Their Lordships differ - Penalty under which Section? - Too many cases go to the Third Member in CESTAT
IN a recent case before the CESTAT, alleging misdeclaration of imported goods, the Adjudicating Authority imposed a penalty of Rs. 1.50 Lakhs without any reference to the section of the Customs Act under which such penalty was being imposed.
In the Tribunal, the Member (J) set aside the penalty, but Member (T) did not agree with her. He held that Penalty was imposed as per the provisions of Section 114, which warrants such imposition. He then extracted Section 114 of the Customs Act in his order.
Because of difference of opinion, the matter went to the Third Member with the following question:
"whether there was deliberatemis-declaration of classification and description as well as value inviting penal provisions under Section 114 of Customs Act, 1962 as held by Member (Technical) or the penalty is to be set aside as held by Member (Judicial)".
The Third member who was also a Technical Member observed, "Though the order of learned Member (Technical) mentions imposition of penalty under section 114, this section is not attracted in this case, as section 114 is for imposition of penalty for attempt to export goods improperly, while this is a case of improperly imported goods to which the provisions of section 111 and 112 apply."
So, he held that penalty was imposable under Section 112(a) of Customs Act, 1962 (not under Section 114 as mentioned in the order of Hon'ble Member (Technical) as this is not a case of improper export). And so penalty is upheld by majority. As far as the assessee is concerned, it makes no difference as to the Section under the Customs Act, which makes him pay the penalty!
Please see
Third Member not an appellate authority: In another case, we are reporting today, in a Third Member case, the Hon'ble Third Member while deciding a reference made a caustic remark about the two Hon'ble Members who had a difference of opinion. He said, "While both the members have recorded factual aspects, none has recorded the consideration on which interim order should base."
Now there was unanimity between the two Members that the comments of the Third Member are not proper. They unanimously declared, "Before the recording of the Final Order, we would like to observe that learned third Member, in para 18 of his order has observed that both the Members have recorded factual aspects but none has recorded consideration on which the interim order should pass. Both the Members feel that such type of comments by the third Member are not appropriate and proper inasmuch as the third Member is not deciding the matter in an appellate capacity and as such, is not in a position to comment upon the orders recorded by his co-brothers."
Please see Breaking News today for this case.
Of late, it has become a common practice in the CESTAT for Members in a Division Bench to have a difference of opinion and the matter is referred to a Third Member. In 2013, we reported 42 CESTAT cases in which the matters were referred to Third Members. May be we should have all Division Benches consisting of three Members so that invariably there is a majority decision and the trouble of referring too many cases to Third Members can be avoided. And maybe Larger Benches should consist of five Members.