1. Import of materials under customs exemption notification — Alleged violation of usage conditions — Dispute over maintainability of appeal before High Court versus Supreme Court under Customs Act. (Para 2 , 4 , 5 )
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2019 Supreme(SC) 995
SUPREME COURT OF INDIA
ARUN MISHRA, M. R. SHAH, B.R. GAVAI, JJ.
COMMISSIONER OF CUSTOMS, BANGALORE-1 – APPELLANT
VERSUS
M/S MOTOROLA INDIA LTD. – RESPONDENT
CIVIL APPEAL NO. 10083 OF 2011 WITH Civil Appeal No. 7021 /2019 (Arising out of SLP (C) No. 29444/2012), Civil Appeal No. 7022 /2019 (Arising out of S.L.P. (C) No. 12755/2015), Civil Appeal No. 7524/2014 and Civil Appeal No. 9245/2015
Decided On : 05-09-2019
Important Points
IMPORTANT POINTS
(1) When an order of Appellate Tribunal would go beyond inter se disputes between parties and may affect a large number of cases, such an issue will be one of general public importance.
(2) Appeal shall lie to High Court against every order passed in appeal by Appellate Tribunal.
(1) When an order of Appellate Tribunal would go beyond inter se disputes between parties and may affect a large number of cases, such an issue will be one of general public importance.
(2) Appeal shall lie to High Court against every order passed in appeal by Appellate Tribunal.
Subject
Customs Law - Jurisdiction of Courts
Act Referred
CUSTOMS ACT: S.130
Headnote
(A) Customs Act, 1962 – Sections 130 and 130E – Appeal – Forum – Appeal shall lie to High Court against every order passed in appeal by Appellate Tribunal if High Court is satisfied that case involves a substantial question of law – Only exception carved out is that an appeal shall lie before Apex Court and shall not lie before High Court against order relating, amongst other things, to determination of any question having relation to rate of duty of customs or to value of goods for the purposes of assessment – Only if any question having relation to rate of duty is involved in an appeal or if it relates to value of goods for the purpose of assessment, appeal would lie to Apex Court and in all other cases it would lie before High Court. (Paras 9 and 10)
(B) Customs Act, 1962 – Sections 130 and 130E – Appeal – Forum – When an order of Appellate Tribunal would go beyond inter se disputes between parties and may affect a large number of cases, such an issue will be one of general public importance – Certain questions raised or arising may require interpretation of the Constitution – Only such questions of general public importance alone are required to be decided by Apex Court. (Para 14)
Facts of Case:
A short question that arises for consideration in these appeals is, as to whether an appeal from order of Customs, Excise and Service Tax Appellate Tribunal 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 Customs Act, 1962 or to this Court under provisions of Section 130E of Customs Act.
Findings of Court:
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 arises in present case. Appeals also do 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 exemption notification or not. Undisputedly, goods are covered by the said notification. The only question is as to whether the assessee has breached conditions which are imposed by the notification for getting exemption from payment of customs duty or not. Appeals do 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 is purely inter-se between parties and is required to be adjudicated upon the facts available.
Result : Appeals allowed.
Legal Category Hierarchy
Advocates Appeared:
For the Appellant(s) :Dhruv Aggarwal, Sunita Rani Singh, Shirin Khajuria, M. Khairati, B. Krishna Prasad, Advocates
For the Respondent(s):Balbir Singh, Nishant Joshi, Nikhil Varshney, S. S. Shroff, V. Lakshmikumaran, Charanya Lakshmikumaran, Aaditya Bhattacharya, Apeksha Mehta, Ishita Mathur, Monica Kasturi, R. Parthasarthy, Kumar Visalaksh, Udit Jain, Archit Gupta, Harish Pandey, Mahfooz A. Naki, M/S. Ap & J Chambers, Advocates.
