Facts

The petitioner, a manufacturer of footwear, imported a consignment of 28500 dozens of pair of soles. When the first consignment arrived at Cochin, the Customs Authorities raised an objection that the goods imported were not soles   but they were complete footwear. On this count, the consignment was confiscated by the authorities. Appeal filed before the Central Board of Customs and Excise    by the petitioner was disposed of on 5-4-1980. Allowing the appeal, the  Board held that the  goods imported cannot be  described as  footwear though they are in finished condition. The Government of India issued a notice to the petitioner seeking torevise the order of the Central Board in exercise of its power of revision suo motu. Meanwhile, a second consignment arrived on 6-6-1981. The Custom Authorities raised the same objection again and issued a show cause notice to the petitioner for confiscation of the goods.

The petitioner preferred a writ petition before the Delhi High Court challenging   the show-cause notice issued by the Collector of Customs. In the same writ petition, the petitioner also challenged the notice issued by the Government of India proposing to revise theorder of the Central Board dated 5-4-1980. The Delhi High Court quashed the notice given by the Government of India proposing to revise the earlier order of the Central Board of Customs and Excise on the ground that it was barred by limitation. However,  as regards the Show-cause notice issued  by the Collector of Customs for the second  consignment,  the High Court held that  it is open to Collector to come to his own conclusion on merits of the case and hence there was no occasion for quashing the show cause notice. The petitioner appeared before the Collector and brought to its notice the earlier order of the Central Board dated 5-4-1980, wherein the similar goods were held to be covered  by the Exemption Notification No. 29 of 1979. The Collector, however, did not agree with the appellant and held that the goods in question are fully finished goods identifiable as chappals. He observed that no expertise is required to insert the straps into them to make them suitable for wearing by human beings. He also held that the earlier order of the Central Board was confined to the consignment which was the subject matter of consideration by the Board and the same does    not apply to other consignments. He also observed that in any case, the Board’s order is now under review in pursuance of the show cause noticeissued by the

Central Government. Against the order of the Collector, the appellant approached the Supreme Court under Article 136 of the Constitution.

Issue

Whether in a case where the goods which were considered in the order of the Central Board dated 5-4-1980 and the goods which are subject matter of the appeal are identical, the Collector was justified in taking the position contrary to the order of the Central Board

Views

The Collector was bound by the judicial order made by the Central Board of Customs and Excise when the goods which were considered in the said order dated 5-4-1980 and the goods which were subject matter of the appeal are identical.

Held

The Supreme Court held that the Collector was bound to follow the orders of the Board unless there was an order of a higher authority or the jurisdictional High Court or Supreme Court to the contrary. So  far as  the Collector is  concerned,  the order of the Board was binding upon him provided the goods were identical specially when the order of the Board was in the case of the appellant himself.   The Supreme Court, however, did not express any  opinion as  to  whether the goods considered in the order and the goods imported under the present consignment are identical. This being a matter of fact to be examined, the Supreme Court remitted the matter back to the Appellate Collector for disposing    of the same in accordance with law and in light of the observations made by the Supreme Court. (dated 26-8-1993)

Editorial : The ratio is applicable to other similar statutes including Income-tax Act, 1961. In Russel Properties (P) Ltd v.  A. Chowdhury, Addl CIT (1977) 109  ITR 229 (Cal) (HC) it is held that an assessment order passed by ITO following     an earlier decision of the Tribunal in which the Tribunal followed Supreme Court decision cannot be said to be erroneous and hence not amenable to CIT’s revisional jurisdiction under section 263. In Shri Govindram Seksaria Charity Trust v.. ITO (1987) 168 ITR 387 (MP)(HC), where the Tribunal set aside the order of the CIT u/s. 263 of the Act and the department was  aggrieved by  the order of the Tribunal, it was held that till the time the order of the Tribunal

was not set aside, the assessing officer cannot proceed with the order u/s. 143(3)

r.w.s. 263 of the Act, though the department might be aggrieved. In Siemens India Ltd v. ITO (1983) 143 ITR 120 (Bom) (HC) (at, 139) court held that merely because an appeal has been filed or a special leave application is pending against   it does notdenude the decision of its binding effect.

“My religion is based on truth and non-violence. Truth is my God. Non-violence is the means of realising Him.”

– Mahatma Gandhi