NAVIN CHEMICALS MFG. AND TRADING CO. LIMITEDversusCOLLECTOR OF CUSTOMS

A        NAVIN CHEMICALS MFG. AND TRADING CO. LIMITED
                                          v.
                          COLLECTOR OF CUSTOMS

                              SEPTEMBER 15, 1993

B            [B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.)

           Customs Act, 1962-Sections 129-C(3), 129-C(4), 129-D(S), 130(1),
    130-E (b )-Central Excise and Gold Control Appellate Tribunal-Questions
    which could be decided by Member of thP. Tribunal sitting singly-Expression
c   'detennination of any question having a relation to the rate of duty of Customs
    or to the value of goods for purposes of assessment' in S. 129-C(3)-Meaning
    of-Appeal to Supreme Court directly from CEGAT in certain cases--
    Relevance of.

          Under an advance import licence for the import of crude emetine
D   under a duty exemption scheme, which required the importer to export the
    goods after processing them, the goods imported by the appellants com-
    pany were found, to contain emetine hydrochloride, moisture and other
    impurities. The Additional Collector of Customs held that the goods
    imported being emetine hydrochloride, the licence was not valid for the
E   same. In as much as the import had been made without the cover of a valid
    licence, the goods in question were ordered to be confiscated. However, the
    appellants were given an option to pay a fine of Rs. 10,000 in lieu of such
    confiscation.

          The appellant company prefered an appeal to CEGAT. A member of
F   the Tribunal sitting singly, rejected the appeal and confirmed the Addi-
    tional Collector's order.

        In the instant appeal before this court against the Tribunal's order,
  the appellant company contended that since the case involved the deter-
G mination of a question having a relation to the rate of customs duty
  applicable to the said goods, it could not have been heard by a member of
  CEGAT sitting singly but ought to have been heard by a Special Bench
  thereof, as per provisions of Section 129-C of the Customs Act.

          On behalf of the respondent it was submitted, that no question
H having relation to the rate of customs duty had been determined by the
                                         326
        NAVIN CHEMICALS MFG. v. COLLECTOR OF CUSTOM                       327

order of the Additional Collector and, therefore, it was not a matter that       A
could have been heard only by a Special Bench of CEGAT.

      Dismissing the appeal, this Court

       HELD : 1. The controversy relates to the meaning to be given to the
expression 'determination of any question having a relation to the rate of       B
duty of customs or to the value of goods for purposes of assessment. The key
lies in the words 'for purposes of assessment' therein. Where the appeal
involves the determination of any question that has a relation to the rate of
customs duty or value of goods f~r the purposes of assessment, such appeal
must be heard by a Special Bench. Cases that relate to the rate of customs
duty for the purposes of assessment and which relate to the value of goods
                                                                                 c
for the purposes of assessment are advisedy treated separately and placed
before Special Benches for decision because they, more often than not, are
of importance not only to the importers who are parties thereto but also to
many other importers who import or propose to import the same or similar
goods. Since the decisions of CEGAT in such matters would have wide              D
application they are, by the tei:ms of the statute, to be rendered by Special
Benches. The phrase 'relation to' is, ordinarily, of wide import but, in the
context of its use in the said expression in section 129-C, it must be read as
meaning a direct and proximate relationship to the rate of duty and to the
value of goods for the purposes of assessment. [331-F-H, 332-A·B]
                                                                                 E
      2. The statutory definition of the expression 'for the purposes of this
sub-section' in the Explanation to sub-section 5 of Section 129-D of the Act,
indicates that it has to be read to limit its application to cases where, for
the purposes of assessment, questions arise directly and proximately as to
the rate of duty or the value of the goods. Although the expression is           F
confined to section 129-D(S), it is proper that the said expression used in
other parts of the Act should be interpreted similarly. [333-H, 334-A]

       3. The order of the Additional Collector under appeal before CEGAT
in the instant case did not have any direct or proximate relation, for the
purposes of assessment, either to the rate of duty applicable to the said G
goods or to the value thereof. All that the Additional Collector's order did
was to confiscate the said goods allowing to the appellant the option of
redeeming them upon payment of a fine of Rs. 10,000. That the appellant
might avail of the option, pay the fine and clear the goods, when questions
as to the rate of duty and value for purposes of assessment might possibly H
    328                   SUPREME COURT REPORTS (1993) SUPP. 2 S.C.R.

A   arise, is far too remote a contingency to satisfy the test that is laid down.
                                                                       [334-G-H]
          4. Where an appeal lies to this Court, the necessity of a reference on
    a question of law to the High Court is obviated. An appeal to this Court
    is provided where, the questions in issue related to the rates of duty or the
B   value of goods for the purposes of assessment, This is because such
    questions have relevance not only for the parties concerned but other
    importers as well. [334-E-F]

            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3174 of
    1984.
c
          From the Judgment and Order dated 13.6.83 of the Appellate
    Tribunal Court, Regional Bench, Bombay in C.D. (Born.) Appeal No. 717
    of 1983.

