The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK OTAPL No. 42 of 2025 & OTAPL No. 31 of 2025 In OTAPL No. 42 of 2025 Commissioner of Customs (Preventive), Bhubaneswar …. Appellant M/s. Chamong Tee Exports Pvt. Ltd …. Respondent -Versus- Advocates appeared in this case: For Appellant For Respondent : : Mr. Tushar Kanti Satapathy, Senior Standing Counsel Mr. Abhratosh Majumdar, Senior Advocate, Mr. Rahul Khatian, Advocate & Mr. Raj Kumar Jena, Advocate In OTAPL No. 31 of 2025 Commissioner of Customs (Preventive), Bhubaneswar …. Appellant M/s. Chamong Tee Exports Pvt. Ltd …. Respondent -Versus- Advocates appeared in this case: For Appellant For Respondent : : Mr. Tushar Kanti Satapathy, Senior Standing Counsel Mr. Abhratosh Majumdar, Senior Advocate, Mr. Rahul Khatian, Advocate & Mr. Raj Kumar Jena, Advocate OTAPL Nos. 42 & 31 of 2025 Page 1 of 15
Legal Reasoning
CORAM: HON’ BLE THE CHIEF JUSTICE AND HON’BLE MR. JUSTICE MANASH RANJAN PATHAK J U D G M E N T ---------------------------------------------------------------------------------- Date of hearing and Judgment: 31st July, 2025 ---------------------------------------------------------------------------------- HARISH TANDON, CJ. 1. The appellant has filed an appeal under Section 130 of the Customs Act, 1962 assailing the judgment and order dated 30th August 2024 passed by the Customs, Excise and Services Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata whereby and whereunder, the demand raised by the appellant upon issuing the show cause notices alleging that there has been a conscious avoidance of the customs duty by splitting one consignment into different components, was rejected. 2. The counsel for the appellant advanced his argument raising an issue which according to him involves a substantial question of law. 3. In order to ascertain whether the points so urged comes within the periphery of the “substantial question of law”, the OTAPL Nos. 42 & 31 of 2025 Page 2 of 15 genesis of the dispute is required to adumbrated as discerned from the records. 4. The respondent herein exported the iron ore fines (IOF) under the cover of 13 shipping bills to different overseas buyers depicting the value and quantity of the said iron ore fines. The revenue authorities, on the basis of DRI investigation found that 5 consignments of high grade iron ore fines containing more than 58% of the iron (Fe) by splitting them into 7 shipping bills of high grade iron ores which attracts the customs duty @ 30% and discharged their obligations upon payment of the same, but 6 shipping bills of iron ore fines which contain less than 58% of Fe being exempted from the customs duty under law, no duty was paid and, therefore, they have undervalued such 5 consignments with an intend to evade the custom duty. 5. 2 show cause notices were issued demanding the differential custom duty on the basis of a test report of the independent testing agency inviting the respondent to file the reply thereto. The respondent took a defence that the said demand in unsustainable as the Fe content is required to be determined on the OTAPL Nos. 42 & 31 of 2025 Page 3 of 15 basis of Wet Metric Ton (WMT) and not on the basis of Dry Metric Ton (DMT). It was the specific stand of the respondent that it has been held by several High Courts that Fe content has to be evaluated on the basis of WMT and not DMT and, therefore, the stand of the revenue authority is not sustainable. 6. The adjudicating authority dropped the demand of the revenue with categorical finding that the Fe content of the aggregate/consolidated consignment exported through a single vessel was less than 58% on WMT basis, but imposed certain penalties on the respondent company and its authorised person. Since the demand of differential amount of custom duty was rejected by the adjudicating authority, the department preferred an appeal before the Tribunal, wherein the respondent also filed the cross objection challenging imposition of the penalty. 7. A stand was taken by the appellant in the appeal filed before the Tribunal that the respondent intentionally split 5 consignments of high grade iron ore fines containing more than 58% Fe into several shipping bills, some of which contains more than 58% Fe, where the custom duty @ 30% was discharged, but OTAPL Nos. 42 & 31 of 2025 Page 4 of 15 did not pay the custom duty by undervaluing the consignment on the premise that it contains less than 58% of Fe, which does not attract the custom duty in law. A further plea was taken by the appellant that the Fe content is to ascertained on the basis of DMT and not WMT and the test report would reveal that IOF contains more than 58% of Fe in aggregate which was rejected by the Tribunal with categorical finding that the Fe content is to be ascertained on the basis of WMT and not on the basis of DMT. 8. The challenge is made in the instant appeal reiterating the stand that the testing report reveals that the said consignment being the subject matter of the dispute, contains more than 58% of Fe on DMT basis and, therefore, the finding of the Tribunal that it has to be done on WMT basis is unsustainable. 