Holding

The High Court was correct in refusing to refer the matter under Section 130A because the Revenue did not specifically challenge the Tribunal’s factual findings as perverse, and thus no question of law arose.

Summary

The importers, including Stoneman Marble Industries, were found to have imported rough marble blocks without the required licence and with mis‑declarations, leading to confiscation of the goods under Section 111(d) of the Customs Act, 1962. The Customs, Excise and Gold (Control) Appellate Tribunal reduced the redemption fine and penalty in each case, relying on a prior decision in Stonemann Marble Industries where similar facts were found. The Revenue (Commissioner of Customs) sought a reference to the High Court under Section 130A of the Customs Tariff Act, 1975, alleging that the Tribunal erred in law by reducing the fines without examining the facts. The High Court rejected the application, holding that no question of law arose because the Revenue did not specifically challenge the Tribunal’s factual findings as perverse. The Supreme Court affirmed this view, stating that a question of law under Section 130A arises only when a factual finding is contested as perverse, which the Revenue failed to do, and therefore dismissed the appeals.

Issues considered

Whether the Tribunal's reduction of redemption fine and penalty, based on a finding of fact that the cases were similar to Stonemann Marble Industries, gives rise to a question of law under Section 130A of the Customs Tariff Act, 1975.
Whether a standard formula can be laid down for the computation of redemption fine and penalty under Sections 111(d), 112(a) and 125 of the Customs Act, 1962.
Whether the Revenue discharged its burden under Section 130A by specifically challenging the Tribunal's factual findings as perverse.

Legislation cited

Customs Act, 1962s. 111(d), s. 112(a), s. 125
Customs Tariff Act, 1975s. 130A
Income Tax Act, 1961s. 256

Subjects

Customs lawRedemption finePenaltySection 130AReference to High CourtFact findingPerverse findingTribunal discretionImport regulations

Judgment

(2011] 1 S.C.R. 545

COMMISSIONER OF CUSTOMS (IMPORT} A
\/.
....
---< STONEMAN MARBLE INDUSTRIES & ORS.
(Civil Appeal Nos. 4371-4383 of 2004 etc.}
JANUARY 21, 2011
8
[D.K. JAIN AND A.K. PATNAIK, JJ.)

CUSTOMS TARIFF ACT, 1975:
~
... Section 130-A - Application by Revenue - Held: It is for c
the party applying for reference to clearly state the question
of law which he seeks to be referred -In the instant case, the
Revenue did not assail the Tribunal's finding to the effect that
the facts in the instant case were similar to those in the cited
judgment - Unless the correctness of facts, on the basis D
wherein an inference is drawn by the Tribunal, is put in issue,
~ a question of law does not arise from its order - Revenue did
not discharge its burden u/s 130-A in as much as it did not
specifically challenge the Tribunal's finding as being perverse
- Therefore, the High Court was justified in declining to issue
E
direction to the Tribunal to make a reference u/s 130A.

Section 111 (d), 112 and 125 - Confiscation of imported
goods - Redemption fine and penalty - HELD: A standard
'1---
formula cannot be laid down for imposition of redemption. fine
and penalty under the provisions of the Act and each case F
has to be examined on its own facts but when a final fact
finding body returns a finding that the facts obtaining in each
of the cases before it are similar,· and such finding is not
questioned, levy of redemption fine or penalty uniformly in all
such cases cannot be construed as laying down an absolute G
.. -< formula .

The respondents, engaged in the business of import
of rough marble blocks, classifiable under sub-heading
545 H
546 SUPREME COURT REPORTS [2011) 1 S.C.R.

A 1515.12 of the Customs Tariff Act, 1975. The goods
imparted by them were confiscated u/s 111 (d) of the Act. ~
They were given option to redeem the goods on payment ...
of redemption fine, which was fixed adopting the margin
of profit as the basis, u/s 125, with penalty levied u/s
B 112(a) of The Act. The appeals of importers were partly
allowed by the Customs, Excise and Gold(Control)
Appellate Tribunal, observing that the facts in each case
were similar to those in Mis Stonemann Marble Industries
vs. Commissioner of Customs; decided on 30.1.2002, >-
c and, therefore, reduced the redemption fine and penalty ...
to 20% and 5% of the CIF value, respectively. The
Revenue filed an application u/s 130 A of the Act before
the High Court stating the questions for reference by the ,.
Tribunal to the High Court. The High Court rejected the
applications on the ground that rio question of law arose
D
from orders of the Tribunal. Aggrieved, Revenue filed the
...I..
appeals.

