no reformatio in peius - The king Orders Five More Lashes
"no reformatio in peius" means that a person should not be placed in a worse position, as a result of filing an appeal. In a recent judgement, the Madras High Court explained it as a Latin Phrase expressing the principle of procedure, according to which, using the remedy at law, should not aggravate the situation of the one who exercises it.
What provoked the High Court to employ the Latin phrase was an order of the CESTAT which elaborated on how adjudication is to be done, but the Tribunal order itself was far from jurisdictionally and judicially correct.
A citizen who was awarded the punishment of 10 lashes appealed to the mercy of the king. The king ordered five more lashes!
Here is a case where an Additional Commissioner passed a judicious reasoned order whereby he dropped part of the duty demanded in the Show Cause Notice. The aggrieved assessee appealed to the Commissioner (Appeals) who while confirming the order of the Additional Commissioner remanded the case to the Additional Commissioner to reconsider the dropping of the part demand.
The assessee appealed to the Tribunal that the Commissioner (Appeals) acted beyond the scope of the appeal and had no power to remand the matter.
When the assessee has questioned the very jurisdiction of the appellate authority and submitted that he had gone beyond the scope of the appeal, and issued directions, the Tribunal, without adverting to the said ground of challenge, has gone further and elaborated, as to how, the oral and documentary evidence, should be considered, in adjudicating the alleged clandestine removal of raw-materials.
It may be noted that there was no appeal or cross objection by the department at any stage.
The aggrieved assessee approached the High Court. The High Court observed,
In the absence of any appeal filed by the department on the finding, relating to alleged clandestine removal of raw materials, the appellant cannot be put in a worse position, in their own appeal, and in such circumstances, the principle of "no reformatio in peius" would come into play, which means that a person should not be placed in a worse position, as a result of filing an appeal. It is a latin phrase, expressing the principle of procedure, according to which, using the remedy at law, should not aggravate the situation of the one who exercises it.
Had the assessee not filed an appeal, it would not be placed in a situation of inviting an adverse order, on the aspect of clandestine removal. A party who files an appeal, expects that the appellate authority would only address the grounds of appeal, made against the order impugned, and the appellant does not expect the appellate authority to go beyond the scope of appeal, and pass an order, adverse to his interest, in which event, it certainly creates a worse situation for the appellant/assessee, in his own appeal, than the order under challenge.
Instead of addressing the issue, as to whether, the appellate authority had acted beyond the scope of the appeal, and exceeded in his jurisdiction, the Tribunal passed an order, impugned before us, elaborating, as to how, adjudication has to be done, with reference to the aspect of clandestine removal of raw materials, which in our considered opinion, is jurisdictionally erroneous. On the facts and circumstances of the case, we hold that the directions issued by the appellate authority and that of the Tribunal, run contrary to the principle of "no reformatio in peius".
Please see Breaking News for the High Court Story
This is not a lone case where the Tribunal has placed the appellant in a worse situation than what he was in before appealing to the Tribunal. The same Bench of the Tribunal in another recent case, set aside an order of the adjudicating authority favourable to the assessee on an appeal by the assessee. The adjudicating authority allowed re-export of the goods, but imposed redemption fine and penalty. The appeal to the Tribunal was only on redemption fine and penalty.
The Tribunal set aside the order of the adjudicating authority and ordered absolute confiscation.
Absolute confiscation is fine, but the goods had already left the country. How will the Customs now confiscate them? The Tribunal was informed by Revenue that the impugned goods have already left India on payment of redemption fine. To which, the Tribunal passed the following order.
Therefore, it is left to the Chairman of the CBE&C to deal this matter as the Board may consider appropriate in the fitness of the circumstances of the case to protect interest of Revenue since the action of redemption of the goods and re-export has caused detriment to interest of justice.
Now, what is the Chairman supposed to do?
Can the Tribunal order five more lashes on an appeal by the assessee and when there was no appeal by the Revenue?
For more details of the case, please see Breaking News