CC, (ICD), New Delhi vs Brightwell Enterprises And Ors.

These appeals are listed for hearing, pursuant to the judgement dated 30.4.2010 of the Delhi High Court in Writ Petition No. 1676/2010. The High

Court quashed the Final Order No. 18.6.2009 passed by this Tribunal in these appeals and the order dated 21.12.2009 passed by the Commissioner of

Customs, Delhi consequent on an order of remand contained in the CESTAT order dated 18.6.2009.

These appeals are preferred by Revenue against adjudication orders dated 22.12.2006, 19.1.2007, 21.2.2007 and 12.3.2007 passed by the

Commissioner of Customs, Delhi, aggrieved that the learned adjudicating authority failed to impose penalty on certain customs officers of the

Department who are alleged to have connived/colluded with exporters in evasion of customs duty. The appeals were filed on 29.6.2007 but strangely

without impleading the Customs officers, the non-imposition of penalties against whom is the singular grievance in the appeals; thus without impleading

necessary parties to the appeals.

These appeals were disposed of on 18.6.2009 setting aside the adjudication order and remanding the matter to the adjudicating authority to consider

inter alia imposition of penalty on the officers. Consequent on the remand the adjudicating authority passed de novo orders on 21.12.2009. Aggrieved

thereby, the officers filed Writ Petition before the Delhi High Court which passed the order dated 3.4.2010 mentioned earlier.

Revenue filed an application on 23.10.2012 seeking impleadment of those departmental officers against whom penalties are required to be imposed

according to the appellant - Revenue. The Misc. applications are still pending consideration.

In this regard, CESTAT vide Order No. 90-95/2015 dated 8.4.2015 observed as under:

The crucial issue to be considered, precedent to determination of the appeals, is the threshold issue whether Revenue's appeals filed in

2007 could be considered as having been duly instituted according to law since necessary parties were not impleaded. Other issues are

whether applications filed in 2012 for impleadment of the necessary parties the effected officers could be considered without determination

of existence of justifiable reasons for failing to implead them in the first instance; and whether the Misc. applications for impleadment could

be heard without notice to the effected officers, sought to be now impleaded.

In the circumstances, it is necessary to have a chronology of events from the date of filing of the appeals, a compilation of the relevant

applications and orders of this Tribunal; of the Delhi High Court, and the order dated 21.12.2009 passed by the adjudicating authority

(which was been set aside by the Delhi High Court)

Ld. Counsel for the affected officers Shri S. Sunil and Id. DR Shri Govind Dixit representing Revenue seek time to file relevant

documents. For this purpose matter is adjourned to 8.7.2015. As both the parties are present, no fresh notice need be issued. A copy of this

docket order shall be furnished to both parties.

In pursuance of the said order dated 8.4.2015 of CESTAT, the Id. Advocate on behalf of the some of the Customs officers filed the chronology of

event essentially as under:

3.1.2007 Order-in-Original No. 10/GS/CC/DRI/NCH/2006 dated 3.1.2007 was passed by Commissioner, holding against exporters (Sunrise

International, Vikrant Overseas, Shree Durga Irnpex, Tech Inds. Corpn., International Engineering and Bright Well Enterprises). No penalty was

imposed on any officer.

26.4.07 Appeals filed by exporters, challenging the Order-in-Original dated 3.1.07, were allowed by remanding the cases of the exporters for de nova

consideration. No officer was a party in the said proceedings.

2007- Appeal Nos. C/280/07, 332-334/07, 392/07 and 402/07 were filed by the learned Commissioner, before this Tribunal without making any officer

a party, but praying that penalty be directed to be imposed on the officers (including the applicant). No notice of these appeals were ever issued to the

applicant or other officers, and none of the officers was heard.

18.6.09- Final Order was passed, setting aside the Order-in-Original dated 3.1.07 of the learned Commissioner and remanding the matters for de

nova consideration by holding the grievance of the Revenue, as contained in its appeals, to be justified.

21.12.09- Order-in-Original was passed by the Commissioner imposing penalty upon the officers who were exonerated by the earlier Commissioner

vide his Order-in-Original dated 3.1.2007.