Dismissing the appeals, the Court

·E HELD:
•
1.1 On a bare perusal of the provisions of s. 130 A of
the Customs Tariff Act, 1975, it is manifest that it is for the
party applying for reference to clearly state the question ~
of law which he seeks to be referred to the High Court
F and then it is for the High Court to consider whether any
such question of law stated in the application for
reference before it should be directed to be referred. In
the instant cases, it is manifest from the format of the
questions proposed by the Revenue, for reference t0- the
G High Court that the Revenue did not assail the Tribunal's '>- .
finding to the effect that the facts in the instant cases
were similar to those in Mis. Stonemann Marble
Industries. It is a trite proposition that unless the
correctness of facts, on the basis whereof an inference
!:i
COMMISSIONER OF CUSTOMS (IMPORT) v. 547
,\
STONEMAN MARBLE INDUSTRIES

is drawn by the Tribunal, is put in issue, a question of law A
does not arise from its order. Therefore, the High Court
has rightly held that the questions raised by the Revenue
for reference could not be said to be questions of law.
The Revenue did not specifically challenge the finding of
the Tribunal that the facts in the instant cases were B
similar to those in Mis. Stonemann Marble Industries,
which was essentially a finding of fact. [paras 11 and 15]
-4_ [553-B-0; 555-B-C]

Beer Sain Vs. Commissioner of Customs (/CD) 2007
(15) SCC 362; Dhirajlal Girdhari/a/ Vs. Commissioner of C
·Income Tax, Bombay AIR 1955 SC 271; K. Ravindranathan
Nair Vs. Commissioner of Income Tax, Emakulam 2000 (5)
=
Suppl. SCR 244 2001 (1) SCC 135; Sudarshan Silks &
Sarees Vs. Commissioner of Income Tax, Kamataka 2008 (6)
=
SCR 456 2008 (12) sec 458 - relied on. D

1.2 Although, a standard formula cannot be laid
down for imposition of redemption fine and penalty under
the provisions of the Act and each case has to be
examined on its own facts but when a final fact finding E
body returns a finding that the facts obtaining in each of
the cases before it are similar, and such finding is not
questioned, levy of redemption fine or penalty uniformly
in au such cases cannot be construed as laying down an
absolute form.ula, which is the case at hand. The Revenue F
did not discharge its burden uls 130A of the Act in as .
much as it did not specifically challenge the Tribunal's
finding as being perverse. In this view of the matter, the
High Court.was justified in declining to issue direction to
the Tribunal to make a reference uls 130A of the Act. [para G
. -< 15] [555-C-E]
· Case Law Reference:
2001 (15) sec 362 relied on para 11
AIR 1955 SC 271 relied on para 12 H
548 SUPREME COURT REPORTS [2011] 1 S.C.R
r
A 2000 (5) Suppl. SCR 244 relied on para 13
2008 (6) SCR 456 relied on para 14
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4371-4383 of 2004.
B -
From the Judgment & Order dated 03.07.2003 of the High
Court of Judicature of Bombay in Custom Applications No. 28,
29, 31, 34 of 2002, 2, 3, 4, 5, 6, 7, 8, 9, 10 of 2003.

WITH
c
C.A. Nos. 840, 841, 842, 843, 844, 845 of 2011, 4384-4386
of 200~. 2904, 2860, 3531, 4042, 4135, 4136 of 2006 & 229,
348 of 2007.

0 RP. Bhat, P. Parmeswaran, B. Sunita Rao, Rashmi
Malhotra, B, Krishna Prasad for the Appellant.

Dr. Kailash Chand, V.M. Doiphode, Rajesh Kumar, RK.
Srivastava, P.N. Srivastava, Krishnakumar RS. Sanjay R
Hedge, Anil Mishra, Shamim Haider, Aditya Jain, Rupesh
E Kumar, Amarjeet Singh, for the Respondents.

The Judgment of the Court was delivered by

D.K. JAIN, J.: 1. Delay in SLP (C) No. 11177 of 2006,
F SLP (C) No. 11180 of 2006, SLP (C) No. 11181 of 2006, SLP
(C) No. 11182 of 2006, SLP (C) No. 12641 of 2006 and SLP
(C) No. 14991 of 2006 is condoned and Leave granted.