D        Sunil Gupta, S. Sukumaran & D.N. Misra for M/s J.B.D. & Co. for
    the Appellant.

            Joseph Vellapally, B. Parthasarthy and D.S. Mehta for the Respon-
    dent.

            The Judgment of the Court was delivered by
E
           BHARUCHA, J. This is an appeal by special leave against the judg-
    ment and order of the Customs, Excise & Gold Control Appellate Tribunal
    (hereinafter referred to as 'CEGAT'). The order which granted special
    leave expressly confines it to the question whether a member of CEGAT
    sitting singly could in law have heard the appeal before it.

          The appellant was granted an advance import licence for the import
    of crude emetine under a duty exemption scheme (C.E.E.D.) which re-
    quired the appellant to export the goods after processing them. The goods
    that were imported by the appellants were found, on chemical analysis
G   performed at the request of the Customs authorities, to contain emetine
                                                                                1
    hydrochloride, moisture and other impurities. The Additional Collector of
    Customs held that the goods imported being emetine hydrochloride, the
    licence was not valid for the S\}me. In as much as the importation had been
    made without the cover of a valid licence, an offence under section lll(d)
H   of the Customs Act, 1962 (hereinafter called 'the said Act') read with
   NA VIN CHEMICALS MFG. v. COLLECTOR OF CUSTOM [BHARUCHA, J.)              329

section 3 of the Import and Export (Control) Act, 1947 was established             A
against the appellant. He ordered thus :

        "Taking all the circumstances into account and in view of the fact
        that this is not an importation for individual sale and profit in India,
        but an importation under D.E.E.C. Scheme who importers are
        bound to re-export Emetine Hydrochloride, B.P. Grade, I take a             B
        lenient view and order that the goods in question shall be confis-
        cated under section 111(d) of the Customs Act, 1962 read with
        section 5 of the Import and Export (Control) Act, 1947. I, however,
        allow under section 125 of the Customs Act, 1962, an option to
        pay in li):U of such confiscation of fine of Rs. 10,000 (Rupees ten        C
        thousand only) and clear the goods into town."

      Thereagainst the appellant preferred an appeal to CEGAT and it
was listed for hearing before a member thereof, sitting singly. The appeal
was rejected and the Additional Collector's order confirmed.
                                                                                   D
       Learned counsel for the appellant submitted that this was a case
which involved the determination of a question having a relation to the rate
of customs duty applicable to the said goods and that, therefore, it could
not have been heard by a member of CEGAT sitting singly but ought to
have been heard by a Special Bench thereof, in which behalf he drew our
attention to the provisions of section 129-C of the said Act. Learned E
counsel for the respondent submitted, on the other hand, that no question
having relation to the rate of customs duty had been determined by the
order of the Additional Collector and that, therefore, it was not a matter
that could only have been heard by a Special Bench of CEGAT. Since this
was a case, in his submission, which fell within the ambit of clause ( c) of F
sub-section 4 of section 129-C it was, rightly, listed before and decided by
a member of CEGAT sitting singly.

     The relevant portions of section 129-C need to be n<prpduced.

        "129-C. Procedure of Appellate Tribunal-                                   G
        (1) The .powers and functions of Appellate Tribunal may be
        exercised and discharged by Benches constituted by the President
        from amongst the members thereof.

        (2) Subject to the provisions contained in sub-sections (3) and (4) H
    330                  SUPREME COURT REPORTS (1993) SUPP. 2 S.C.R.

A           a Bench shall consist of one judicial member and one technical
            member.

            (3) Every appeal against a decision or order 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
B           of assessment shall be heard by a Special Bench constituted by the
            President for hearing such appeals and such Bench shall consist
            of not less than two members and shall include at least one judicial
            member and one technical member.

