ORDER
S.L. Peeran, Member (J)
1. These reference applications arises from the rejection of the appeals as being not maintainable by upholding the preliminary objection raised by the department as per the Tribunal’s Final Order No. C/145-146/93-B2, dated 22-11-1993. The applicants after making out the necessary grounds have raised the following question of law for reference to the High Court under Section 130(i) of the Customs Act, 1962 :
QUESTION OF LAW:
“In the above facts and circumstances, whether the Tribunal was right in dismissing the appeal filed by the applicant as not maintainable?”
2. The facts of the case arising for these reference applications as stated by appellants are:
“The facts of the case are that the department issued a show cause notice dated 7-3-1992 to M/s. ORG Systems and to C.R. Salian above named appellants and it appear no show cause notice was issued to Shri H.C. Choksi, the other appellant in this case under Sections lll(m), 112(a) for violation of Section 11 of Customs Act, 1962. The company filed a detailed reply and so also Salian but no reply was filed by Shri Choksi. The Learned Deputy Collector passed the order-in-original against the appellants and the company, by which he ordered for confiscation of 45 nos. of wine Chester Disc Drives under Section lll(m) of the Customs Act but at the same time granted redemption to the company on payment of fine of Rs. 3 lakhs and also imposed penalty under Section 112(a) on both the appellants of Rs. 1.5 lakh each.
Both the appellants did not file appeal before the Collector (Appeals) as provided under the law, although the order-in-original was served upon them. The covering letter to the order-in-original clearly disclosed that if they were aggrieved with the said order, they could file appeal before the Collector (Appeals). The company filed the appeal on its behalf only, without the appellants being the parties or the appellants signing the appeal of the company. The company in its appeal had made among other prayers, a prayer to set aside the penalty imposed on the present appellants also. As separate appeals had not been filed as contemplated in law by the appellants, the prayer of the company, to set aside the penalty imposed on the present appellants was rejected by the Learned Collector (Appeals) as held by him in Para (10)”.
3. A preliminary objection was raised by the department representative regarding the maintainability of these appeals in view of the following finding given in para 10 by the Collector in the impugned order:
“The ld. Advocate has also submitted the imposition of penalty on S/Sri Choksi and Salian is not warranted. The impugned order has been issued to both the above executives of the appellant firm. The present appeal is from M/s. ORG Systems, Wadi Wadi, Baroda and not from S/Shri H.C. Choksi and C.R. Salian. The appellant cannot submit arguments in respect of the penalties imposed on the other 2 individuals. The appellant has also not stated as to how they are aggrieved by the imposition of the penalty on the above two persons. Definitely when the other two persons can file appeal against the order, if they felt aggrieved, it is not open for the appellants to request for setting aside the order of imposition of penalty on them. I, therefore, do not find any justification to entertain this request when the above two individuals have not filed any appeal. Accordingly, I reject the plea of the appellant for setting aside the order of imposition of penalty on S/Shri H.C. Choksi and C.R. Salian. The appeal is accordingly disposed of.”
4. The Tribunal after hearing both the sides passed the detailed order upholding the Revenue’s contention. The Tribunal has held in Para 6 as follows :
“6. We have carefully considered the submissions made by both the sides and also perused the rulings cited before us. The proviso granting right of appeal to the Collector against the orders passed by adjudication is provided in Section 128 of the Customs, 62. It reads as follows :
“128. Appeals to Collector (Appeals) – (1) Any person aggrieved by any decision or order passed under this Act by an officer of Customs lower in rank than a Collector of Customs may appeal to the Collector (Appeals) within three months from the date of re-communication to him of such decision or order :
Provided that the Collector (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be prescribed within a further period of three months.
(2) Every appeal under this section shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf.”
