1. After hearing stay petition No. S.P. (Bom) No. 56 of 1983 on 18-4-83, the two Members of the Regional Bench expressed different opinions on the following points which arose in that matter :- (i) whether there was an effective order of the Collector as distinct from an order of a lower authority which could be a cause of action to justify the application for stay; and (ii) whether the Tribunal could entertain such an application and grant the stay.
The case having been referred to me by the President under Section 129C(5), Customs Act, I have on the 4th and 5th July, 1983, heard representatives of both parties on the above questions. (Although one of the points for decision is whether at all an appeal lies to the Tribunal in this case, M/s. K.S. Diesels Ltd., are for convenience, and without prejudging the issue, referred to as "the appellants"). Shri J.R. Gagrat, Advocate, appeared for the appellants and Shri Krishan Kumar, Junior Departmental Representative, for the respondent.
2. In the notice of hearing, the attention of the appellants had been drawn to the fact that the Collector's order was in effect a composite order consisting of three orders-in-original, pertaining to three different consignments covered by separate Bills of Entry, and there should have been three appeals instead of one filed before the Tribunal (assuming appeals to lie to the Tribunal). As regards this point, Shri Gagrat submitted that the West Regional Bench had in previous similar cases accepted a single appeal. However, on it being pointed out that the general practice of the Tribunal was to require as many separate appeals to be filed as were covered by the composite order of the authority below, Shri Gagrat undertook to file two supplementary appeals within a week. On this undertaking the matter was taken up for hearing. The appellants have subsequently, on 11-7-83, filed two supplementary appeals with corresponding stay applications. These are allocated as under, as requested by the appellants :- Appeal File Stay Application Bond No. No. No. and date(Original) 313/83 56/83 510/24-5-80Supplementary) 850/83 171/83 B316/ 6-5-80(Supplementary)851/83 172/83 B204/ 3-5-76 3. In this case the appellants had warehoused three consignments of machinery parts after executing bonds under Section 59 of the Customs Act, 1962. In respect of one consignment, under bond No. B204/3-5-76, the warehousing period was shown as three years. In respect of the other two consignments, covered by bond Nos. B316/6-5-80 and 510/24-5-80, the warehousing period was shown as one year.
Subsequently, the appellants sought extensions of the respective warehousing periods. After some correspondence, and after a personal hearing before the Collector of Customs, Bombay, on 16-7-1982, they were given the option to clear the goods in a phased manner by depositing 50% of the total duty by the end of August, 1982, and finally clearing the consignments by the end of December, 1982. The appellants again approached the Custom House by their letter dated 20-10-82, stating that they had been able to deposit only Rs. 6 lakhs by that time (as against Rs. 14 lakhs as earlier agreed upon) and wanted time upto December, 1982, for further clearances. The Collector held that it was evident that the appellants had not adhered to their agreement to clear the goods by instalment. He, therefore, passed the following order :- "I, therefore, order that the demand notice already issued in terms of Section 72 of the Customs Act, 1962 be enforced." It is to be noted that the date of .this order is shown as 24-9-82.
Against the entry "Date of Issue" no date has been shown. The copy of the order bears an attestation by the Assistant Collector of Customs over a date which appears to be 15-12-82.
4. Against the above order, the appellants filed an appeal dated 28-2-1983 to the Tribunal. They also filed a stay application with the same date in which they expressed their apprehension that the Customs authorities would sell the goods for recovery of the duty due, and requested that the demand for duty be stayed and directions be issued to the Collector not to dispose of the goods lying in the bonded warehouse.
5. It is with reference to the above order of the Collector that differences of opinion arose between the two Members of the Regional Bench. It was held by the learned Member (Technical) that though the Collector in his order dated 24-9-82 had ordered recovery of duty in terms of Section 72(1) Customs Act, there was no order from the Collector in terms of Sub-section (2) ibid. He observed that the Bench was not aware of any such order except through the oral submission of the Advocate. If the order in terms of Sub-section (2) was that of a lower authority, the appeal against such decision or order would not lie to the Tribunal and it would be improper for the Tribunal to rush to a decision in that case.
6. The learned Judicial Member, on the other hand, observed that in terms of the Collector's order there had been already a direction that the demand notice issued in terms of Section 72, Customs Act be enforced. This appeal was directed against the Collector's order and it had been urged before the Bench that if the direction was to be enforced, pending a hearing in the appeal, the appeal itself would be rendered infructuous. The learned Judicial Member, therefore, felt that this was eminently a case for stay of the operation of the Collector's order so that status "quo ante might remain till the duration of the appeal.
