MAY 04, 2016

By P R Chandrasekharan, Member (Cestat) (Retd.)

"CESTAT saved in time" is the breaking news headline of DDT column in TIOL dated 2-5-2016. The relevant extract from the column is reproduced verbatim below:-

"The Government came to the rescue of CESTAT and issued an order dated 29.04.2016, with the approval of the Finance Minister authorizing Mr. Ravindran to prepare roster beyond 29.04.2016, till the joining of the new President.

The order reads as,

Shri M V Ravindran Member (Judicial) Customs, Central Excise and Service Tax Appellate Tribunal, who had been designated as HoD, CESTAT vide order F.NoA­12026/02/2011-AdlC(CESTAT) dated 31.03.2016, is hereby authorized to prepare rosters for re-assigning the bench matters to the Members beyond 29.04.16 till the joining of new President CESTAT or until further orders, for smooth functioning of the tribunal.

This issues with the approval of Finance Minister.

A major crisis has been averted and all CESTAT Benches can function normally from Monday. Mr. Ravindran flew down to Delhi (from Mumbai where he is posted) on Saturday (30th April) and issued the roster for all the Benches. Now, even the newly appointed Technical Members who were sitting idle for want of a roster can be assigned to Benches and are in fact assigned."

Is the proposition made above legally correct? I am afraid it is not.

2. To examine the issue in its proper perspective, it will be appropriate to peruse the legal provisions relating to the constitution of the Tribunal and its procedures. Sections 129 and 129C of the Customs Act, 1962,are relevant for this purpose and they read as under:

"SECTION 129.    Appellate Tribunal . - (1) The Central Government shall constitute an Appellate Tribunal to be called the Customs, Excise and Service Tax Appellate Tribunal consisting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act.

(2)   …………

(2A)………….

(3)   The Central Government shall appoint –

(a)   a person who is or has been a Judge of a High Court; or

(b)   one of the members of the Appellate Tribunal, to be the President thereof.

(4)   The Central Government may appoint one or more members of the Appellate Tribunal to be the Vice-President, or, as the case may be, Vice-Presidents, thereof.

(5)    A Vice-President shall exercise such of the powers and perform such of the functions of the President as may be delegated to him by the President by a general or special order in writing.

(6) ………………..

SECTION 129C.    Procedure of Appellate Tribunal.  - (1) The powers and functions of the 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-section (4), a Bench shall consist of one judicial member and one technical member.

………………..

(4)   The President or any other member of the Appellate Tribunal 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 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 of 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 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 ten lakhs rupees.

(5)   If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority; but if the members are equally divided, they shall state the point or points on which they differ and make a reference to the President who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of these members of the Appellate Tribunal who have heard the case, including those who first heard it.

(6)   Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings."

A plain reading of the above provisions make it abundantly clear that it is only the President of the Tribunal or a Vice-President who has been specifically authorized by the President who can constitute the various benches of the Tribunal for the purposes of hearing of appeals before the Tribunal. That power has not been delegated to any other authority.

3. Rules 3 and 4 of the Cestat Procedure Rules, 1982, deal with sittings and powers of a Bench and read as under:-

RULE 3. Sittings of Bench.:- Subject to such general or special orders as may be made by the President, a Bench shall hold its sittings either at Headquarters or at such other place falling within its jurisdiction as it may consider expedient.

RULE 4. Powers of Bench.:- (1) A Bench shall hear and determine such appeals and applications made under the Acts as the President may by general or special order direct.

(2) Where two or more Benches are functioning at any place, the President, or in his absence the senior amongst the Vice-Presidents present, or in their absence the senior-most Member present, may transfer an appeal or application from one Bench to another.

Thus the constitution of the bench, the place where it can sit, the subject matter which it can hear, are all subject matters which come under the jurisdiction of the President. As per the Administrative Order Department Of Revenue Order inF.No. A-12026/0,2/2011-Ad.IC (CESTAT), dated: April 29, 2016, the Member (Judicial) who has been assigned the function of preparation of rosters for hearing of cases (that is, constitution of benches) has not been appointed as the President or Vice-President. It is a well-known fact that the post of Vice-President in CESTAT has been abolished long time back.

4. Thus the conferring of powers on the Member (Judicial) for constitution of CESTAT Benches is ex-facie illegal. The hearing of appeals by such irregularly constituted benches can be challenged in a court of law by any aggrieved party and decisions by such benches could be set aside for want of jurisdiction.

5. The correct course of action that should have been taken is to amend the relevant provisions of the Customs Act, 1962 and the CESTAT Procedure Rules, 1982, retrospectively, by amendments in the Finance Bill, 2016, which is pending consideration and approval in the Parliament. When the Finance Minister himself is a legal luminary, it is surprising that action contrary to law is being taken,however much the intention behind it might be noble and laudable.

Please also see  CESTAT Needs a Regular President - Immediately - DDT  2821  06 04 2016

(The author was an officer of the Indian Customs and Central Excise Service for more than 3 decades and retired as Member (Technical), CESTAT, WZB, Mumbai)