TIOL-DDT 172 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 172</font><br> 04 08 2005<br> Thursday</b></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Judicial Indiscipline in Revenue Department</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>“Be you ever so high, the law is above you”</b> – except for a few revenue officers who honestly believe they are above Law. It is really unfortunate that an otherwise well disciplined department like the Customs and Central Excise has scant respect for judicial discipline. An Assistant Commissioner or Joint Commissioner would never disobey the orders of a Commissioner – written or unwritten, legal or illegal and a Commissioner will never dream of disobeying similar orders of a Chief Commissioner or Board. Perfectly right. But when it comes to judicial decisions, departmental officers flout with total impunity (and immunity) orders of the Tribunal and even those of the High Court and Supreme Court. The unfortunate fact is that these Revenue officers believe that they are better than the judiciary and nothing will happen to them if they pass orders in total violation of binding principles laid by the Tribunal or higher Courts.<br> <br> Once I was pleading with a Commissioner to give a little more respect to judicial orders. Then he asked me, “what would you like your son to be in life?” Without confusing me further, he answered his own question. <br> <br> “We all would like our children to be doctors or engineers; if they fail to get qualified in the tough entrance tests, our next option is the Civil services. If the fellow fails in the IAS and other services, the next option is a job with one of the MNCs; if that also fails, there are other government jobs, like Inspector of Central Excise/ Income Tax etc,.. If your fellow fails there too, try to put him in some Bank. If that also fails, use your influence to get him a job in some private firm. Even here your stupid fellow may not succeed. Then what do you do? After you have confirmed that your progeny is simply useless, there is one option before you. Join him in a Law course and after three years he will come out with a degree in law and a Licence to practice in a Court. Buy him a coat and send him to court. After seven years manage to get him a job as a magistrate and wait for thirty years, people will call him, “My Lord”. And it is the order of this Lord, you want me to respect?”<br> <br> This is an extreme case but the stark reality is that in the field they don’t have respect for the judiciary and they have been successful in getting away with absolute disrespect and disobedience for higher appellate authority. This happens because no Commissioner ever gets punished for passing an order in favour of Revenue even by disobeying the Tribunal or higher authorities. As the Tribunal does not have contempt powers, this disrespect and disobedience is blatant and rampant in cases of Tribunal orders. <br> <br> In Unichem Laboratories Ltd. v. CCE, Bombay- </font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=50&filename=legal/sc/2002/2002-TIOL-237-SC-CX.htm">2002-TIOL-237-SC-CX</a></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">, the Supreme Court observed that, <br> <br> “No doubt that the authorities functioning under the Act must, as are duty bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law - no-less and also no more - It is not part of their duty to deprive any assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue - They must act reasonably and fairly”.<br> <br> But these are high goals not understood by Revenue. Even a regular departmental officer like Dr. Sree Kumar Menon, Commissioner (Appeals), as he then was observed in Order-in-Appeal No. 21/2003, dated 24-2-2003, <br> <br> I am of the considered opinion that the department should not be labelled as a maverick organisation answerable to no institutional and judicial discipline.<br> <br> Fourteen years ago the Apex Court in UNION OF INDIA v KAMLAKSHI FINANCE CORPORATION LTD., very clearly held that,<br> <br> The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent Court. <b>If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws.</b><br> <br> But many in the field do not consider the Supreme Court supreme and have consistently flouted this sacred principle.<br> <br> In the <i>Sachin Textiles</i> case, the Western Bench of the Tribunal made a sarcastic remark, “Unfortunately, the revenue officers are always under the obligation and compulsion of earning additional revenue. <b>“These officers would rather give priority to this requirement than the obligation to follow the law.”