In Vaish Brothers Through Partner vs. Commissioner of Customs, Delhi High Court recently held that choice of option in quasi-judicial matters is not absolute and unfettered and also asks the Customs, Excise and Service Tax Tribunal ( CESTAT ) to hear the appeal.
The assessee in the present case had imported consignment of Bemberg Cupro (Viscose) fabric during the year 2012 and paid Customs duty of Rs.65,460.50 by debiting transferable script authorization/ License issued under focus product scheme. The early mentioned license/script was originally issued by the DGFT, Moradabad to M/s lsha Color for Rs. 5,77,698 and the same was transferred to several firms and at last it has transferred to the Assessee by way of issue of release advise for Rs. 65,407.
During the assessment period, the Assessee duly filed bills of entry along with import documents, subject license and transfer letter etc. before the authorities and were passed out of charge by the proper officer after due scrutiny and no discrepancy was pointed out at that time and even subsequently.
Thereafter the Assessee has received a notice from the Commissioner, Air Cargo Export for purported misuse of Focus Product Scheme and it was stated that the subject license was invalid as the same was issued on the basis of fake shipping bills by the original holder. Accordingly, the department confirmed customs duty of Rs.65,407.50 under section 28(1) along with interest at the rate of 18% under section 28(A) of the Income Tax Act 1961 against the Assessee.
The Assessee contended that they were not the original allottee and were a bona fide third party, who had purchased the script/license for value. However, the department refused to accept the contention of the Assessee and penalty of Rs.65,407.50 and Rs.50,000 under Sections 114A and 114AA of the Act were also imposed.
On appeal, both the lower authorities such as CIT(A) and the Tribunal upheld the penalty imposed by the Revenue and dismissed the appeal filed by the Assessee. Thereafter the Assessee carried the matter before the Court on further appeal.
The division bench comprising of Justice Sanjiv Khanna and Justice Chander Shekhar observed that in the present appeal, however, it is the exercise of the discretion in not entertaining and admitting the appeal which is in question. The impugned order merely refers to the proviso and the discretion vested with the Tribunal. The Order is silent and does not state and give reasons for the exercise of discretion. Discretion gives the choice of option, but the choice of option in quasi-judicial matters is not absolute and unfettered. Discretion vested vide proviso to Section 129 A of the Act is an effective tool which enables the Tribunal not waste time and effort in deciding petty and small amount cases.
The Court also held that in the present circumstances the Tribunal has not correctly exercised the discretion under the proviso (iii) to sub-section 1 of Section 129A of the Act. Therefore, the matter is remanded to the Tribunal to hear the appeal on merits while allowing the appeal of the Assessee.
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