30.4.10- Hon'ble High Court of Delhi vide its judgement set aside the Order-in-Original dated 21.12.09 passed by the Commissioner in the remand

proceedings qua the officers who had approached the Hon'ble High Court challenging the said Order-in-Original.

17.5.10- On this date, the appeals which were filed by the Revenue were taken on board. The Counsel appraised the Tribunal regarding the

judgement dated 30.4.10 passed by the Hon'ble High Court. It was submitted that the appeals preferred by the Revenue had not been made available

to the officers.

8.7.11- Appeals preferred by Revenue were once again taken on board. On this date, it was also submitted before this Tribunal that Revenue had

sought relief against the officers without making them parties. The Tribunal, therefore, observed that Revenue was required to amend its appeal memo

to include the officers as necessary parties and serve them the appeal memo. Six weeks time was granted to cure the defects and serve copies of

appeal memo on the officers.

18.4.12- This Tribunal upon hearing the Counsel for parties in the appeal preferred against the Commissioner's order dated 21.12.09, directed that the

appeal preferred by the Revenue in 2007 requires to be heard first.

27.4.12- This Tribunal vide its Misc. Order No. C/M/194/12-Cus noticed the fact that no appeal memo of the Revenue against the officers has come

up. There was no instruction with the Registry from Revenue as to whether they have filed any appeal against them.

The Registry was also directed to search the records as to whether any appeal has been filed by the Revenue against the petitioners.

Revenue during the hearing on 22.07.2015 and in its written submissions filed on 29.07.2011 essentially contended/pleaded as under:

(i) The Hon'ble CESTAT issued an Interim Order No. IO/C/90-95/2015-CU(DB) dated 8.4.2015 in the case of Brightwell Enterprises &

Others. Vide the said order, the CEST AT in paragraph 5 determined that a crucial issue which remained for consideration was :

whether Revenue's appeals filed in 2007 could be considered as having been duly instituted according to law since necessary parties were

not impleaded. Other issues are whether applications filed in 2012 for impleadment of the necessary parties the effected officers could be

considered without determination of existence of justifiable reasons for failing to implead in the first instance; and whether the

miscellaneous applications for impleadment could be heard without notice to the effected officers, sought to be now impleaded.

(ii) The CESTAT therefore desired that it should be provided with a chronology of the events of the case from the date of filing of appeals

along with a compilation of relevant applications and orders of the CEST AT and the Hon'ble Delhi High Court and in particular the order

dated 21.12.2009 of the adjudicating authority which was set aside by the Hon'ble Delhi High Court.

(iii) In pursuance to the directions of the CEST AT, the Counsel for Shri Bamin Tari & Shri Rajeev Sood (who were sought to be impleaded

by Revenue) filed a compilation along with a chronology of events. This compilation was duly brought to the notice of CESTAT Bench in

Court No.1, Principal Bench, New Delhi on 22.7.2015 when the appeals were taken up for hearing for their final disposal. Revenue heavily

relies upon paragraphs 3, 6 and 7 of the order dated 30.4.2010 of the Delhi High Court to emphasize the point that while the Hon'ble Delhi

High Court took notice of the fact that the names of the Customs Officers were not shown as respondents in the Form annexed to the appeal

before the CESTAT and only the concerned exporters were shown as the respondents and the addresses at which the notices were to be sent

to respondents were of the exporters and not of the Customs Officers who Revenue wanted to make as respondent.

(iv) The High Court further noted that it was obligatory on the part of Revenue to show the names of the officers as respondents in the

appeal against the column for respondents in the Form annexed to the appeal. Had this been done CESTAT would have to issue notice to

the Customs Officers instead of issuing notice to the concerned exporters as a consequence of which, natural justice would not have been

denied to the Customs Officers as they would have got an opportunity to contest the appeal filed by the department and to present their case

before the Tribunal.

(v) The Hon'ble High Court after setting aside CESTAT's Order dated 18.6.2009 and the original adjudication Order dated 21.12.2009 to

the extent of penalty imposed on the Customs Officers, issued the following directions:

The Tribunal is directed to pass fresh order in the appeals of the Department against the petitioners, after giving opportunity of hearing to

the parties. The parties are directed to appear before the Tribunal on 17th May, 2010 in the first instance. No further notice would be

necessary for their participation in the said appeals.