            (4) The President or any other member of the Appellate Tribunal
c           authorised in this behalf by the President may, sitting singly,
            dispose of any case which has been allotted to the Bench of which
            he is a member where-

            (a) the value of the goods confiscated without option having been
D           given to the without option having been given to the owner of the
            goods to pay a fine in lieu of confiscation under section 125; or

            (b) in any disputed case, other than a case where the determination
            or any question having a relation to the rate of duty of customs or
            to the value of goods for purposes of assessment is in issue or is
E           one of the points in issue, the difference in duty involved or the
            duty involved; or

            (c) the amount of fine or penalty involved,

            does not exceed fifty thousand rupees.
F
         Sub-section (1) of section 129-C empowers the President of CEGAT
  to constitute Benches for the exercise of the powers and functions thereof.
  By virtue of sub-section (2) a Bench shall consist of one Judicial Member
  and one Technical Member. Sub- section 3 is in the nature of an exception
  to sub-section 2 and it provides that an appeal against a decision or order
G 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' shall be heard by a Special Bench of not less than
  two members, of whom one_&li:cruld be a Judicial Member and one a
  Technical Member. (Before 1985 the requirement was that a Special Bench
H should consist of not less than three members). Sub-section 4 is also in the
    NAVINCHEMICALSMFG. v. COLLECTOROFCUSTOM(BHARUCHA,J.]               331

 nature of an exception to sub-section (2). It authorises the President or any A
member of CEGAT authorised in this behalf by the President to dispose
of, sitting singly, cases of goods confiscated where no option is given to the
.owner to pay a fine in lieu of confiscation, where the value of goods does
not exceed Rs. 50,000; cases where the difference in duty involved or the
duty involved does not exceed Rs. 50,000, other than a case where the
'determination of any question having a relation to the rate of duty of
                                                                               B
customs or to the value of goods for purposes of assessment' is a point in
issue; and cases where the amount of fine or penalty involved does not
exceed Rs. 50,000.

       It is, upon a plain reading of the section, clear that appeals against C
 orders which involve 'determination of any question having a relation to
the rate of duty of customs or to the value of goods for purposes of
 assessment' are specially treated and are required to be heard by a Special
Bench. This is what sub- section 3 of section 129-C provides. appears in
 other matters are to be heard by a Bench consisting of one Judicial D
Member and one Technical Member, subject to the provisions of sub-sec-
tion (4). Sub-section (4) carves out an exception to the general provisions
of sub-section (2) and provides that a member of CEGAT sitting singly can
hear appeals in the matters enumerated therein provided that they are not
cases where 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' is E
in question.

      The controversy, therefore, relates to the meaning to be given to the
expression 'determination of any question having a relation to the rate of
duty of customs or to the value of goods for purposes of assessment'. It p
seems to us that the key lies in the words 'for purposes of assessment'
therein. Where the appeal involves the determination of any question that
has a relation to the rate of customs duty for the purposes of assessment
that appeal must be heard by a Special Bench. Similarly, where the appeal
involves the determination of any question that has a relation to the value
of goods for the purposes of assessment, that appeal must be heard by a G
Special Bench. Cases that relate to the rate of customs duty for the
purposes of assessment and which relate to the value of goods for the
purposes of assessment are advisedy treated separately and placed before
Special Benches for decision because they, more often than not, are of
importance not only to the importers who are parties thereto but also to H
    332                   SUPREME COURT REPORTS I1993] SUPP. 2 S.C.R.

A many other importers who import or propose to import the same or similar
    goods. Since th( decisions of CEGA T in such matters would have wide
    application they ire, by the terms of the statute, to be rendered by Special
    Benches. The phrase "relation to" is, ordinarily, of wide import but, in the
    context of its use in the said expression in section 129-C, it must be read
    as meaning a direct and proximate relationship to the rate of duty and to
B   the value of goods for the purposes of assessment.

          Before we consider whether the case of the appellant falls within the
    said expression, we must note that section 130, sub-section (1) and section
    130-E, clause (b) of the said Act also use the said expression and they refer
C   respectively to the Statement of Case to the High Court on a reference by
    CEGAT and an appeal to the Supreme Court directly. Section 130(1)
    states that the Collector of Customs or the other party may require
    CEGAT to refer to the High Court any question of law arising out of an
    order under appeal before it provided it is not an order relating among
D   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'.
    Clause (b) of section 130-E provides that an appeal shall lie to the Supreme
    Court from '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'.
E
           The importance of the present appeal lies not so must in deciding
    which appeals can be heard by a member of CEGAT sitting singly and
    which by a Special Bench thereof as in determining where a reference can
    be made by CEGAT to the High Court and in which cases an appeal
F   against an order of CEGAT can be filed directly before the Supreme
    Court. Where an appeal lies to the Supreme Court, the necessity of a
    reference on a question of law to the High Court is obviated. An appeal
    to this Court is provided where as aforementioned, the questions in issue,
    relating to the rates of duty or the value of goods for the purposes of
    assessment, have relevance not only for the parties there concerned hut for
G   other importers as well.