7. While referring the matter to me under Section 129C(5), the President also ordered a stay of operation of the impugned order.
8. Consideration of the two questions involving a difference of opinion also involves consideration of the question whether in this case the Tribunal was the proper authority to whom an appeal lies. I, therefore, heard arguments on this question.
9. Shri Gagrat gave a general account of the difficulties faced by the appellants, to explain why they had not so far been able to clear the goods which had been warehoused. According to him, they were a sick unit, depending on assistance from the Government of India and the financial institutions and these had not come up to their expectations.
On the question whether or not an appeal lay against the Collector's order dated 24-9-82, Shri Gagrat referred to the preamble to that order, which was in the usual form, indicating that an appeal would lie to the Tribunal. He also submitted that during the hearing before the West Regional Bench, the point that the Collector's order was not the proper one to appeal against had not been raised. On the point that the enforcement of the demand under Section 72 was to be by the "proper officer", who was normally the Assistant Collector, Shri Gagrat pointed out that under Section 5(2) of the Customs Act, the Collector could exercise the powers of an officer subordinate to him. Shri Gagrat further submitted that in the Collector's order there was a reference only to Section 72 and not to either of the sub-sections thereof and therefore the observation of the learned Member (T) that the Collector's order was only under Sub-section (1) ibid was not correct.
10. Shri Gagrat was asked what substantive relief the Tribunal could give the appellants, in case it was held that an appeal lay to the Tribunal against the Collector's order dated 24-9-82. Shri Gagrat fairly admitted that, in view of the recent amendments to Section 61, Customs Act, through the Finance Act, 1983, the maximum period for which non-consumable stores could ordinarily remain warehoused was only one year, which could be extended by the Collector by a period not exceeding six months. (It was one of his arguments that in the case of the latter two consignments the Collector had wrongly held that the normally admissible period of warehousing was only one year, whereas it should have been three years, as they were non-consumable and not likely to deteriorate). In all the three cases under consideration, a period of over three years had already expired, and, therefore, the Collector now had no further powers of extension. However, the Board's unlimited power to extend the period, subject to the payment of interest as newly provided through, the Finance Act, 1983, remained unaffected. Shri Gagrat also fairly admitted that the Tribunal could not exercise the powers of extension of the warehousing period specifically given to the Board in this regard. In effect, therefore, the Tribunal could not give any substantive relief in this case. He, however, stated that it was still open to the appellants to seek a further extension of the ware-housing period from the Board, which they proposed to do. All that he sought from the Tribunal was a stay of action by the Collector to sell the goods or take any other irrevocable action till such time as the appellants had been able to approach the Board with a request for extension of the warehousing period and for stay of action by the Collector. In this connection Shri Gagrat relied on the Supreme Court judgment in the case of Income-tax Officer v.Mohammed Kunhi, reported in (1969) 71 ITR 815, according to which the Tribunal had incidental and ancillary powers to give interim relief in such a case.
11. For the Department, Shri Krishan Kumar stated that there was only one point of difference between the two Members, namely, whether an appeal lay to the Tribunal against the Collector's order. He referred to an observation of the learned Technical Member to the effect that under Section 129E of the Customs Act the appellate authority could demand deposit of duty or penalties in respect of goods which were not under the control of the Customs authorities. In the present case, the goods were under Customs control in a public bonded warehouse.
Therefore, on a strict construction of Section 129E there could not be any application for stay of the duty ordered to be realised under the Collector's decision dated 24-9-82. In this connection Shri Krishan Kumar cited Order No. 66 of 1983 dated 5-5-1983 passed by the West Regional Bench in another case, wherein the Bench had held that since the goods were under Customs control there were no grounds for grant of a stay. He submitted that even if it was held that an appeal could be entertained, a stay should not be granted in view of the provisions of Section 129E.12. On the question whether an appeal lay to the Tribunal against the Collector's order dated 24-9-83, Shri Krishan Kumar submitted that this was not actually the date of the order. This would be evident from the fact that the order itself referred to the appellants' letter dated 20-10-82. According to him, the Assistant Collector had issued a demand notice on 1-10-82. The appellants had replied to this notice by their letter dated 20-10-82, and it was after considering this letter that the Collector passed his order which was wrongly dated as 24-9-82.
