court has committed a
manifest error of law in dismissing the Statutory appeal in
limine by a non-speaking order and therefore, the case
deserves to be remitted back to the High Court for decision
on merits of the questions proposed in the appeal. Learned            D
counsel argued that all the questions, raised by the appellant
in their appeal are substantial questions of law and therefore,
the High Court ought to have examined each one of the
questions so framed instead of dismissing the appeal by a
cryptic order, by merely observing that the Tribunal has dealt        E
with each and every argument urged on behalf of the appellant
and they were in agreement with the reasons recorded by the
Tribunal. Relying on the recent decision of this Court in
 Commissioner of Customs Vs. Sayed Ali & Anr.1, the learned
counsel asserted that in any event the question extracted in          F
para 5 (supra) is a substantial question of law, which should
have been examined by the High Court.

     7. Per contra, Mr .. Bishwajit Bhattacharya, learned
Additional Solicitor General of India, submitted that the
impugned order deserves to be affirmed as the questions now           G
proposed in this appeal are pure questions of facts. Learned
counsel submitted that in so far as the question of jurisdiction
of the adjudicating authority is concerned, no such issue has
been raised in the present appeal.
1.   c2011) 3 sec 537.
      1110     SUPREME COURT REPORTS                [2011] 8 S.C.R.


· A      8. Having bestowed our anxious consideration on the facts
   at hand, we are of the opinion that there is some merit in the
   submission of learned counsel for the appellant that while
   dealing with an appeal under Section 130 of the Act, the High
   Court should have examined each question formulated in the
 B appeal with reference to the material taken into consideration
   by the Tribunal in support of its finding thereon and given its
   reasons for holding that question is not a substantial question
   of law. It needs to be emphasised that every litigant, who
   approaches the court for relief is entitled to know the reason
 c for acceptance or rejection of his prayer, particularly when either
   of the parties to the lis has a right of further appeal. Unless the
   litigant is made aware of the reasons which weighed with the
   court in denying him the relief prayed for, the remedy of appeal
   will not be meaningful. It is that reasoning, which can be
   subjected to examination at the higher forums. In State of Orissa
 0
   Vs. Dhaniram Luhafl this Court, while reiterating that "reason
   is the heart beat of every conclusion and without the same, it
   becomes lifeless", observed thus:

         "8 ....... Right to reason is an indispensable part of a sound
 E       judicial system; reasons at least sufficient to indicate an
         application of mind to the matter before court. Another
         rationale is that the affected party can know why the
         decision has gone against him. One of the salutary
         requirements of natural justice is spelling out reasons for
 F       the order made; ...... ."

        It was thus, expected of the High Court to record some
   reason, at least briefly, in support of its opinion that the order
   of the Tribunal did not give rise to any substantial question of
 G law. In this behalf, the language of Section 130 of the Act is also
   significant. It contemplates that on filing of an appeal under the
   said Section either by the Commissioner of Customs or the
   other party aggrieved, the High Court has to record its
   satisfaction as to whether or not "the case involves a substantial
 H 2. (2004) 5 sec sea.
 CHANDNA IMPEX PVT. LIMITED v. COMMISSIONER 1111
    OF CUSTOMS, NEW DELHI [D.K. JAIN, J.]

question of law". In the instant case, it is clear from the afore-   A
extracted order of the High Co1.1rt that it does not meet the
requirement of stating reasons for, coming to the conclusion that
the order of the. Tribunal did_, not give rise to any substantial
question of law including the question extracted in para 5 above.
Nevertheless, the next question for consideration is whether,        B
having regard to the nature of the issues raised by the appellant
in their appeal before the Tribunal, would it be worthwhile to
remit the case back to the High Court to decide, in the first
instance, question as to whether ornot the questions proposed
by the appellant in their application under Section 130 of the       c
Act are substantial questions of law arising from the order of
the Tribunal, before embarking upon their consideration on
,merits?
    · 9. As stated above, the appellant had framed in their
appeal before the High Court, as many as seven questions as D
substantial questions of law. It is manifest from a bare reading
of the six questions, viz. (b) to (g), repeated in this appeal, that
none of the questions can be said to be a substantial question
of raw, in as much as they do not proceed on the premise that
the decision of the Tribunal on the issues raised therein is E
perverse, in the sense that the findings of fact, arrived at by the
Tribunal are nt>t based on the material placed before it or that
the relevant material has been ignored by it. It is trite law that a
finding of fact may give rise to a substantial question of law,
inter-alia, in the event the findings are based on no evidence F
and/or while arriving at the said finding, relevant admissible
evidence has not been taken into consideration or inadmissible
evidence has been taken into consideration or legal principles
have not been applied in appreciating the evidence, or when
the evidence has been misread. (Ref: West Bengal Electricity G
Regulatory Commission Vs. CESC LTD. 3;-Metroark Ltd. Vs.
Commissioner of Central Excise, Calcutta 4;- Commissioner

3.   c2002) s sec 115.
4.   (2004) 12 sec 505.                                              H
           1112        SUPREME COURT REPORTS                [2011} 8 S.C.R.