. 2. Challenge in this batch of appeals is to the orders

I
passed by the High Court of Bombay dated 3rd July, 2003 in
G Customs Application Nos. 27-29, 31, 34, 36 of 2002 and 2-10
of 2003; 24th March, 2005 in Customs Application Nos.17-18 )-- ·
of 2003; 30th March, 2005 in Customs Application Nos.26 and
29 of 2003; 16th March, 2005 in Customs Application Nos. 11-
14 of 2003; 6th April, 2005 in Customs Application Nos. 31-
H 33 and 35 of 2003 and 23rd March, 2005 in Customs

' '
COMMISSIONER OF CUSTOMS (IMPORT) v. 549
STONEMAN MARBLE INDUSTRIES [D.K. JAIN, J.]
Application Nos. 15-16\
of 2003.
.
By the impugned orders, the A
High Court has rejected the applications filed by the Revenue
~ under Section 130A of the CustOms Act, 1962 (for short "the
. Act") on the ground that no question of law arose from the
orders of the Customs, Excise and Gold (Control) Appellate
Tribunal (for short "the Tribunal"). B
3. As common questions of law and facts are involved. in
all the appeals, these are being disposed of by this common
.{ judgment. However, to appreciate the controversy involved, a
brief reference to the facts in C.A. Nos.4371-4383 of 2004, as
being illustrative, would suffice. c
The respondents-importers were engaged in the business
of import· of rough marble blocks, classifiable under sub-
heading 2'515.12 of the Customs Tariff Act, 1975, from various
countries such as Italy, Iran, Turkey, Indonesia, Spain, China, D
Greece etc. in the year 1999. These goods were covered by
.........
Exim Code No. 25151200 of ITC [HS] Classification of Export
& Import Items 1997-2002, and required a specific licence for
importation under the EXIM Policy-1-997-2002. Admittedly,
when the imports were made all the respondents, in the 'instant E
cases, did not possess the licence as required under the EXIM
Policy. Additionally, in some cases, the quantity and price of
the imported goods was mis-declared in the bills of entry.
,...,._
4. The goods imported by the respondents were
confiscated under Section 111 (d) of the Act. However, the F
importers were given an option to redeem the confiscated
goods on payment of redemption fine, which was fixed,
adopting the margin of profit as the basis, under Section 125
of the Act; and penalty levied under Section 112(a) of the Act.
G
• -< 5. Aggrieved, the importers approached the Tribunal in
appeal. The Tribunal, in each case, partly allowed the appeal,
observing that the facts in each case were similar to those in
Mis. Stonemann Marble Industries Vs.· Commissioner of
Customs (Order No. Cl/424-25/WZB/2002 dated 30th January, H
550 SUPREME COURT REPORTS [2011] 1 S.C;R.

A 2002), and therefore, the redemption fine and penalty was
reduced to 20% and 5% of the CIF value respectively.

6. Being aggrieved, the Revenue preferred an application
under Section 130A of the Act, stating that the following
questions of law arose out of the orders of the Tribunal:
8
"1. Whether on the facts and in the circumstances of the
case the Tri~unal was right in law reducing the redemption
fine imposed under Section 125 of the Customs Act, 1962
from Rs.1.01 Crores to Rs. 25,00,000/- and penalty
c imposed u/s. 112[a] from Rs. 29,40,000/- to Rs. 7,50,000/
- in Appeal No. C/1030/01-Mum and in reducing the
redemption fine from Rs. 42,84,000/- to Rs. 7,00,000/- and
penalty from Rs. 4,00,000/- to Rs. 2,00,000/- in Appeal No.
C/1042/201-Mum by following its earlier orders in the case
D of Stonemann Marble Industries.

2. Whether on the facts and in the circumstances of the
case the Tribunal was right in law in intervening with the
redemption fines of Rs. 1.01 crores and Rs. 42,84,000/-
imposed under Section 125 by the Commissioner of
E
Customs, Jawahar Customs House, Nhava Sheva and
reducing it to Rs. 25,00,000/- and Rs. 7,00,000/- and with
penalties of Rs. 29,40,000/- & Rs. 4,00,000/- imposed
under Section 112[a] by the Commissioner of Customs,
Jawahar Customs House, Nhava Sheva & reducing them
F to Rs. 7,50,000/- and Rs. 2,00,000/- respectively without
examining the facts of the case?"

