When appeal from order of CESTAT lie before Supreme Court or to the High Court u/s 130E or 130 of Custom Act. Supreme Court explains the law
ABCAUS Case Law Citation:
ABCAUS 3138 (2019) (09) SC
Important case law relied upon by the parties:
Navin Chemicals Manufacturing & Trading Company Ltd. vs. Collector of Customs (1993) 4 SCC 320
Steel Authority of India Ltd. Vs. Designated Authority, Directorate General of Anti-Dumping & Allied Duties, (2017) 13 SCC 1,
The question that arose for consideration in these appeals was as to whether an appeal from the order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), involving an issue regarding violation of conditions contained in customs exemption notification, would lie before the High Court under the provisions of Section 130 of the Customs Act, 1962 (Customs Act) or to the Hon’ble Supreme Court under the provisions of Section 130E of the Customs Act.
In the instant case, the assessee was entitled to the benefit of Notification No. 30/1997– Customs dated 01.04.1997 (notification) by which the materials imported into India were exempted from whole of the customs duty leviable in the First Schedule of the Customs Tariff Act, 1975 and further whole of the additional duty leviable thereon under Section 3 of Customs Tariff Act, 1975.
As per the scheme framed under the said notification, the goods imported under the actual user condition were required to be used only for the manufacture of the declared final product.
A specific intelligence was received by the Director of Revenue Intelligence to the effect that the assessee had stopped manufacturing of declared products and hence a certain portion of the duty free material imported under the Scheme had been written off in their books of accounts.
The assessee submitted the list of such unutilized items, which were imported under the said notification and lying unutilized. It was further informed by the assessee that they have ceased to manufacture declared items and as such materials had become.
Not satisfied with the contention of the assessee, the Commissioner of Customs, issued a Notice to the assessee, calling upon it to show cause as to why the customs duty along with interest and the penalty should not be recovered from it.
After following the procedure prescribed, the Commissioner of Customs passed an Order holding that the assessee was liable to pay the aforesaid duty along with interest and penalty.
Being aggrieved thereby, the assessee preferred an appeal before the CESTAT. The CESTAT allowed the appeal. Being aggrieved thereby, the Commissioner of Customs preferred an appeal before the High Court under the provisions of Section 130 of the Customs Act.
At the stage of final hearing of the appeal, the assessee raised a preliminary objection contending therein, that the order impugned before the High Court amongst other things, also relates to the rate of duty of customs and as such the appeal under Section 130 of the Customs Act was not tenable before the High Court and the appeal will have to be preferred before the Apex Court under the provisions of Section 130E of the Customs Act.
The Division Bench of the High Court held that the appeal under Section 130 of the Customs Act was not tenable before the High Court but would be tenable under Section 130E of the Customs Act before Hon’ble Supreme Court.
Being aggrieved thereby, the Revenue was in appeal before the Hon’ble Supreme Court.
The Hon’ble Supreme Court opined that a conjoint reading of the related provisions makes it clear that only if any question having relation to the rate of duty is involved in an appeal or if it relates to value of goods for the purpose of assessment, the appeal would lie to the Supreme Court and in all other cases it would lie before the High Court.
The Hon’ble Supreme Court pointed out that the issue was no more res integra. In a catena of the judgments, this position had been clarified. While considering the provisions of Section 130 and Section 130E of the Customs Act, the Hon’ble Supreme Court had held that where an appeal involves determination of any question that has relation to customs duty for the purpose of assessment or where an appeal involves determination of any question that has relation to the value of goods for the purposes of assessment, such cases will have to be treated separately and have to be given special treatment. Even in a recent decision, the Hon’ble Supreme Court had reiterated the same position.
The Apex Court had found that when an order of the Appellate Tribunal would go beyond inter se disputes between the parties and may affect a large number of cases, such an issue will be one of general public importance. It had further been found that certain questions raised or arising may require interpretation of the Constitution. It is held that only such questions of general public importance alone are required to be decided by the Supreme Court. It had further been held that, by the very nature of a question raised or arising, the same necessarily had to involve issue of law going beyond the inter parties rights and extending to a class or category of assessees as a whole.
The Hon’ble Supreme Court further pointed out that in a recent judgment, after considering the its earlier judgments, it had carved out following conditions which are required to be satisfied before admitting an appeal under Section 130E of the Customs Act:
Conditions must be satisfied before admitting appeal u/s 130-E(b) of the Customs Act:
(i) The question raised or arising must have a direct and/or proximate nexus to the question of determination of the applicable rate of duty or to the determination of the value of the goods for the purposes of assessment of duty. This is a sine qua non for the admission of the appeal before this Court under Section 130-E(b) of the Act.
(ii) The question raised must involve a substantial question of law which has not been answered or, on which, there is a conflict of decisions necessitating a resolution.
(iii) If the Tribunal, on consideration of the material and relevant facts, had arrived at a conclusion which is a possible conclusion, the same must be allowed to rest even if this Court is inclined to take another view of the matter.
(iv) The Tribunal had acted in gross violation of the procedure or principles of natural justice occasioning a failure of justice.
The above parameters, which by no means should be considered to be exhaustive, may now be applied to the case of the parties before us to decide the primary question indicated at the outset of the present order, namely, whether this appeal deserves to be admitted.
The Hon’ble Supreme Court further opined that the Legislature has carved out only following categories of cases to which it has intended to give a special treatment of providing an appeal directly to the Apex court.
(i) determination of a question relating to a rate of duty;
(ii) determination of a question relating to the valuation of goods for the purpose of assessment;
(iii) determination of a question relating to the classification of goods under the Tariff and whether or not they are covered by an exemption notification;
(iv) whether the value of goods for purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for.
In the instant case, the Hon’ble Supreme Court observed that the only question was whether the assessee had violated the conditions of the exemption notification by not utilizing the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. Neither any question with regard to determination of rate of duty arises nor a question relating to valuation of goods for the purposes of assessment had arisen in the present case.
The appeals also did not involve determination of any question relating to the classification of goods, nor do they involve the question as to whether they are covered by the exemption notification or not. The appeals did not involve any question of law of general public importance which would be applicable to a class or category of assessees as a whole. The question was purely inter-se between the parties and was required to be adjudicated upon the facts available.
The Hon’ble Supreme Court held that the High Court was not justified in holding that the appeals were not maintainable under Section 130 of the Customs Act but are tenable before Supreme Court under Section 130E of the Customs Act.
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