(vi) CESTAT vide its Misc. order dated 22.7.2011 proceeded to interpret the High Court judgement dated 30.4.2010 to the effect that the

defect in filing of the appeal by Revenue was a curable one and not a fatal one.

(vii) It must not be forgotten that the Hon'ble Delhi High Court after noting the defect in para 3 of its judgement also observed that the

prayer in the appeal filed by the department before CESTAT was to seek orders from CESTAT to impose penalty on the Customs Officers

which indicated that the appeal was filed with a prayer directed at the Customs Officers. On 22.7.2011, the CESTAT in its Misc. Order No.

C/169/2011 in paragraph 3 has reasoned as follows :

Keeping in view the direction of the Hon'ble High Court, Revenue is required to amend its appeal memo to include these three respondents

as necessary party and serve them appeal memo. Learned DR seeks six weeks time to cure the defect as stated above and also to serve copy

of respective appeal memo on the above three respondents. Accordingly, we direct that the process of amendment of appeal memo and

service of copy thereof should be completed by 29th August, 2011.

(viii) The threshold issue concerning curing of the defects in filing the appeal by Revenue having been settled by the CESTAT as far as in

July 2011, cannot be re-opened again when Revenue has filed appeals in pursuance of the CESTAT order dated 22.7.2011. The arguments

regarding non-impleadment of necessary parties was a matter taken cognizance of by the Hon'ble Delhi High Court on 30.4.2010 and yet

the Hon'ble High Court directed the CEST AT to pass fresh order in the appeals of the department against the petitioner after giving

opportunity for hearing to the parties. This was carried out by the CESTAT when it passed its Misc. order dated 22.7.2011. The defect

having been cured by virtue of CESTAT's own Order of 22.7.2011, the appeals should be considered on their merits after adverting to the

facts of the case, the issues involved and the Jaw applicable and not disallowed on the technical ground of non impleadment of necessary

parties which was already sought to notice of the Hon'ble High Court.

(ix) One CESTAT Bench whether headed by its President or anybody else cannot and should not sit in review over the decisions of another

coordinate CESTAT Bench. This is impermissible under law.

The Id. Advocates for the Customs officers contended that the Customs officers cannot be allowed to be impleaded so many years after the

impugned order of the Commissioner. These appeals were filed in 2007 without naming the Customs officers as respondents and thus in effect, as far

as the Customs officers are concerned, there was no appeal filed with regard to them.

We have considered the matter and the contentions of both sides. It is undisputed that in these appeals filed in 2007 the Custom officers were not

impleaded. As penalty was sought to be imposed upon the Customs Officers, they were indisputably the necessary parties and not merely proper

parties. In the case of Benares Bank Ltd. Vs. Bhagwandas - AIR 1947 Allahabad 18, the Full Bench of the High Court of Allahabad laid down the

following two tests for determining the question whether a particular party is a necessary party to the proceeding.

(i) There must a right to some relief against such party in respect of the matter involved in the proceedings in question; and

(ii) It should not be possible to pass an effective decree in the absence of such a party.

It is self evident that the Custom officers satisfied both the above conditions and therefore they are the necessary parties beyond any pale of doubt. In

Prabodh Verma Vs. State of U.P. - (1984) 4 SCC 297, the action of the State in recruiting teachers was challenged by the petitioners. But the

persons who would be vitally affected were not joined as party-respondents. The Supreme Court observed that the High Court ought not to have

heard the matter in the absence of those persons or at least some of them in a representative capacity.

While summarising the conclusions, the Court observed :

A High Court ought not to hear and dispose of a writ petition under Article 226 of the Constitution without the persons who would be

vitally affected by its judgement being before it as respondent or at least some of them being before it as respondents in a representative

capacity if their number is too large to join them as respondents individually, and, if the petitioners refuse to so join them, the High Court

ought to dismiss the petition for non-joinder of necessary parties.

A Similar view was taken in lshwar Singh.Vs. Kuldip Singh - 1995 Supp. (1) SCC 179 and in J. Jose Dhanapaul Vs. S. Thomas - 1996 (3) SCC 587 In

the latter case, non-impleadment of a necessary party was described as a ""grave error of law"".