9. Before we proceed to delve into the aforesaid points, we find it prudent to recapitulate the position of law in pursuit to ascertain the substantial question of law involved in an appeal filed before this Court. We are conscious that a mere question of law may not necessarily be a substantial question of law, and, therefore, it is ardent duty of the High Court to ascertain the same OTAPL Nos. 42 & 31 of 2025 Page 5 of 15 and admit the appeal upon formulation thereof. The expression “substantial question of law” has not been defined in the said act nor in any other statute containing such expression. The prefix of the words „substantial‟ before the expression “question of law” must be of such character having bearing on a substance having essential, real and nexus to the issues involved therein, in contradiction with the technical, inconsequential issues or merely on academic. 10. In pursuit of determining the question to come within the ambit of substantial question of law, the point must be debatable or there is possibility of taking a different decision or the opinion and above all where the Court feels that the said point or the question may invite the alternative views to be taken. The point which is settled by a catena of decisions of the coordinate Bench or of a higher Court cannot come within the folds of substantial question of law. The proper test for determining whether the question of law raised in a case can be regarded as a substantial question of law is highlighted in a judgment of the apex Court in Santosh OTAPL Nos. 42 & 31 of 2025 Page 6 of 15 Hazari v. Purushottam Tiwari (Dead) By LRs, reported in 2001 (3) SCC 179 in the following paragraphs: “14. A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be substantial, a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, in so far as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do OTAPL Nos. 42 & 31 of 2025 Page 7 of 15 justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. 15. A perusal of the judgment of the trial Court shows that it has extensively dealt with the oral and documentary evidence adduced by the parties for deciding the issues on which the parties went to trial. It also found that in support of his plea of adverse possession on the disputed land, the defendant did not produce any documentary evidence while the oral evidence adduced by the defendant was conflicting in nature and hence unworthy of reliance. The first appellate Court has, in a very cryptic manner, reversed the finding on question of possession and dispossession as alleged by the plaintiff as also on the question of adverse possession as pleaded by the defendant. The appellate Court has jurisdiction to reverse or affirm the findings of the trial Court. First appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. The judgment of the appellate Court must, therefore, reflect its conscious application of mind, and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate Court. The task OTAPL Nos. 42 & 31 of 2025 Page 8 of 15 of an appellate Court affirming the findings of the trial Court is an easier one. The appellate Court agreeing with the view of the trial Court need not restate the effect of the evidence or reiterate the reasons given by the trial Court; expression of general agreement with reasons given by the Court, decision of which is under appeal, would ordinarily suffice (See Girijanandini Devi & Ors. Vs. Bijendra Narain Choudhary, AIR 1967 SC 1124). We would, however, like to sound a note of caution. Expression of general agreement with the findings recorded in the judgment under appeal should not be a device or camouflage adopted by the appellate Court for shirking the duty cast on it. While writing a judgment of reversal the appellate Court must remain conscious of two principles. Firstly, the findings of fact based on conflicting evidence arrived at by the trial Court must weigh with the appellate Court, more so when the findings are based on oral evidence recorded by the same presiding Judge who authors the judgment. This certainly does not mean that when an appeal lies on facts, the appellate Court is not competent to reverse a finding of fact arrived at by the trial Judge. As a matter of law if the appraisal of the evidence by the trial Court suffers from a material OTAPL Nos. 42 & 31 of 2025 Page 9 of 15 irregularity or is based on inadmissible evidence or on conjectures and surmises, the appellate Court is entitled to interfere with the finding of fact (See Madhusudan Das Vs. Smt. Narayani Bai & Ors., AIR 1983 SC 114). The rule is __ and it is nothing more than a rule of practice __ that when there is conflict of oral evidence of the parties on any matter in issue and the decision hinges upon the credibility of witnesses, then unless there is some special feature about the evidence of a particular witness which has escaped the trial Judges notice or there is a sufficient balance of improbability to displace his opinion as to where the credibility lies, the appellate Court should not interfere with the finding of the trial Judge on a question of fact.