13. Shri Krishan Kumar argued that the Collector's order could be considered as an administrative order, and no appeal under the Customs Act would lie against it. According to him, if at all an appeal lay to the Tribunal, it should have been against the demand notice dated 1-10-82 issued by the Assistant Collector and not against the order dated 24-9-82 issued by the Collector, which was "administrative". In conclusion, he stressed that all the directions of the Collector were executive or administrative and could not be considered as orders passed by him as an adjudicating authority. Therefore, according to Shri Krishan Kumar, an appeal in this matter could not be entertained by the Tribunal, nor could a stay be given.
14. Shri Krishan Kumar was asked whether he would like to make any submission on the argument of Shri Gagrat that the goods were not consumable or liable to deterioration and therefore the normal period of warehousing should have been three years. Shri Krishan Kumar replied that he did not have the original Custom House records and, therefore, could not make any submission on this point. He added that the appellants themselves had in the first instance executed a bond only for one year in two cases.
15. I have carefully considered the arguments advanced on both sides on the question whether an appeal lies to the Tribunal against the "order" dated 24-9-82 of the Collector. It is quite obvious that the Collector himself regarded this as an order against which an appeal lies to the Tribunal, since the preface to the order clearly says so. Again, the order ends by saying "I, therefore, order that the demand notice already issued in terms of Section 72 of the Customs Act, 1962, be enforced". This is clearly an order or decision of the Collector relating to the exercise of a statutory power under Section 72 of the Customs Act. It is, therefore, obvious that in passing that order, the Collector was acting as an "adjudicating authority" as defined in Section 2(1) of the Customs Act. Accordingly, an appeal from his decision or order should, in terms of Section 129A(1) (a) of the Customs Act, lie to the Tribunal.
16. Against the position as thus simply stated, arguments have been put forward, some by the learned Technical Member and some by the Departmental Representative. The learned Technical Member has observed that though the ' Collector's order orders recovery of duty in terms of Section 72(1), there is no order from the Collector in terms of Sub-section (2). With due respect, I am unable to agree that the Collector's order is only under Sub-section (1) of Section 71 of the Customs Act. The relevant sentence, which has been reproduced above, makes reference to Section 72 and not any sub-section thereof. Further, the two letters dated 1-9-82 and 1-10-82 issued to the appellants by the Custom House, to which the Collector's order has reference, clearly indicate that action under Sub-section (2) of Section 72 was also proposed. The learned Technical Member has also made a point that if a lower authority passes an order in terms of Sub-section (2). an appeal against that order would not lie to the Tribunal. On this point I consider that any "order" of a lower authority to enforce the demand notice already issued would not be an independent order or decision, but a compliance with the order dated 24-9-82 of the Collector. If the appellants were to file an appeal against such a consequential "order" passed by a lower authority, it could with equal if not greater force be argued that the basic decision is not that of the lower authority but of the Collector. This could well result in the appellants being tossed between two sets of appellate authorities. In the circumstances, it would be proper to go by the plain indication given by the Department itself, in the shape of the preamble to the Collector's order dated 24-9-82 and to treat that as the basic order against which an appeal would lie, the appropriate appellate authority being the Tribunal.
17. The Departmental Representative argued at considerable length on the basis of various dates. Among other things, he pointed out that the date of 24-9-82 given in the Collector's order could not be correct, because the order itself refers to a letter dated 20-10-82 of the appellants. It is no doubt strange that an order bearing the date 24-9-82 should refer to a letter dated 20-10-82. This clearly shows that some error has crept into the Collector's order. Equally clearly, the fact that such an error has crept into the order should not prejudice the appellants' position. The error in the dates will not, therefore, alter the conclusion reached and recorded in the preceding paragraphs.
18. Granted that an appeal lies to the Tribunal, a further question is what the scope of that appeal would be. As pointed out in paragraph 9 above, it would not be possible for the Tribunal, acting as an appellate authority, to grant an extension which in terms of Section 61 can be granted only by the Board. However, the Tribunal, as an appellate authority, can certainly exercise a power or grant a concession which it considers that the lower authority should have done but did not do. Thus, if the Collector wrongly applied the shorter period of one year (now three months), as appropriate to goods which; are consumable or liable to deterioration, in the cases of goods which are not of that nature, the Tribunal could certainly grant relief by modifying his decision. (In fact, in the present case, one of the submissions is that in respect of two consignments the Collector mistakenly took the view that the shorter period applied, whereas it did not, as the goods were not consumable or : liable to deterioration.