The proceedings under the Section 111 and Section 112(a) of the Act before the adjudication authority are quasi-criminal in nature and the levy of penalty is penal in character. The appellants Shri C.R. Salian had been issued with show cause notice. Although Choksi had not been issued with show cause notice but he is aware of the proceedings. The company had filed their appeal against the confiscation of the goods and against the imposition of fine. In their prayer column, they had sought for setting aside the penalty against their officers. But this appeal is not a joint appeal and the appellants had neither signed the appeal of the company nor authorised the company to file an appeal on their behalf. The copy of the order-in-original had been served on Shri C.R. Salian, and it had been noted in the covering letter that if he is aggrieved with the order than he could file the appeal before Collector (Appeals) under Section 128 of the Customs Act. A reading of Section 128 makes it clear that only an aggrieved person can file an appeal. The appeal of the company is the order of confiscation and imposition of fine against them. Therefore, the company cannot be said to be aggrieved party as against imposition of penalty against the appellants. Hence, the ruling of Kanta International is totally not applicable to the facts of this case as this case dealt with filing of joint appeal with one set of fees against a single order. The company not having been authorised to file the appeal on behalf of the appellants, the appeal before the Collector was not a joint appeal and hence the ratio of this case is not at all applicable. As regards the plea of the applicability of order 1 Rule 10 of CPC, it is to be stated that this provision of law is applicable only with regard to Civil Suits before the Civil Court and the Court has been empowered to allow substitution of the parties, in order to pronounce judgment in respect of Civil rights, which effects all the parties having sustantive interest in the suit. The position in this case is different. The appellant had been imposed with penalty, which affects their personal rights and it was for them to have filed a proper appeal as per Section 128 of the Act. The applicants have also not chosen to file an appeal before the Collector, even after the Collector having opined in the impugned border. The appeal against the impugned order-in-original lies before Collector (Appeals). Therefore, the present appeals are clearly not maintainable. The rulings cited by the ld. Counsel is under Civil Procedure Code, which proviso does not apply to the appeal proceedings under the Customs Act.”
5. In Para 7, the Tribunal examined the ratio of the judgments of the Delhi High Court rendered in the case of Hindustan Photo Films Mft. Co. Ltd. and Union of India v. CEGAT as reported in 1990 (50) E.L.T. 234 and that of Hardat Sharma v. Jai Kishan Shamlal & Sons as reported in AIR 1983 JK 29 and also that of Hon’ble Supreme Court’s judgment rendered in the case of Bal Niketan Nursery School v. Kesari Prasad and held the same to be not applicable to the facts of the present case.
6. In the present reference applications, the appellants are stating that an appeal lies to the Collector (Appeals) by any person aggrieved by any decision or order passed by an officer of Customs lower in rank than the Collector of Customs. Therefore, the Company M/s. SEL being an aggrieved party had filed the appeal and the appellants had not been done so. However, it is their contention that SEL could not submit arguments in respect of penalty imposed on the appellants and therefore, the Collector (Appeals) had not passed any order regarding the imposition of penalty against the appellants in the absence of any appeal from them. It is stated by them that although they had not filed any appeal before the Collector (Appeals) as per law yet they are aggrieved persons and hence, a question arises for reference to the High Court. They also stated that although the appeal lies under Section 130E of the Customs Act to the Hon’ble Supreme Court from any order passed by the Appellate Tribunal relating among other things to the determination of any question having relation to the rate of duty or Customs or to the value of goods for the purpose of assessment. However, in this case as only penalty has been challenged by the appellants, they have no right of appeal and hence they have filed this reference application.
7. When this reference application initially came up for hearing the Revenue again had raised a preliminary objection against the filing of this reference application on the ground of the same has not been maintainable. However, the Bench by Misc. Order No. C/17/95-B2, dated 12-1-1995 rejected the Revenue’s contention held to be reference to be maintainable.
8. We have heard the learned Advocate, Shri V. Lakshmi Kumaran for the appellants and the learned DR, Shri Mohd. Ali for the Revenue.