(See Sarju Pershad Ramdeo Sahu Vs. Jwaleshwari Pratap Narain Singh & Ors., AIR 1951 SC 120). Secondly, while reversing a finding of fact the appellate Court must come into close quarters with the reasoning assigned by the trial Court and then assign its own reasons for arriving at a different finding. This would satisfy the Court hearing a further appeal that the first appellate Court had discharged the duty expected of it. We need only remind the first appellate Courts of the additional obligation cast on them by the scheme of the present Section 100 OTAPL Nos. 42 & 31 of 2025 Page 10 of 15 substituted in the Code. The first appellate Court continues, as before, to be a final Court of facts; pure findings of fact remain immune from challenge before the High Court in second appeal. Now the first appellate Court is also a final Court of law in the sense that its decision on a question of law even if erroneous may not be vulnerable before the High Court in second appeal because the jurisdiction of the High Court has now ceased to be available to correct the errors of law or the erroneous findings of the first appellate Court even on questions of law unless such question of law be a substantial one.” 11. Such being the proposition of law relating to the involvement of a substantial question of law, the point urged before us whether the Fe content in IOF is to be ascertained on the basis of WMT or DMT involves a substantial question of law, our attention was drawn to a coordinate Bench decision of this Court in the case of Commissioner of Customs (Preventive), Bhubaneswar v. Kai International Pvt. Ltd., reported in (2025) 29 Centax 178 (Ori). In the said judgment the identical issue was raised whether Fe content in IOF has to be ascertained on the basis OTAPL Nos. 42 & 31 of 2025 Page 11 of 15 of WMT or DMT and the coordinate Bench answered the same in the following: “12. We accept respondent's contentions upon reliance on Dwijendra Narain Roy (supra). So far as V.M. Salgaocar and Brother Pvt. Ltd. (supra) is concerned, one of the views taken by the Division Bench of the Bombay High Court says, it is not correct for revenue to contend that the dry method which is being used for the purpose of trade and commerce be made applicable for purpose of determination of its classifications for the purposes of levy of export duty of raw iron ore in its natural form. Disclosed in the appeal is circular dated 17th February, 2012, paragraph-3 in which is reproduced below. "3. In light of the observation by the Apex Court that export duty is chargeable according to Fe contents, and to maintain uniformity all over the custom houses, it is clarified that for the purpose of charging of export duty the assessment of iron ore for determination of Fe contents shall be made on Wet Metric Ton (WMT) basis which in other words mean deducting the weight of OTAPL Nos. 42 & 31 of 2025 Page 12 of 15 impurities (inclusive of moisture) out of the total weight/Gross Weight to arrive at Net Fe contents." 12. From the above quoted observations of the coordinate bench, it is exposit that the Fe content in IOF is to be determined on the basis of WMT and not DMT and in view of a decision having taken in this regard and in absence of any materials forthcoming before us to take a different view, the said point having settled cannot be said to be a debatable one nor it invites any different opinion to be arrived at. The comity of the judicial discipline demands the uniformity in a proposition of law and the judgment of the coordinate Bench of a Court binds the other coordinate Bench. The only course opens to the later coordinate Bench, in the event of dissent to refer the matter to the Chief Justice to constitute a larger Bench. 13. As indicated above, we do not find any material forthcoming to take a different view and, therefore, the judicial discipline demands the adherence of the judgment rendered by the coordinate Bench at an earlier point of time. We thus do not find that the contention of the appellant that Fe content in IOF is to OTAPL Nos. 42 & 31 of 2025 Page 13 of 15 require to be determined on the basis of DMT and not WMT is sustainable. 14. We further find that the appellant has taken a different stand in the instant appeal what he took before the Tribunal. A party cannot be permitted to take inconsistent stand at different stages of the proceeding. The plea taken before the Tribunal is sought to be varicated at the stage of the instant appeal, which in our opinion is not permissible. The enlightening observations rendered in the case of Dwijendra Narayan Roy v. Joges Chandra De, reported in AIR 1924 Calcutta 600 can be gainfully applied in this regard, wherein it is held: "......It is an elementary rule that a party litigant cannot be permitted to assume inconsistent positions in Court, to play fast and loose, to blow hot and cold, to approbate and reprobate to the detriment of his opponent : Bhaja Choudhury v. Chuni Lal (45); Giris v. Bepin (46); Bama Charan v. Nimai Mandal (47). This wholesome doctrine applies not only to the successive stages of the same suit, but also to another suit than the one in which the position was taken up, provided that the second suit grows out of the judgment in the first. ... ..." (emphasis supplied) OTAPL Nos. 42 & 31 of 2025 Page 14 of 15 15. In view of the discussions made hereinabove, we do not find that the instant appeals involve substantial question of law under Section 130 of the Customs Act, 1962. The appeals are dismissed. There shall be no orders as to costs. (Harish Tandon) Chief Justice (M.R. Pathak) Judge Arun Mishra Signature Not Verified Digitally Signed Signed by: ARUN KUMAR MISHRA Designation: ADR-cum-Addl. Principal Secretary Reason: Authentication Location: High Court of Orissa, Cuttack Date: 31-Jul-2025 19:34:58 OTAPL Nos. 42 & 31 of 2025 Page 15 of 15