For the Appellant(s) :Dhruv Aggarwal, Sunita Rani Singh, Shirin Khajuria, M. Khairati, B. Krishna Prasad, Advocates
For the Respondent(s):Balbir Singh, Nishant Joshi, Nikhil Varshney, S. S. Shroff, V. Lakshmikumaran, Charanya Lakshmikumaran, Aaditya Bhattacharya, Apeksha Mehta, Ishita Mathur, Monica Kasturi, R. Parthasarthy, Kumar Visalaksh, Udit Jain, Archit Gupta, Harish Pandey, Mahfooz A. Naki, M/S. Ap & J Chambers, Advocates.
Table of Contents
2. Whether an appeal involving violation of exemption notification conditions relates to the rate of duty, thereby lying before the Supreme Court instead of the High Court. (Para 2 , 5 , 6 )
3. Violation of exemption notification conditions is a factual dispute between parties and does not involve determination of the rate of duty or valuation of goods for assessment. (Para 9 , 10 , 12 , 16 , 17 )
4. Appeals concerning the breach of conditions in an exemption notification do not relate to the rate of duty or valuation, thus lying before the High Court. (Para 17 , 18 )
5. Appeals allowed — High Court orders set aside — Matter remitted to High Court for de novo consideration on merits. (Para 19 )
6. When does an appeal from the CESTAT lie before the High Court versus the Supreme Court under the Customs Act?
Appeals generally lie before the High Court if they involve a substantial question of law. However, appeals relating to the determination of the rate of duty of customs or the value of goods for assessment purposes lie directly before the Supreme Court. (Para 8 , 9 , 10 )
7. What constitutes a question having a relation to the rate of duty of customs for the purpose of determining appellate jurisdiction?
It requires a direct and proximate relationship to the rate of duty or value of goods for assessment, including questions of classification of goods under the Tariff and whether they are covered by an exemption notification. (Para 11 , 12 , 16 )
8. Does a dispute regarding the violation of conditions in a customs exemption notification constitute a question relating to the rate of duty?
No. A dispute over whether an assessee breached the conditions of an exemption notification is a factual matter inter-se between the parties and does not involve the determination of the rate of duty or valuation of goods. (Para 17 )
JUDGMENT
B.R. GAVAI, J.
Leave granted in S.L.P.(C) No. 29444/2012 and S.L.P.(C) No. 12755/2015.
2. A short question that arises for consideration in these appeals is, as to whether an appeal from the order of Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the “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 (hereinafter referred to as the “Customs Act”) or to this Court under the provisions of Section 130 E of the Customs Act.
3. The facts in the present matter are not in dispute. For the sake of convenience, we would refer to the facts in Civil Appeal No. 10083/2011, inasmuch as the impugned judgment and order(s) in all other connected appeals are passed following the judgment and order passed by the Karnataka High Court in CS TA No. 2/2007.
4. The assessee is a leading manufacturer of pagers. The assessee is entitled to the benefit of Notification No. 30/1997– Customs dated 01.04.1997 (hereinafter referred as the said “notification”) by which the materials imported into India for the manufacturing of the pagers 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 pagers and hence a certain portion of the duty free material imported under the Scheme had been written off in their books of accounts. The officers of the DRI, therefore, took up further investigation in the matter. The assessee was called upon to submit the list of such unutilized items, which are imported under the said notification and lying unutilized. The assessee submitted a list of such unutilized items with requisite details and sought for further time to link unutilized items to the bill of entry at the relevant assessable value. It was further informed by the assessee that they have ceased to manufacture pagers and as such materials have become obsolete insofar as they are concerned.
5. Not satisfied with the contention of the assessee, the Commissioner of Customs, Bangalore, issued a Notice to the assessee, calling upon it to show cause as to why the customs duty amounting to Rs. 96,17,498/- along with interest at the rate of 24% per annum and the penalty should not be recovered from it. After following the procedure prescribed, the Commissioner of Customs passed an Order in Original on 30.04.2002 thereby, holding that the assessee was liable to pay the aforesaid amount of Rs. 96,17,498/- 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, Bangalore preferred an appeal before the Karnataka 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 this Court under the provisions of Section 130 E of the Customs Act.
6. The Division Bench of the High Court held that it was called upon to decide whether the terms and conditions of the said notification have been complied with by the assessee or not and whether the levy of duty, interest and penalty were legal or not and whether the CESTAT was j