9. The learned Advocate submitted that the non-consideration of the appeals at the threshold as being not maintainable is a question of law and the same is required to be referred to the High Court in terms of question raised by them. He also relied on the ratio of the following judgments :
1. Shree Meenakshi Mills Ltd. v. Commissioner of Income-tax – AIR 1957 SC 49;
2. Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. – AIR 1961 SC 1633;
3. Commissioner of Income-Tax v. M/s. Chander Bhan Harbhajan Lal – AIR 1966 SC 1490;
4. Steel Authority of India Ltd. v. Collector of Central Excise -1990 (47) E.L.T. 419;
5. Collector of Central Excise & Customs v. Indian Metal & Ferro Alloys Ltd. -1992 (61) E.L.T. 425.
10. On the other hand, the learned DR pointed out that no question of law arises in this case as the appellant’s appeal has been held as not maintainable in view as the appellants having acquiesced the right of filing the appeal before the Collector (Appeals) and hence the order-in-original is deemed to have been confirmed against them. The appeal before the Tribunal without crossing the stage of first appeal is not maintainable and being a settled question of law, no question of law arises for determination by High Court. It is his case that only where a statutory interpretation is required, it is only then that the matter is referred to the High Court for determination of the points, which are purely legal in nature and that does not require any interpretation of any facts. He submitted that the appellants have not shown any ground which could be considered as a question of law for reference to the High Court.
11. We have carefully considered the submissions made by both the sides and we have to uphold the contention raised by the learned DR. In this case the appellants have not exercised the right of appeal by filing an appeal before the first appellate forum and it is only the company M/s. SEL, who had agitated against the order passed by the Assistant Collector before the Collector (Appeals). The Collector (Appeals) had merely noted the fact that the appellants not having filed the appeal before him. Therefore, the order of the Collector gets confirmed to that extent. It follows, therefore, that the appellants have not exercised their right of appeal and by their action, whether deliberate or conscious have given up their right of appeal, which was available to them to file appeal before the first appellate forum. They realised only after the Collector (Appeals) had passed an order about their having waived their right of filing the appeal. Therefore, they approached the Tribunal and the Tribunal held that they have not exercised their right of filing the appeal and that they cannot come to the second appellate forum, as the Tribunal takes up the appeals only against the order passed by the first appellate forum. As can be seen from the provisions of law, that an appeal before the Collector has to be filed within 3 months and the Collector has been vested with power to condone the delay in filing an appeal for another period of 3 months. The position is that if a party does not file an appeal within the said statutory period or within a period under which the law provides for filing the appeal with an application for condonation of delay, then it follows that they have waived their right of appeal. The right of appeal is not a substantive right but it is only a procedural right and on not exercising the same, the party has acquiesced their rights and the Revenue has acquired the benefit of the order and the order-in-original has got confirmed. This position of law being very clear and settled, and the Tribunal having decided this point correctly and also no legal point having arisen therefrom requiring any statutory interpretation or interpretation of any provisions of law, therefore, the question of reference of a matter arising from facts to the High Court does not arise in this case. The entire case made out in this reference application is only appreciation of facts and it is as to whether the appellants have right of appeal before the Tribunal without exercising their right before the first appellate forum. The appellants having not exercised their right before the first appellate forum and having acquiesced their right and right of appeal being not a statutory right, therefore, the question of approaching a higher forum does not arise. This is merely an appreciation of facts and not any interpretation of any statutory provision or interpretation of any provision of law.
12. In the case of Sree Meenakshi Mills Ltd. (supra), the Hon’ble Supreme Court has laid down that the position for making a reference under Section 66 of the Income-tax Act arises :
(i) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the Court under S.66(l).
(ii) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those findings is a question of law which can be reviewed by the court.
(iii) A finding on a question of fact is open to attack under S.66(l) as erroneous in law when there is no evidence to support it or if it is perverse.
(iv) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact.
13. As can be seen, the present case does not fall within any of ambits laid down by the Hon’ble Supreme Court. There is no point for determination arising from a construction of a statute or legal provision requiring interpretation. Hence, the above ratio will not help the appellants, while in fact, it helps the Revenue.
14. In the case of Scindia Steam Navigation Co. Ltd. (supra), the Hon’ble Supreme Court has held that where a question of law is raised before the Tribunal and the same was not dealt with, then it becomes a question arising out of its order requiring reference. It also held that when a question was not raised before the Tribunal but the Tribunal deals with it, that it will also be a question arising out of its order. It also held that where a question of law is neither raised before the Tribunal nor considered by it, then it will not be a question arising out of its order; notwithstanding that it may arise on the finding given by it. On an examination of this ruling, it is very clear that the same is more helpful to the Revenue, then to the appellants.