       A of Customs (Preventive) Vs. Vijay, Dasharath Pate/5 &
           Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi6)

              10. In Hero Vinoth (Minor) Vs. Seshammaf, referring to
         the Constitution Bench decision of this Court in Sir Chunilal
       B V. Mehta & Sons Ltd. Vs. Century Spinning & Manufacturing
         Co. Ltd. 8 as also a number of other decisions on the point, this
         Court culled out three principles for determining whether a
         question of law raised in a case is substantial. One of the
         principles so summarised, is :

       C          "The general rule is that High Court will not interfere with
                  the concurrent findings of the courts below. But it is not an
                · absolute rule. Some of the well-recognized exceptions are
                  where (i) the courts below have ignored material evidence
                  or acted on no evidence; (ii) the courts have drawn wrong
       D          inferences from proved facts by applying the law
                  erroneously; or (iii) the courts have wrongly cast the burden
                  of proof. When we refer to "decision based on no
                  evidence", it not only refers to cases where there is a total
                  dearth of evidence, but also refers to any case, where the
       E          evidence, taken as a whole, is not reasonably capable of
                  supporting the finding".

              11. Tested on the touchstone of the said legal principle,
         we are of the opinion that the order of the Tribunal, wherein the
         material referred to by the Commissioner in his order has been
       F extensively analysed, does not give rise to the five questions,
         proposed by the appellant in this appeal, as questions of law,
         much l~ss substantial questions of law. It would bear repetition
         that none of the said questions seek to challenge the findings
         of the Tribunal or that of the Commissioner, on the issue raised
       G in the questions, as perverse. It is not within the domain of the

           5.   c2001) 4 sec 118.
           6.   (2009) 3 sec 287.
           7.   c2006) 5 sec 545.
       H 8. AIR 1962 SC 1314.

                            '*':.~
:..~
CHANDNA IMPEX PVT. LIMITED v. COMMISSIONER 1113
  · OF CUSTOMS, NEW DELHI [D.K. JAIN, J.]

High Court, in appeal under Section 130 of the Act, to                  A
investigate the grounds on which the findings were arrived at
by the Tribunal, the final court of fact. In that view of the matter,
w~ do not consider it expedient to remit the case to the High
Court, in so far as these five questions are concerned.
                                                                        B
      12. However, the question which still survives for
consideration is that the appellant having raised the question
of jurisdiction of the ORI issuing the show cause notice as also
the Commissioner of Customs passing the order of
adjudication, in its appeal before the High Court and the High          C
Court having failed to apply its mind as to whether or not it was
a substantial question of law, the appellant is barred from
raising the said issue before us in this appeal.

     13. Having carefully gone through the appeal, in particular
ground (f), wherein the jurisdiction of the ORI to issue a show         D
cause notice under Section 28 of the Act as a "proper officer"
has been specifically questioned, we are of the view tliat the
said issue is a substantial question of law, and requires to be
examined afresh particularly in light of the decision of this Court
in Sayed Ali & Anr. (supra), where the question as to who is a          E
"proper officer" in terms of Section 2(34) of the Act has been
examined.

     14. Having so held, again the residual question would be
whether, in the first instance, the High Court should be asked
to .examine the question relating to the jurisdiction of the            F
adjudicating authority or to remit the matter to the Tribunal to
reconsider the issue in light of the recent decision of this Court
in Sayed Ali &Anr. (supra), wherein the decision of the Tribunal
in Konia Trading Co. Vs. Commissioner Of Customs, Jaipu~.
relied upon by the Tribunal in the present case, has been               G
considered. We are of .the opinion that in order to avoid
prolongation in the life of lis between the appellant and the
revenue, it would ·be expedient to follow the latter option,

9.   (2004) 170 E.L.T. 51 (Tri-LB)                                      H
    1114      SUPREME CUUK 1 r<i:PORTS            [2011) 8 S.C.R.


A because ultimately the High Court may also like to have the
  views of Tribunal on the impact of the said decision of this Court
  on the facts of the present case, since the said decision, was
  not available to the Tribunal when the appeal of the appellant
  was decided by it.
B
       15. Consequently, the appeal is partly allowed to the extent
  indicated above and the decision of the Tribunal on the question
  of the jurisdiction of the adjudicating authority, which stood
  affirmed by the dismissal of appellant's appeal by the High
  Court, is set aside. The case is remanded to the Tribunal for
C fresh adjudication, confined to the question of jurisdiction of the
  adjudicating authority to pass order dated 17th September,
  2004, after affording adequate opportunity of hearing to both
  the parties.

D        16. However, in the facts and circumstances of the case,
    there shall be no order as to costs.

    B.B.B.                                   Appeal partly allowed.