Case Type: Civil Appeal
Case No: 10083/ 2011
Appellants: Commissioner of Customs, Bangalore
Respondents: M/S Motorola India Ltd
Decided On: 05-09-2019
Statues Referred:
- Custom Act, 1962
Case Referred:
- Navin Chemicals Manufacturing & Trading Company Ltd. vs. Collector of Customs
- Steel Authority of India Ltd. Vs. Designated Authority, Directorate General of Anti-Dumping & Allied Duties (2017) 13 SCC 1
Bench:
- J. Arun Mishra,
- J. M. R. Shah,
- J. B.R. Gavai
Facts:
The assesse-respondent herein is the leading manufacture of pagers. The assesse is one of the beneficiary of the notification as issued by the Customs dated 01-04-1997. According to the notification the materials imported into India for the manufacturing of pagers were exempted from whole of Custom Duty and additional duty leviable U/S 3 of Custom Tariff Act, 1975.
Under the said notification the goods imported could be used only for the production of the declared final product. But the Director of Revenue Intelligence (DRI) was tipped off that the assesse had ceased the production of pagers and had written off the duty free material in their books of account. Consequently the DRI held further investigation into the matter.
Therefore the assesse was called upon to set forth the details of unutilized imported items under the said notification. Whereafter the assesse submitted list of unutilized items and sought for extended time to link unutilized item to the bill of entry with relevant value.
Dissatisfied with the contention of the assesse the Commissioner of Customs, Bangalore served a show cause notice to the assesse as to why the custom duty amounting ₹96,17,498/- with an interest of 24% p.a should not be recovered from him.
After following the due procedure, the Commissioner of Customs, issued order on 30-04-2002 holding the assesse liable for an amount of customs, issued order on 30-04-2002 holding the assesse liable for an amount of 96,17,498/- along with interest and penalty.
Aggrieved by the decision, the assesse filed an appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The appeal was allowed. Commissioner of Custom being aggrieved by the decision, applied an appeal to the High Court U/S 130 of the Customs Act.
In the appeal, the assesse flagged a preliminary objection that since the issue at hand was whether the requirements of the said notification was complied or not by the assesse and whether the levy of duty, interest and penalty by the Commissioner was just or not and whether the CESTAT was justified in setting aside the order of Commissioner and all these came within the ambit of determination of rate of duty.
The High Court held that the said appeal to the High Court U/S 130 was untenable and was to be applied to the Supreme Court U/S 130E of the Act. Aggrieved by the decision the Commissioner of Revenue filed an appeal to the Supreme Court.
Issue:
Whether an appeal for issue regarding violation of conditions contained in customs exemption notification, from the order of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) would lie before the High Court or Supreme Court U/S 130 or 130E of Custom Act, 1962 respectively.
Obiter Dicta:
Judgement of the Courts having implication beyond the parties to the suit, to a large number of people i.e. having a general public importance, should be subject to the adjudication of the Highest Authority of India which is always the Supreme Court.
Such matters may also involve question relating to interpretation of the Constitution and hence it become on the more feasible to be adjudicated by the Supreme Court to eradicate all scintilla of doubts or hesitancy or incredulity.
Ratio Decedendi:
Section 130(1) of the Customs Act explicitly provides that an appeal to the High Court lies from every order passed in appeal by the Appellate Tribunal but which should not involve the questions relating to the rate of duty or value of goods for purpose of assessment.
Section 130E provides that an appeal to the Supreme Court shall lie from (a) any judgement of the High Court or (b) any order passed by the Appellate Tribunal, by the Appellate Tribunal relating, among other things, to the determination of the rate of duty of customs or to the value of goods for the purposes of assessment.
Therefore on a conjoint perusal of the above provision it is crystal that the matters relating to the questions of rate of duty of customs or the value of goods for the purpose of assessment would lie only before the Supreme Court and High Court is drummed out of issue and is confined only to the questions relating to the law.
In Navin Chemicals Manufacturing & Trading Company Ltd. vs. Collector of Customs, reported in (1993) 4 SCC 320, the apex Court has held where an appeal involves any adjudication of any question in relation to rate of custom duty or value of goods for the purpose of assessment then such issues shall be heard by the Supreme Court. Because such issue are of great importance not only to the parties to the issue but also to the other importers who imports the same materials.
Any judgement of the Court having implication beyond the parties to the suit i.e. having a public importance, should be adjudicated by the Supreme Court. It might also involve a fresh look into the provision of the Constitution and therefore becomes incumbent upon the Supreme Court to provide its best decision on such issues having implication beyond parties to the suit.
Hon’ble Court referred to the condition as laid dawn in its precedent case of Steel Authority, namely,:
- The matter in issue must have a direct nexus with 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. It is sine quo non for the admissibility of appeal U/S 130E of the Act.
- The matter must involve a substantial question of law which has not been adjudicated.
- The adjudication of the Tribunal must be considered as conclusive and must be allowed to rest even if the Supreme Court has a contrary view.
- If the Tribunal had acted in grim violation of procedure or principle prescribed by natural justice resulting in failure of justice.
In the instant case the issue at hand was that whether the assesse had violated the condition of said notification by diverting the imported materials for the production of goods that are disallowed. No question for determination of rate of duty aroused nor for any value of goods for the purpose of assessment was involved. The only question in the instant case was whether the assesse had breached the condition of the said notification.
Judgment
The Apex Court’s bench comprising of Arun Mishra, M. R. Shah, B.R. Gavai, JJ held the following:
In the instant case no question for determination of rate of duty or value of goods for the purpose of assessment came up. Only issue at hand was whether the assesse violated the condition of the said notification.
Also no question of law or public importance was involved in the case herein. The issue was completely in between the parties.
Hence the High Court decision of regarding the appeal as untenable U/S 130 but tenable U/S 130E of the Custom Act was erroneous/unjustifiable in nature.
Therefore the appeal was allowed and the High Court order was set aside. And was remitted back to the High Court for a de novo consideration.
No order as to cost was allowed.
Conclusion
Comprehending the issue in the instant case as an issue involving the determination of rate of duty or value of goods for the purpose of assessment was an erroneous attempt of the respondent or to say that he was ill-advised by its counsel, would suffice. Absence of sine quo non for Section 130E resulted in dismissal of the High Court’s order.
Kaushal Agarwal