7. As afore-mentioned, the High Court has, vide the
impugned orders, rejected the applications filed by yie Revenue
G on the ground that no question of law arose from the orders of
the Tribunal. It has held as follows: · r ·
"Having heard the counsel on both sides, we are of the
opinion that there are no questions of law which can be
said to arise out of the order of the Tribunal. It is not
H
COMMISSIONER OF CUSTOMS (IMPORT) v. 551
STONEMAN MARBLE. INDUSTRIES [D.K. JAIN, J.]

disputed by the Revenue that the facts in the case. of the A
Respondents i.e. Marmo Classic and the facts in the case
of Stonemann Marble,Jndustries and Jai Bhagwati lmpex
Pvt. Lt~. are similar. On perusal of the orders passed by
the Trit)unal in the cas'e of Stonemann Marble Industries
and Jai Bhagwati lmpex Pvt. Ltd. it is seen (sic.) that the B
Tribunal has 1/reduced the redemption fine and penalty by
taking into account the margin of profits and the demurrage
.l..'.
incurred by the importers of the said consignments. It is
pertinent to note that the Tribunal in similar circumstances
have taken a uniform view to restrict the redemption fine c
to 20% of the CIF value and penalty to 5% of the CIF value.
Under these circumstances, it is evident that the decision
of the Tribunal is essentially based on finding of fact. The
Tribunal has reduced the redemption fine and penalty by

- taking into account its earlier decision as well as the margin
profit' and the arnount of demurrage incurred on the goods.
It is not disputed by the Revenue that the CEGAT has
D

power to reduce the redemption fine and penalty.
Therefore, in the facts of the case whether the reduction
in redemption fine and penalty is justified or not, it is
essentially a finding of fact and no material has been E
adduced by the revenue to establish that the order ofthe
~ Tribunal is ex-facie perverse, arbitrary & contrary to the
facts on record."

---( 8. Hence, the present appeals by the Revenue. F

9. -Mr: R.P. Bhatt, learned senior counsel appearing on
behalf of the Revenue, while assailing the impugned orders
-c'I
contended that the Tribunal could not lay down a standard
• -< formula for the computation of redemption.fine and penalty as
G
facts and circumstances of each case have to be examined
independently. Learned counsel submitted that the Tribunal was
only required to examine whether or not the Commissioner had
exercised his discretion correctly on the facts and
circumstances of each of the cases. Learned counsel thus,
' H
552 SUPREME COURT REPORTS [2011] 1 S.C.R.

A asserted that the Tribunal erred in law in laying 'down an
absolute rule in that behalf, giving rise to a question of law.

10. Per contra, Mr. V.M. Doiphode, learned counsel
appearing on behalf of the respondents, strenuously urged that
the impugned orders deserve to be affirmed in light of the fact
8
that the Revenue has not challenged the Tribunal's finding that
the facts in the instant cases were similar to. those in Mis.
Stonemann Marble Industries (supra). Relying on the decision
of this Court in Collector of Customs, Bombay Vs. Super
Fasteners, Marwana (Haryana)1, learned counsel contended
C that it is settled that if the Tribunal in its discretion reduces
. redemption fi~e, this Court would not ordinarily interfere with the
same.

11. Before adverting to the rival submissions, i! would be
D · expedient to make a reference to the provisions of Section . <ti;i.

130A of the Act, which read as follows:

"130A. Application to High Court.· - (1) The
Commissioner of Customs or the other party may, within
one hundred and eighty days of the date upon which he is
E served·with notice of an order under section 1298 passed
[before the 1st day of July, 2003] (not being an order
relating, among other things, to the determination of any
question having a relatjon to the rate of duty of customs
or to the value of goods for purposes of assessment), by
F application in the prescribed form, accompanied, where
the application is made by the other party, by a fee of two
hundred· rupees, apply to the High Court to direct the
Appellate Tribunal to refer to the High Court any question
of law arising from such order of the Tribunal. '>- •
G
(2)The Commissioner of Customs_ or· the other party
applying to the High Court under sub-section (1) shall
clearly state the question of law which he seeks to be
referred to the High Court a'nd shall also specify the
H 1. (1997) 10 sec 591.
COMMISSIONER OF CUSTOMS (IMPORT) v. 553
:STONEMAN MARBLE INDUSTRIES [D.K. JAIN, J.]
paragraph in the order of the Appellate Tribunal relevant A .
to the question sought to be referred."

