Threat to Rule of Law : CESTAT Frowns On Customs Dept. For ‘Defiant Disregard’ of Its Ruling; Orders Copy to Revenue Secretary, CBIC Chairman

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has castigated the Customs adjudicating authority for what it described as a “defiant disregard” of an earlier binding Tribunal ruling, warning that such conduct threatens judicial discipline and the rule of law. The bench of Ajay Sharma, Member (Judicial Member) and C J Mathew (Technical Member) went to the extent of directing that a copy of its order be sent to the Revenue Secretary and the Chairman of the Central Board of Indirect Taxes and Customs (CBIC) for appropriate action. The order was passed in a batch of applications filed by three Customs officers — Vinay Brij Singh, Jitendra Bahadur Singh Patel and C Y Manikanhaiya — arising out of customs appeals linked to adjudication proceedings on alleged over-invoicing of rough diamonds. The officers had been named as noticees in show cause proceedings proposing penalties for alleged abetment, despite rough diamonds being exempt from customs duty. The core dispute revolved around the applicability of the statutory safeguards under Section 155 of the Customs Act, 1962, which grant protection to government officers and mandate specific procedural requirements before proceedings can be initiated against them. In an earlier round, the Tribunal had categorically held that a show cause notice issued under Section 124 of the Act cannot automatically be treated as the notice contemplated under Section 155(2). The Tribunal had remanded the matter for a limited purpose — to ascertain whether the statutory “trigger” and timelines under Section 155(2) had been complied with — and not for a fresh or open adjudication. That order had not been challenged by the department and had thus attained finality. However, when the adjudicating authority resumed proceedings, it allegedly reiterated the very position rejected by the Tribunal earlier, treating the show cause notice as sufficient compliance with Section 155(2). This prompted the appellants to move fresh applications before the Tribunal, alleging that the de novo adjudication was vitiated by a blatant violation of judicial discipline. Dr. Sujay Kantawala, the counsel on behalf of the Customs officers, pointed out that the appeal of the applicants had not been dismissed by the Tribunal and the resumption of proceedings had been ordered to enable closure of a proceedings that had been initiated but was yet to be by the original authority. Dr. Kantawala submitted that, in such disposal, the proposition of the ‘show cause notice’ as notice intended under section 155(2) of Customs Act, 1962 was not only demonstrated lack of clarity in the mind of the lower authorities in the earlier round of litigation but also, having been discarded by the Tribunal as not sufficing, could not to be deployed as the ‘T-spot’ again except as show of defiance. He suggested that the adjudicating authority had, effectively, erased the earlier round of litigation commenced at his own instance and was aghast that the entire issue was to be revisited through recourse before an appellate authority subordinate to the Tribunal. Such deliberate defiance and perverse disregard merit reference to the High Court for contempt. The Tribunal, speaking through Member (Technical) C J Mathew, noted that while it was treading a “treacherous path” in entertaining the applications at an interim stage, the circumstances justified intervention. It observed that the adjudicating authority had effectively ignored a binding appellate decision that had attained finality and had attempted to revive a proposition already discarded. Such conduct, the Tribunal said, was not merely erroneous but bordered on contempt for law and institutions. The Bench emphasised that once an appellate order is not challenged, it binds not only the adjudicating authority but also the Central Government itself. Any attempt to bypass or nullify such an order through fresh proceedings under the same cause of action was held to be “anathema to the scheme of appellate empowerment” under the Customs Act. The Tribunal also rejected the argument that its earlier order amounted to an “open remand,” clarifying that the remand was narrowly confined to examining compliance with Section 155(2) requirements. In unusually sharp observations, the Tribunal warned that tolerating such conduct would lead to “incipient chaos in the governance of customs law.” It recalled the Supreme Court’s landmark ruling in Union of India v. Kamalakshi Finance Corporation Ltd., reiterating that orders of higher appellate authorities must be followed unreservedly by subordinate officers, irrespective of departmental disagreement. Failure to do so, the Tribunal noted, results in harassment to noticees and undermines administrative discipline. As a corrective measure, the Tribunal directed that the de novo adjudication order be taken up for review by the jurisdictional Commissioner of Customs under Section 129D of the Customs Act. The Commissioner has been instructed to examine the legality and propriety of the order, particularly in light of the settled position that a show cause notice under Section 124 does not fulfil the statutory mandate of Section 155(2). The Tribunal made it clear that remedies still exist within the statutory framework, but stressed that adherence to judicial discipline is non-negotiable. The order stands out for its candid rebuke of internal administrative defiance and serves as a strong reminder that the rule of law binds all authorities, including those tasked with enforcing it. Case Details Case Title: Vinay Brij Singh Versus Commissioner of Customs (APSC) Case No.: CUSTOMS APPLICATION (MISC) NO: 86909 OF 2025 Date: 27/01/2026 Counsel For Appellant: Dr. Sujay Kantawala, Senior Advocate Counsel For Respondent: PRV Ramanan, Special Counsel Click Here To Read Order Read More: Customs Confiscation Order Quashed For Not Considering Importer’s Claim Of Customs Duty Exemption: Madras HC

Threat to Rule of Law : CESTAT Frowns On Customs Dept. For ‘Defiant Disregard’ of Its Ruling; Orders Copy to Revenue Secretary, CBIC Chairman

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