Valuation (Customs) — Related person — Binding effect of
decision of Supreme Court
Circular No. 85/2002-Cus., dated 11-12-2002
F. No. 467/41/2001-Cus.V
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Subject :Supreme Court’s decision in the case of GMMCO
[2001 (127) E.L.T. 508] in the context of Related Party
Transaction - Regarding
I am directed to refer to the Tribunal’s decision against
Revenue in the case of Collector of Customs, Madras v. General Marketing and
Manufacturing Co. Ltd. (GMMCO), reported in [2001 (127) E.L.T. 508], dated 25th August, 2000. An Appeal
Nos. 2772-73/2001 filed in the Hon’ble Supreme Court against the Tribunal
decision, has been dismissed in limine which reads as under :
“Delay condoned. The Civil Appeal is dismissed”.
The effect of this judgment has been examined in
consultation with Ministry of Law and Justice. The Opinion of Ministry of Law
and Justice is as follows :
“The Hon’ble Supreme Court in a case reported in 1991 JT
Vol. III, State of U.P. v. M/s. Synthetics and Chemicals Ltd. and Another p. 268
where therein our lordships have observed, a decision which is not expressed and
is not founded on reasons nor it proceeds on consideration of issue cannot be
deemed to be a law declared to have a binding effect as is contemplated by
Article 141. Uniformity and consistency are core of judicial discipline. But
that which escapes in the judgments without any occasion is not ratio
decidendi.”
The Hon’ble Apex Court in a matter reported in AIR 1967 S.C. Shama Rao v.
State of Pondicherry
p. 1680 has held :
“It is trite to say that a decision is binding not because
of its conclusions but in regard to its ratio and the principles laid down
therein any declaration or conclusion arrived without application of mind or
preceded without any reason cannot be deemed to be a declaration of or authority
of a general nature binding as a precedent. Restraint in dissenting or
overruling is for sake of stability and overruling is for sake of stability and
uniformity but rigidity beyond reasonable limits is inimical to the growth of
law.
Here in the present matter, it is an admitted fact that the
order of the Supreme Court is not a speaking one, as such, the same cannot be
said to be a reasoned order. So, in view of the ratio of the judgments in M/s. Synthetic’s
case (supra) and Shama Rao’s case (supra), no binding effect should be
given to it and should not be treated as precedent.”
The Opinion of the Law Ministry as above should be taken
into account while dealing with similar matters.