On a bare perusal of the provisions, it is manifest that it is for
the party applying for reference to clearly state the question,..of
law which he seeks lo be referred to the High, Court and then it
is for the High Court to co.nsider whether any such question of B
law stated in the application for reference before it should be
dir~cted·fo be referred. (See: Beer Sain Vs. Commissioner of
Customs (ICD)2). It is _manifest from the format of the questions
proposed by the Revenue, extracted in para 6 supra, for
reference to the High Court that the Revenue did not assail the . C · ·
Tribunal's finding to the effect that the facts in the instant cases·
were . similar to those .in Mis. Stonemann Marble Industries·
(supra). It is a trite ·proposition that unless the correctness of
facts, on the basis whereof an inference is drawn by the Tribunal,
is put in issue, a question of law does not arise from its order. D

12. In Dhirajlal Girdhari/al Vs. Commissioner of Income
Tax 3, Bombay a Constitution Bench observed that:
/ - . ' . ,

"5. The question whether or not the Hindu undivided family
was doing business iii shares transferred to it by the firm, E
is undoubtedly a question of fact; but if the, court of fact
whose decision on a question of fact is final, arrives at this
decision by considering material which is irrelevant to the
enquiry, or by considering material which is partly relevant
and partly irrelevant, or bases its decision partly on F
conjectures, surmises and suspicions, and partly on
evidence: then in sue..~ a situation clearly an issue of law
arises."

13. Similarly, in K. Ravindranathan Nair Vs. G
Commissioner of Income Tax, Ernakulam 4 , while dealing with

2. c2007) 1s sec 2s2.
3. AIR 1955 SC 271.
4. c2001) 1 sec 135. H
554 SUPREME COURT REPORTS [2011] 1 S.C.R.

A Section 256 of the Income Tax Act, 1961, a Bench of three
learned Judges of this Court had held that:

"7. The High Court overlooked the cardinal principle that
it is the Tribunal which. is the final fact-finding authority. A
decision on fact of the Tribunal can be gone into by the
B
High Court only if a question has been referred to it which
says that the finding of the Tribunal on facts is perverse,
in the sense that it is such as could not reasonably have
been arrived at on the material placed before the Tribunal.
In this case, there was no such question before the High.
c Court. Unless and until a finding of fact reached by the
Tribunal i.s canvassed before the High Court in the manner
set out above, the High Court is obliged to proceed upon
the findings of fact reached by the Tribunal and to give an
answer in law to the question of law that is before it.
D
8. The only jurisdiction of the High Court in a reference
application is to answer the questions of law that are
placed before it. It is only when a finding of the Tribunal on· .
fact is challenged as being perverse, in the sense set out
E above, that a question of law can be said to arise."

14. In Sudarshan Silks & Sarees \7s. Commissioner of
Income Tax, Kamataka 5 , this Court had observed that:

"Question as to perversity of the findings recorded by the
F Tribunal on facts was neither raised nor referred to the
High Court for its opinion. The Tribunal is the final court of
fact. The decision of the Tribunal on the facts can be gone
into by the High Court in the reference jurisdiction only if a
question has been referred to it which says that the finding
G arrived at by the Tribunal on the facts is perverse, in the
sense that no reasonable person could have taken such
a view. In reference jurisdiction, the High Court can answer ·
the question of law referred to it and it is only when a finding

H 5. (2008) 12 sec 458.
COMMISSIONER OF CUSTOMS (IMPORT) v. 555
STONEMAN MARBLE INDUSTRIES [D.K. JAIN, J.]
of fact. recorded by the Tribunal is challenged on the A
ground of perversity, in the sense set out above, that a
. question of law can be said to arise."

, 15. Thus tested, we are in complete agreement with the
High Court that the questions raised by the Revenue for B
reference could not be said to be questions of law. It bears
repetition that the Revenue did not specifically challenge the
.!.'. finding of the Tribunal that the facts in the instant cases were
similar to those in Mis. Stonemann Marble Industries (supra),
which was essentially a finding of fact. Although, we do find
some substance in the submission of learned counsel for the
c
Revenue that a standard formula cannot be laid down for
imposition of redemption fine and penalty under the aforenoted
provisions of the Act and each case has to be examined on
its own facts but when a final fact finding body returns a finding
that the facts obtaining in each of the cases before it are D
similar, and such finding is not questioned, levy of redemption
fine or penalty uniformly in all such cases cannot be construed
as laying down an absolute formula, which is the case here.
We are convinced that the Revenue did not discharge its
burden under Section 130A of the Act in as much as it did not E
specifically challenge the Revenue's aforestated finding as
being perverse. In this view of the matter, the High Court was
justified in declining to issue direction to the Tribunal to make
a reference under Section 130A of the Act.
F
16. In the circumstances and for the foregoing reasons,
these appeals, being devoid of any merit, are dismissed and
the impugned order:s are affirmed. Parties are left to bear their
own costs.
. ~
R.P. G
Appeals dismissed.