Thus, as has been consistently held by Supreme Court, in the absence of necessary parties, the appeals would not survive.

We have perused the order of Delhi High Court, para -7 of which is reproduced as under:

For the reasons given in the preceding paragraphs, the impugned order dated 18.6.2009 passed by the Tribunal as well as the

impugned orders dated 21.12.2009 passed by respondent No. 2 to the extent they impose penalty upon the petitioners, are hereby set aside.

The Tribunal is directed to pass fresh order in the appeals of the Department against the petitioners, after giving opportunity of hearing to

the parties. The parties are directed to appear before the Tribunal on 17th May 2010 in the first instance. No further notice would be

necessary for their participation in the said appeals. All the five writ petitions stand disposed of.

Thus, the High Court required the Tribunal to pass fresh order in the appeals of the department against the petitioners after giving opportunity of

hearing to the parties and the parties were directed to appear before the Tribunal on 17th May, 2010. The parties in these appeals are Revenue and

the exporters. As regards the Custom officers who were not (made) parties in these appeals, no order imposing penalty on them can be passed in

view of the jurisprudential analysis earlier. This view is supported by the Supreme Court decision in the case of Udit Narain Vs. Board of Revenue -

AIR 1963 SC- 786 which is a leading decision on this point. In that case certain orders were passed by the Commissioner as well as by Board of

Revenue in favour of x and y. Those orders were challenged by A by filing a petition in the High Court. Though initially X and Y were joined as

respondents, their names were struck off. When the matter reached the Supreme Court, it was contended that X and Y were not only proper parties

but were necessary parties inasmuch as orders were passed in their favour by the authorities. The question before the Supreme Court was whether X

and Y were necessary parties. The Court replied the question in the affirmative and dismissed the appeal in the absence of necessary parties.

Revenue has also contended that CESTAT vide its order dated 22.07.2011 has already held as under-

Keeping in view the direction of the Hon'ble High Court, Revenue is required to amend its appeal memo to include these three respondents

as necessary party and serve them appeal memo. Learned DR seeks six weeks time to cure the defect as stated above and also to serve copy

of respective appeal memo on the above three respondents. Accordingly, we direct that the process of amendment of appeal memo and

service of copy thereof should be completed by 29th August, 2011.

and that another coordinate bench of CEST AT should not sit in review of that judgement. Although the jurisprudential position with regard to the issue

involved is elucidated in the preceding paragraphs, we nevertheless take up this contention for analysis. It is seen that the said order (dated 20.7.2011)

of CESTAT required Revenue to amend the appeal memo to include the Customs officers as necessary party and serve the appeal memo upon them.

CESTAT gave six weeks to comply with this process and directed Revenue that the process of amendment of appeal memo and service of copy

thereof on the Custom officers should be completed by 29th August, 2011. It is seen that the applications for impleadment of officers were made in

October 2012 i.e. after almost 15 months from the date of that CESTAT order (dated 22.07.2011) while the time granted was only 6 weeks (up to

29.8.2011). Having thus totally failed to comply with the said order of CESTAT, the Revenue's ability to take shelter there-under is completely

jeopardised.

It is also pertinent to point out that Revenue's applications for impleadment of the Custom officers as necessary parties tantamount to filing of

fresh appeals against them. Thus the net, indeed the only, effect of such applications for impleadment of customs officers is that these appeals against

the Customs officers essentially have to be reckoned as if these were filed on the date of filing of the applications seeking their impleadment. We find

that in the applications filed m 2012, no reasons (beyond saying ""administrative reasons"") even remotely satisfactory have been given to explain the

delay of so many years with reference to the date of the impugned order-in-original, or even the delay of more than one year with reference to

CESTAT order dated 22.7.2011 against only 6 weeks allowed by CESAT). Thus we find not even an iota of reasonable ground on the basis of which

such inordinate delay can be condoned even by adopting the most liberal approach in this regard.

In the light of the analysis above, applications seeking impleadment of the Custom officers are rejected. As regards the appeals, in the absence of

the necessary parties namely the Customs officers, those (i.e. the appeals) also cannot be sustained and are accordingly dismissed.