15. The matter dealt with by the Hon’ble Supreme Court in the case of Chander Bhan Harbhajan Lal (supra) is pertaining to a person in his individual capacity can legally be a partner in the assessee firm, and the fact that he secured the capital from another firm, or that he entered into a partnership with the other members of that firm in respect of his share in the assessee firm does not show that the other firm is a partner of the assessee firm or that the assessee firm is not validly constituted. The Hon’ble Supreme Court held that no substantial question of law arose out of the order of the Appellate Tribunal and that the High Court in the exercise of its discretion under Section 66(2) rightly rejected the Commissioner’s application. This is also not helpful to the facts of the present case.
16. In the case of Steel Authority of India Ltd. (supra), the Tribunal held that the claim for refund of duty was held as barred under Section 11 of the Central Excises and Salt Act, 1944 and is a question of law for reference to the High Court. This judgment is also not helpful to the present case.
17. In the case of Indian Metal & Ferro Alloys Ltd. (supra), the Orissa High Court directed the Tribunal to reframe the question and refer the matter to the High Court. The High Court also held that question of law which was neither raised nor decided do not come within the scope of “having arising out of the order” and for the reasons stated therein directed the Tribunal to frame the question and refer the same to the High Court. This case is not applicable to the facts of the present case.
18. The view taken by us is a well settled proposition as can be seen from the commentary under Section 113 of the Civil Procedure Code pertaining to reference to the High Court as appearing in pages 1811 and 1812 of Vol. 2 of Dr. Nand Lal’s Code of Civil Procedure Second Edition (1977), the same is noted herein below:
“It is now fairly well settled that a person who had derived an advantage under a statute could not be permitted to assert its invalidity when ultimately it has been decided against him under the statute. [Bapatla Venkata Subba Rao v. Sikharam Ramakrishna Rao, A.I.R. 1958 A.P. 322 at pp. 324-25: (1958) 1 A.P.W.R. 33]
In Rottschaefer’s Constitutional Law at page 29 the position is stated thus :
“A person who would otherwise be entitled to raise a constitutional issue is sometimes denied that right because he is estopped to do so. The factor usually present in these cases is conduct inconsistent with the present assertion of that right, or conduct of such character that it would be unjust to others to permit him to avoid liability on constitutional grounds. A person may not question the constitutionality of the very provision on which he bases the right claimed to be infringed … and a person who has received the benefits of a statute may not thereafter assert its invalidity to defeat the claims of those against whom it has been enforced in his own favour.”
A passage from Halsbury’s Laws of England (3rd Ed.), Vol. II, P.150 (Simond edition) is also of some assistance :
“The qualification of a present to act as a relator could be successfully impeached if it could be shown that, at the time, he acquiesced in the election to which he objected; or that he had concurred in other election of like kind with that to which he objected, and which was subject to the same objection or that he stood in the same situation as the defendant, so that he would have no title to his own office, if his objection to the defendants election were successful; or that he was raising an objection which might have been put forward against himself at a previous election….”
In Queen v. Lofthouse, [(1866) 1 Q.B. 433] it was remarked by Blackburn, J., that a relator who kept his objection until after he was defeated was not a fit person to be entrusted with the prerogative process of the Crown. Much to the same effect are the observations of Justice Shee at page 444 :
“On the other point, I agree that we ought not to assist this relator. Cases have been brought to our notice which show that where a man with the knowledge of the irregularity of a particular course, nevertheless concurs in it, he cannot afterwards take advantage of the irregularity. In the present case, Mr. Maw voted on a voting paper which he knew or believed to be irregular. He therefore comes precisely within the rule enunciated by Lord Kenyon, C.J., in Rex v. Clarke. [(1800) 1 East 38 at pp. 46-47] ‘The Court have on several occasions said, and said wisely, that they would not listen even to a corporator who has acquisced or perhaps concurred in the very act which he afterwards comes to complain of when it suits his purpose; and so far I think we have determined rightly’. And there are other cases to the same effect. The present relator has concurred in the very act he now complains of, for he has used voting papers in blank in this very election and in others. Therefore, in the exercise of our discretion, we ought not to assist him.”