The goods being machinery parts, there appears to be force in this contention. When it was put to the Departmental Representative, he preferred not to make any comments, on the ground that the original Custom House records were not available with him).
19. Thus, the Tribunal, acting as an appellate authority, can modify a decision of the Collector under Section 61, to the extent of allowing what the Collector himself could have allowed, but it cannot exercise the power specifically reserved for the Board as an executive authority in terms of this Section. In the present case, by the time the matter came up for hearing before me, the goods covered by each of the three consignments had been in the warehouse for over three years; and by virtue of the recent amendment to Section 61 by the Finance Act, 1983, the maximum warehousing period which it is within the power of the Collector to allow now stands reduced to one year and six months.
Accordingly, there was no further relief which the Collector as an adjudicating authority could have given, and there is none which the Tribunal, as an appellate authority over the Collector, can give.
20. It is also obvious that an interim order such as a stay order can be issued by the Tribunal only in a case where it has jurisdiction.
Therefore, if it is held that no appeal in a case like this lies to the Tribunal, there would also be no authority for us to issue any stay order. However, as explained above, this is a case where an appeal does lie to the Tribunal, although in the present case and at the present time no further relief can be given by us. Shri Gagrat appreciated this position. He stated that the appellants would be applying to the Central Board of Excise and Customs for an extension of the warehousing period in the exercise of the Board's powers under Section 61. In view however of the proposal by the Customs authorities to sell the goods in the meantime, he sought from the Tribunal an interim order staying any such action until the appellants could apply to the Board and get an interim direction from the Board. This seems to be a reasonable request. An interim stay has already been granted by the President vide his order dated 22-4-1983. It would be in the interests of justice if this is extended for a reasonable period to enable the appellants to apply to the Board, which may or may not accede to their request. I would consider that continuance of the stay order for a period of say two months from the date of communication to the appellants of the final order of the Tribunal would be reasonable.
21. Reference has been made to the order dated 5-5-83 of the West Regional Bench which has been cited by the Departmental Representative, and in which a view was taken that a stay could not be granted in such a case. It has been observed therein that the goods were not under Customs control and therefore there were no grounds for the grant of a stay. No view has been expressed as to whether an appeal lies or does not lie in such a case. So far as the question of stay is concerned, the order has not gone into the question of the distinction between waiver of pre-deposit of duty under Section 129E, Customs Act, and grant of stay of realisation. It is quite true that the question of pre-deposit of duty does not arise in respect of goods which are under the control of the Customs authorities. Accordingly, the question of waiver of pre-deposit in terms of the proviso to Section 129E also would not arise. However, the grant of a stay restraining the Customs authorities from taking measures for realisation of duty or penalty is not referable to Section 129E. The power to grant such a stay is not exercised in terms of any specific provision of the Customs Act, but of the incidental and ancillary powers of the Tribunal as an appellate authority. This has been made clear in the judgment ' of the Supreme Court in the case of Income-tax Officer v. Muhammed Kunhi, reported in (1969) 71 ITR 815. That case was with reference to the Income-tax Act, but the judgment has been followed by the Andhra Pradesh High Court in a case under the Central Excises and Salt Act, viz., K.V.N. Prasad and Ors. v. Central Board of Excise and Customs and Ors., reported in 1978 ELT (J 397). The provisions of the Central Excises and Salt Act relating to appeals, which were before the Andhra Pradesh High Court in that case, are pari materia with those of the Customs Act which are before the Tribunal in this case. Therefore, in a case like this, where the question of pre-deposit of duty does not arise, but nevertheless action is proposed to be taken by the Customs authorities for realisation of the duty demanded, the Tribunal clearly has the power to order a stay, in the exercise of its incidental and ancillary powers as an appellate authority.
22. In the light of the foregoing discussion, I would answer as follows the two questions on which the two Members of the West Regional Bench differed and which have been referred for my opinion : - (i) The order dated 24-9-82 of the Collector is an effective order a which an appeal lies to the Tribunal (though the extent of relief can be granted by the Tribunal is limited, as explained in paragraphiry 18 and 19 above); and (ii) Since an appeal lies to the Tribunal, it can be entertained and a stay also granted if the Tribunal deems fit.
23. The case will now go back to the West Regional Bench to dispose of the stay application according to law. As indicated in paragraph 2 above, the present stay application and the related appeal are deemed to be in respect of Bond No. 510 dated 24-5-80. The Dy. supplementary appeals and the related stay applications would have to be disposed of separately.