          Section 129-D deals with the powers of the Central Board of Excise
     and Customs and the Collector of Customs to call for and examine the
     record of any proceedings before authorities subordinate thereto and
H    examine the legality or propriety thereof and also to direct such authorities
    NAVIN CHEMICALS MFG. v. COLLECTOROFCUSTOM[BHARUCHA,J.] 333


to file appeals. Sub-section 5 was added to section 129-D by the Customs           A
& Central Excises Laws Amendment Act, 1988 and it reads thus :

         "(5) The provisions of this section shall not apply to any decision
         or order in which the determination of any question having a
         relation to the rate of duty or to the value of goods for the purposes
         of assessment of any duty is in issue or is one of the points in issue.   B
         Explanation - For the purposes of this sub-section, the determina-
         tion of a rate of duty in relation to any goods or valuation of any
         goods or valuation of any goods for the purposes of assessment of
         duty includes the determination of a question.
                                                                                   c
        (a) relating to the rate of duty for the time being in force, whether
        under the Custom~ Tariff Act, 1975 (51 of 1975), or under any
        other Central Act providing for the levy and collection of any duty
        of customs, in relation to any goods on or after the 28th day of
        February, 1986; or                                                    D
        (b) relating to the value of goods for the purposes of assessment
        of any duty in cases where the assessment is made on or after the
        28th day of February, 1986; or

        (c) whether any goods fall under a particular heading or sub-head-         E
        ing of the First Schedule or the Second Schedule to the Customs
        Tariff Act, 1975 (51 of 1975), or that any goods are or not covered
        by a particular notification or order issued by the Central Govern-
        ment granting total or partial exemption from duty; or

        (d} whether the value of any goods for the purposes of assessment          F
        of duty shall be enhanced or reduced by the addition or reduction
        of the amounts in respect of such matters as are specifically
        provided in this Act.

      It will be seen that sub-section 5 uses the said expression 'determina-
tion of any question having a relation to the rate of duty or to the value of G
goods for the purposes of assessment' and the Explanation thereto provides
a definition of it "for the purposes of this sub-section'. The Explanation
says that the expression includes the determination of a question relating
to the rate of duty; to the valuation of goods for purposes of assessment;
to the classification of goods under the Tariff and whether or not they are H
    334                   SUPREME COURT REPORTS (1993) SUPP. 2 S.C.R.

A covered by an exemption notification; and whether the value of goods for
  purposes of assessment should be enhanced or reduced having regard to
  certain matters that the said Act provides for. Although this Explanation
  expressly confines the definition of the said expression to sub-section 5 of
  section 129-D, it is proper that the said expression used in the other parts
  of the said Act should be interpreted similarly. The statutory definition
B accords with the meaning we have given to the said expression above.
  Questions relating to the rate of duty and to the value of goods for
  purposes of assessment are questions that squarely fall within the meaning
  of the said expression. A dispute as to the classification of goods and as to
  whether or not they are covered by an exemption notification relates
c directly and proximately to the rate of duty applicable thereto for purposes
  of assessment. Whether the value of goods for purposes of assessment is
  required to be increased or decreased is a question that mlates directly
  and proximately to the value of goods for purposes of assessment. The
  statutory definition of the said expression indicates that it has to be read
D to limit its application to cases where, for the purposes of assessment,
  questions arise directly and proximately as to the rate of duty or the value
   of the goods.

           This, then, is the test for the purposes of determining whether or not
E an appeal should be heard by a Special Bench of CEGAT, whether or not
     a reference by CEGAT lies to the High Court and whether or not an
     appeal lies directly to the Supreme Court from a decision of CEGAT :
     does the question that requires determination have a direct and proximate
     relation, for the purposes of assessment, to the rate of duty applicable to
     the goods or to the value of the goods.
F
        The order of the Additional Collector under appeal before CEGAT
  in the present case did not have any direct or proximate relation, for the
  purposes of assessment, either to the rate of duty applicable to the said
  goods or to the value thereof. All that the Additional Collector's order did
G was to confiscate the said goods allowing to the appellant the option of
  redeeming them upon payment of a fine of Rs. 10,000. That the appellant
  might avail of the option, pay the fine and clear the said goods, when
  questions as to the rate of duty. and value for purposes of assessment might
  possibly arise, is far too remote a contingency to satisfy the test that is laid
  down.
    NAVIN CHEMICALS MFG. v. COLLECTOROFCUSfOM[BHARUCHA,J.] 335


        Strictly speaking, on the interpretation that we have placed upon the A
  said expression, this appeal would not lie from the impugned order of
· CEGAT to the Supreme Court. But we do not propose to dismiss it on
  that ground. We dismiss it on the ground that the appellants were in error
  in contending that their appeal before CEGAT ought to have been heard
  by a Special Bench and could not have been heard and decided by a B
 member of CEGAT, sitting singly.

       The appeal is dismissed. There shall be no order as to costs.

V.M.                                                    Appeal dismissed.




                       •