In A.R.V. Achar v. Madras State, [(1954) 1 M.L.J. 102 : A.I.R. 1954 Mad. 563] reservation of seats to particular communities under the Madras City Municipalities Act (Act 4 of 1919) was questioned as unconstitutional, being opposed to the provisions of Arts. 14 and 15 of the Constitution. One of the grounds upon which the Bench consisting of Rajamannar, C.J., and Justice Venkatrama Ayyar, refused to issue a writ for information in the nature of quo warranto was that the petitioner –
“has acquiesced in the election to which he objects or that he is raising an objection which might have been put forward against himself at a previous election or that while cognizant of the objection he voluntarily so acted to enable the respondent to exercise the office.”
In the Panchayat, Pandarapadu v. State of Andhra Pradesh [1956 Andh. L.T. 781 : A.I.R.1957 A.P.355] Justice Bhimasankaram concurred in the principle enunciated by the Bench in A.R.V. Achar v. Madras State. [A.I.R. 1954 Mad. 563]. In Madhao Gopal v. Secretary of State, [A.I.R. 1939 Nag. 44] Justice Niyogi and Justice Gruer stated the rule thus :
“It is true that an ultra vires statute cannot be validated by acquiescence but it is equally true an acquiescing party may be estopped from questioning it.” [See Street on the Doctrine of Ultra Vires, 1930 Ed., p. 436]
In W.P. No. 375 of 1954 (Andhra) (i), Satyanarayana Raju, J., held that a person who was himself appointed under the Madras Hereditary Village Offices Act could not question the validity of the Act.”
19. In that view of the matter, for reasons stated above no reference of law arises for High Court. Hence, the reference applications are rejected.
S.K. Bhatnagar, Vice President
With due respect to my learned Judicial Member, my views and orders are as follows:
2. In my opinion, the question of maintainability of an appeal or otherwise is a question of law. However, it is not that every question of law is referable to the High Court.
3. In the present case, an explicit provision of law exists to the effect that an appeal against a decision or order of an officer below the rank of Collector (now Commissioner) lies to Collector (now Commissioner) (Appeals) as apparent from Section 128 of the Customs Act, and an appeal against an order of Collector (now Commissioner) or Collector (Commissioner) (Appeals) lies to the Tribunal as evident from Section 129.
4. The applicants in this case admittedly did not file an appeal before the Collector (Appeals) i.e. before the proper forum but filed a petition against the order of an officer below the rank of Collector directly to the Tribunal which is not contemplated by the statute. There is no scope for any doubt or dispute in this regard. The provisions are explicit and clear. Therefore, no question referable to High Court arises in this case.
5. In this respect, it would be worthwhile to cite from Shri S.N. Dokania’s book on ‘Appeal, Revision, Reference and Writs under Direct Taxes’:
In Chapter 4 para 44 regarding referable question of law, it is mentioned therein that the Tribunal is obliged to refer only a question of law which calls for investigations, examination, debate or when it is a dubious problem. However, if a point of law decided by the Tribunal is positive, certain, definite and sure, there is no obligation on the part of the Tribunal to refer as it cannot be termed as a question of law referable to High Court. It is not that every point of law is required to be referred by the Tribunal to the High Court. When an answer to the question is simple, obvious and self-evident, it is not bound to refer such a question. In this connection, the case of CIT v. Basant Kumar Agarwalia and Anr. -1983 (140) ITR 418 (422) (Gau); Mathuraprasad Motilal and Co. v. CIT -1956 (30) ITR 695 (Nag.) has been cited.
6. In the circumstances, I belive that in the present case, it is not necessary to refer the provisions of the Civil Procedure Code pertaining to the reference to the High Court and the situation is different from the one given in Rottschaefer’s Constitution Law at page 29 or Halsbury’s Laws of England at page 150 or the cases quoted in paragraph 18. It will be sufficient for our purpose if we confine ourselves to the cases relating to the Customs Act and similar provisions in allied laws and therefore, I agree with my learned brother that the present case is distinguishable from the case of ChanderBhan Harbhajan Lal (supra), SAIL (supra) and Indian Metal & Ferro Alloys Ltd. (supra) mentioned in Paragraphs 15,16, and 17. I agree also with my learned colleague’s observations in paras 12 and 13; hence I also hold that the reference applications are required to be rejected.