</b> The Tribunal further observed, <b>“in the absence of any enforcement authority, the Tribunal even if it makes any specific direction, is helpless in the face of lack of enforcement”. </b><br> <br> Disobeying the Tribunal is not a recent phenomenon. Way back in 19993 in AMAR ENTERPRISES v COLLECTOR OF CUSTOMS, the Tribunal presided over by the President had ordered the Collector to be present for a hearing to explain the non implementation of the Tribunal’s orders. On expected lines, the Collector did not bother to appear and the Tribunal remarked, <b>“Today, when the matter was called, Collector of Customs, Bombay has not appeared personally. The attitude adopted by the respondent is highly deplorable. Judicial discipline has to be followed. The Order passed by the Tribunal is binding on adjudicating and appellate authorities”. </b>So what did the Tribunal do? It gave another opportunity to the Collector. <br> <br> In a case where the Commissioner (Appeals) had the audacity to disagree with the Tribunal’s orders, the Tribunal observed, <br> <br> It would be blissful spectre of functional discipline conducive to smooth administration of justice in the area of disputes under the Central Excise Act, Customs Act etc, if the Appellate Commissioners of Central Excise & Customs would keep themselves within the limits of their functional discipline by reminding themselves of the indisputable fact that the decisions of the Tribunal are binding on them as long as they are not possessed of better authorities over-ruling or over-riding such decisions.<br> <br> - J.K. CEMENT WORKS v COMMISSIONER OF CUS. & C. EX., JAIPUR<br> <br> There was a Commissioner who felt that the Tribunal had not applied its mind. The Tribunal reacted with, “....’ which almost amount to indicate that the Tribunal does not apply its mind and borders on contempt are not called for” - HYDERABAD CYLINDERS PVT. LTD v COMMISSIONER OF C. EX., HYDERABAD<br> <br> One reason cited by many adjudication officers for not following the Tribunal’s orders is that the Government has decided to go in appeal.<br> <br> <b>In Commissioner of Central Excise, Jamshedpur Vs. ICI India Limited [2003 (156) E.L.T. 426 (Tri-Kolkata)],</b> the Tribunal held that the Tribunal’s decisions holding the filed or required to be followed till the same are set aside by the higher appellate forum (<b>Mere appeal is not enough</b>). <br> <br> <b>In Commissioner of Customs & Central Excise, Hyderabad Vs. Bakelite Hylam Limited, [2002 (140) E.L.T. 389 (Tri-Chennai)</b>] the Tribunal held that even the Tribunal is bound by a previous decision of the Tribunal if not stayed by a higher court.<br> <br> <b>In SSM Processing Mills Limited Vs. Union of India [2003 (161) E.L.T 87 (Mad)]</b> the Madras High Court held <br> <br> “unfortunately the Commissioner of Central Excise & Customs informed one of the petitioners that the order of CEGAT cannot be accepted as an appeal against the same was contemplated and they follow only the circular issue. This attitude of the commissioner is contrary to the principles laid down by the Apex Court and against the principles of judicial discipline. Merely because filing of appeal is contemplated or an appeal is filed and the same is pending, it cannot be a ground for not following the same, unless its operation has been suspended by the competent authority or court.” <br> <br> <b>In Sipani Automobiles Vs. Commissioner of Central Excise, Bangalore [2002 (150) E.L.T. 845 (Tri-Bang)]</b>, Tribunal held that mere filing of the appeal is no ground to refuse to follow the orders of the Tribunal. <br> <br> <b>In ABS Industries Limited Vs. Commissioner of Central Excise & Customs, Vadodara [2001 (135) E.L.T. 848 (Tri-Mum)]</b>, Tribunal held that, “as long as the existence of the Larger Bench decision of the Tribunal which is a superior body over the Commissioner (Appeals), he could not have disregarded the same thereby impinging the Judicial Proprietary Hierarchical authorities provided under the Act.” The Tribunal went on to hold that even if the Supreme Court had granted a stay, the effect of the same has to be seen from the tenor and words of the stay order. <br> <br> <b>The same logic is applicable where the Tribunal’s order is in favour of revenue and against the assessee. In Majestic Auto Limited Vs. Commissioner of Central Excise, Gaziabad (</b></font><font size="1" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=52&filename=legal/cestat/2004/2004-TIOL-58-CESTAT-DEL.htm">2004-TIOL-58-CESTAT-DEL</a></font>)<font size="2" face="Verdana, Arial, Helvetica, sans-serif"> the Tribunal held that even though the assessee has taken the matter before the Supreme Court, so long as the judgment of the Tribunal is not stayed by the Supreme Court, the Tribunal’s judgment holds. <br> <br> <b>In Commissioner of Central Excise, Hyderabad Vs. Kavson Gas Equipments (P) Ltd [2002 (146) E.L.T. 617 (Tri-Chennai)]</b> the Tribunal dismissed revenue’s appeal on the ground that mere appeal against the Tribunal’s order does not amount to stay. <br> <br> Dr. Sreekumar Menon as Commissioner (Appeals) in Order-in-Appeal Nos. 48-49/2003 (M III), dated 25-6-2003, observed, <br> <br> In spite of availability of Tribunal orders/Board’s Circulars and CCE (A) order, the lower Adjudicator has proceeded to pass the impugned orders utterly disregarding and disrespecting all norms of judicial discipline. Such brazen defiance of the law cannot be tolerated and condoned.<br> <br> The whole system of judicial decisions will end up in a mockery if lower authorities are allowed to disregard the judicial decisions of higher authorities. It has become a practice of late among quasi judicial authorities to somehow pass orders in favour of revenue even by blatant disobedience of the orders of higher authorities. <br> <br> Today we are carrying yet another case where Tribunal frowned on judicial indiscipline. <br> <br> <b>“Be you ever so high, the law is above is you”</b><br> <br> <font color="#FF6666"><b>Until Tomorrow with more DDT<br> <br> Have a nice day. <br> <br> Mail your comments to</b></font> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>