VINTAK PIPE INDUSTRIES VS CUSTOMS APPELLATE TRIBUNAL, 2018 PTD-LAHORE-HIGH-COURT-LAHORE 1823 (2018)

Customs Act (IV of 1969)---

----Ss. 194-C(5) & 196---Reference---Appellate Tribunal---Difference of opinion amongst Members of the Bench---Petitioner company was aggrieved of the order passed by Customs Appellate Tribunal where Members of the Bench had difference of opinion and Member did not resort to the procedure as mandated by S.194-C(5) of Customs Act, 1969---Validity---Members were supposed to formulate point or points on which they differed and send the case to the Chairman for referring matter to a third member; after three members had recorded their opinion, order of Tribunal could be formulated and signed by all three Members who had heard the parties---High Court set aside order of the Tribunal and remanded case to Customs Appellate Tribunal for decision afresh.

Junaid Jabbar Khan for Applicant.

Ch. Muhammad Zafar Iqbal for Respondents.

JUDGMENT

JAWAD HASSAN, J.---This is a Reference under Section 196 of the Customs Act, 1969 (the "Act").

2.Following question of law is proposed for our opinion, which is asserted to have arisen out of the judgment dated 29.03.2018 (the "Impugned Judgment") issued on 22.05.2018 of the Customs Appellate Tribunal, Lahore (the "Appellate Tribunal"):--

QUESTION OF LAW

Whether the Customs Appellate Tribunal could pass the impugned judgment having difference of opinion between learned Members without resorting to the mandatory procedure provided under Section 194-C(5) of the Act?

3.Brief facts of the case are that against the show-cause notice dated 10.05.2017 the petitioner filed reply resultantly, the Deputy Collector (Adjudication) after hearing both the parties quashed the said show-cause notice vide order-in-original dated 12.07.2017. Feeling aggrieved thereby the Respondents challenged the said order-in-appeal before the Collector of Customs (Appeals) which was dismissed on merit vide order dated 06.09.2017. Subsequently, the Respondent No.2 challenged the said order before the Customs Appellate Tribunal through an Appeal which was heard by two members. Thereafter, the Petitioner was informed that due to difference of opinion between the members its case would be heard by the Tribunal which passed the impugned judgment dated 29.03.2018. Hence, this Custom Reference.

4.Learned counsel for the Applicant submitted that the impugned judgment is in sheer violation of mandatory provisions of Section 194-C(5) of the Act whereby in case of difference of opinion between the members, both the members were required to state point or points of differences on which they are differed and then the case was to be referred by the Chairman to any other Member for hearing on such point or points and thereafter the case was required to be decided on the basis of opinion of majority of the members of the Appellate Tribunal; that in the present case neither the points of differences, were recorded by the members who initially heard the matter nor the same were provided to the Petitioner; that the Petitioner was not provided any opportunity of hearing, as such the impugned judgment has been passed in violation of principle of natural justice. Learned counsel has placed reliance on the case titled Deputy Collector Sales Tax v. Collector, Excise and Sales Tax and others (2002 PTD 2570).

5.When the above position, as submitted by the learned counsel for the Applicant, was confronted to the learned counsel for the Respondents, he conceded and shown no objection if the impugned judgment is set aside and the case is remanded for its decision afresh in view of the above referred judgment.

6.Arguments heard and record perused.

7.The minute perusal of Impugned Judgment reveals that provisions of Section 194-C(5) of the Act has not been complied with in sensu stricto as it was mandatory in case of difference of opinion between members, both the members were required to state point or points of differences on which they differ and thereafter the case was to be referred by the Chairman to any other member for hearing on such point or points and then the case was to be decided according to the opinion of the majority of the members of the Appellate Tribunal which requirements are lacking in the Impugned Judgment. The bare reading of Section 194-C(5) of the Act vividly depicts that viz: (i) If the members of a Bench differ in opinion on any point; (ii) the point shall be decided according to the opinion of the majority, if there is a majority; (iii) but if the members are equally divided, they shall state the point or points on which they differ (iv) and the case shall be referred by the Chairman; (v) for hearing on such point or points by one or more of the other members of the Appellate Tribunal; (vi) and such point or points shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who have heard the case including those who first heard it; (vii) Provided that, where the members of a Special Bench are equally divided, the points on which they differ shall be decided by the Chairman.

8.We have also gone through the above referred judgment passed by the Hon'ble Division bench of this Court in case of Deputy Collector Sales Tax supra. For the sake of brevity we would like to reproduce the relevant portion of the said judgment which is as follows:--

"Difference of opinion between Members of the Appellate Tribunal. Procedure. Provisions of S. 194C(5) of the Customs Act, 1969 provided that a reference to Chairman of the Tribunal for referring the matter to a third Member could not have been made by the Member without recording the point or points on which they differed. Such points were required to be formulated in order to identify the exact nature and extent of difference of opinion between the Members. Formulation of these points were in the nature of issues framed in civil suits bringing out the material proposition of law or fact on which the Members had differed. On formulation of all these points which had to be by agreement of the Members and signed by them the matter was to be submitted to the Chairman "for hearing on such point or points by one or more of the other Members of the Tribunal". Once this had been done and the third Member had heard the parties and expressed his opinion the point or points were to be decided in accordance with the opinion of the majority. Final result or decision in accordance with opinion of the majority was to be recorded and signed by all the members who had heard the case.

Appellate Tribunal-Difference of opinion between Members of the Appellate Tribunal. Recording of order by the Chairman without hearing the parties. Validity. Reference was made to the Chairman for appointment of a third Member to hear the case without stating the points which was not in accordance with law. Third Member had recorded his agreement on certain points on which he believed that his colleagues had differed. Order of the Tribunal ought to have been signed by the three Members. Chairman who had not heard the parties at any stage could not record the order of the Tribunal. Recording of order of the Tribunal by Chairman alone and particularly when he had not heard the parties was alien to the practice and procedure of any judicial forum comprising more than one Member. Chairman of Tribunal was primus interpares which means first amongst equals. Except for his privilege to constitute Benches he was simply another Member of the Tribunal and had no precedence over any other Member in that capacity. While being a Member of Bench his judgment or decision was only that of a Member and nothing more. Member of the Tribunal who had not heard the parties could not subscribe a single word to the judgment muchless recording the order of the Tribunal without participation of the Members who had in fact heard the parties. In view of S.194C(5) of the Customs Act, 1969 the failure on the part of the Members to formulate points resulted in a material irregularity. After recording of opinion by the third Member the recording of order of the Tribunal by the Chairman had rendered the order to be non-existent in law. Order was set aside by the High Court with the direction that appeal shall be deemed pending before the Tribunal which will proceed from the stage the Judicial Member and Member (Technical) differed. Said Members will formulate the point or points on which they differed and send the case to Chairman for referring the matter to a third Member (including the Chairman himself as a Member (Judicial)). After the three Members have recorded their opinion an order of the Tribunal shall be formulated and signed by all the three Members who had heard the parties."

9.Keeping in view the consent of the parties and verdict by the Hon'ble Division Bench of this Court in the above referred judgment, we set aside the Impugned Judgment with the direction that appeal shall be deemed pending before the Tribunal which will proceed from the stage the Judicial Member and Member (Technical) differed. Said Members will formulate the point or points on which they differed and send the case to Chairman for referring the matter to a third Member (including the Chairman himself as a Member (Judicial)). After the three Members have recorded their opinion an order of the Tribunal shall be formulated and signed by all the three Members who had heard the parties.

10.Disposed of in the above terms.

11.Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per Section 196(5) of the Act.

MH/V-1/L Case remanded.