In cases relating to rate of duty or 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

An appeal shall lie to the High Court against every order passed in appeal by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), if the High Court is satisfied that the case involves a substantial question of law. The only exception carved out is that an appeal shall lie before Supreme Court and shall not lie before the High Court against the order relating, amongst other things; determination of any question having relation to the rate of duty of customs; or to the value of goods for the purposes of assessment.

The above-mentioned observation was noted by the Supreme Court in the matter of Commissioner of Customs, Bangalore-1 vs. M/s Motorola India Ltd. (Civil Appeal No. 10083/2011), published on 07.09.2019

 

Challenge:

The Respondent/assessee used to import materials for the manufacturing of the pagers which were exempted in the Customs Tariff Act, 1975. The Director of Revenue Intelligence received the information that the assessee had stopped manufacturing of pagers and hence a certain portion of the duty free material imported had been written off in their books of accounts. The officers of the DRI, therefore, took up investigation in the matter. The Commissioner of Customs, Bangalore, issued a Notice to the assessee, calling upon it to show cause as to why the customs duty along with interest, the rate 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 amount 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 the Supreme Court under the provisions of Section 130E of the Customs Act.

The Division Bench of the High Court, therefore, 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 the Supreme Court. Being aggrieved thereby, the Revenue filed an appeal before the Supreme Court.

 

Held:

The Supreme Court after reiterating the relevant provision held that an appeal shall lie to the High Court against every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The only exception carved out is that an appeal shall lie before Supreme Court and shall not lie before the High Court against the order relating, amongst other things; to the determination of any question having relation; to the rate of duty of customs; or to the value of goods for the purposes of assessment.

The Court observed that the provisions of Section 130 and Section 130E of the Customs Act, has 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.

The Court further carved out certain conditions which are required to be satisfied before admitting an appeal under Section 130E of the Customs Act. The following conditions must be satisfied:

  1. 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.
  2. 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.
  3. 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.
  4. The Tribunal had acted in gross violation of the procedure or principles of natural justice occasioning a failure of justice.

The Court in conclusion also carved out only categories of cases to which it has intended to give a special treatment of providing an appeal directly before the Supreme Court. The following categories are;

  1. determination of a question relating to a rate of duty;
  2. determination of a question relating to the valuation of goods for the purpose of assessment;
  3. determination of a question relating to the classification of goods under the Tariff and whether they are covered by an exemption notification;
  4. 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.