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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO. 10083 OF 2011

COMMISSIONER OF CUSTOMS, BANGALORE-1   .... APPELLANT                             

VERSUS

M/S MOTOROLA INDIA LTD.            .... RESPONDENT  

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.  

J U D G M E N T

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”)

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or to this Court under the provisions of Section 130E 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

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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,

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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 130E 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 justified in setting aside the

levy of duty, interest and penalty and all these questions were

related to determination of the rate of duty. 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

this Court. Being aggrieved thereby, the Revenue is in appeal

before this Court.

7.      We  have  heard  Ms.  Pinky  Anand,  learned  Additional

Solicitor General appearing on behalf of the appellant-Revenue

and Mr. Balbir Singh, learned Senior Counsel appearing on behalf

of the respondent-assessee.

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8. For  appraising  the  rival  contentions,  it  would  be

apposite to refer to Section 130 and Section 130E of the Customs

Act, 1962 (as it existed prior to its amendment by the Finance

Act, 2018). They read as follows:

“130.   Appeal to High Court-

(1) An  appeal  shall  lie  to  the  High  Court  from  every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order  relating,  among  other  things,  to  the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment), if the High Court is satisfied  that  the  case  involves  a  substantial question of law.

(2) The Principal Commissioner of Customs or Commissioner of Customs or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub- section shall be –  

(a) Filed within one hundred and eighty days from the  date  on  which  the  order  appealed  against  is received by the Principal Commissioner of Customs or Commissioner of Customs or the other party;

(b) Accompanied by a fee of two hundred rupees where such appeal is filed by the other party;

(c) In the form of a memorandum of appeal precisely stating  therein  the  substantial  question  of  law involved.

(2A)The High Court may admit an appeal after the expiry of the period of one hundred and eighty days referred to  in  clause  (a)  of  sub-section  (2),  if  it  is satisfied  that  there  was  sufficient  cause  for  not filing the same within that period.

(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:

Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other

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substantial question of law not formulated by it, if it is satisfied that the case involves such question.

(5) The High Court shall decide the question of law so formulated  and  deliver  such  judgment  thereon containing  the  grounds  on  which  such  decision  is founded and may award such cost as it deems fit.

(6) The High Court may determine any issue which–

(a) has  not  been  determined  by  the  Appellate Tribunal; or

(b) has  been  wrongly  determined  by  the  Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section(1).

(7) When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges.

(8) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it.

(9) Save  as  otherwise  provided  in  this  Act,  the provisions of the Code of Civil Procedure, 1908 (5 of 1908) relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.

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130E. Appeal to the Supreme Court-An appeal shall       lie to the Supreme Court from–

(a) Any judgment of the High Court delivered-

(i) In an appeal made under Section 130; or

(ii) On a reference made under Section 130 by the  Appellate Tribunal before the 1st day of July, 2003;

(iii) On a reference made under Section 130A,

in any case which, on its own motion or on an oral application  made  by  or  on  behalf  of  the  party aggrieved,  immediately  after  the  passing  of  the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or

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(b) Any  order  passed  [before  the  establishment  of  the National  Tax  Tribunal]  by  the  Appellate  Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for the purposes of assessment.”

9.      Upon a conjoint reading of the aforesaid provisions, it

could thus be seen 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 this 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.

10. It could thus clearly be seen 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 this Court and in all other cases it

would lie before the High Court.

11. However, the issue is no more res integra. In a catena of

the judgments, right from the judgment of this Court in the case

of  Navin  Chemicals  Manufacturing  &  Trading  Company  Ltd.   vs.

Collector of Customs, reported in (1993) 4 SCC 320, the position

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has been clarified. We may gainfully refer to paragraphs 6, 7 and

11  of  the  said  judgment  wherein,  this  Court  considered  the

provisions of Section 130 and Section 130E of the Customs Act.

They read thus:

“6. It is, upon a plain reading of the section, clear that appeals against orders which involve ‘determi- nation of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment’ are specially treated and are required to be heard by a Special Bench. This is what sub-section (3) of Section 129-C provides. Appeals in other matters are to be heard by a Bench consisting of one judicial member and one technical member, subject to the provisions of sub- section (4). Sub-section (4) carves out an exception to the general provisions of sub-section (2) and provides that a member of CEGAT sitting singly can hear appeals in the matters enumerated therein provided that they are not cases where the ‘determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment’ is in question.

7. The controversy, therefore, relates to the mean- ing to be given to the expression ‘determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment’. It seems to us that the key lies in the words ‘for purposes of assessment’ therein. Where the appeal involves the de- termination of any question that has a relation to the rate of customs duty for the purposes of assessment that appeal must be heard by a Special Bench. Similarly, where the  appeal  involves  the  determination  of  any  question that has a relation to the value of goods for the pur- poses of assessment, that appeal must be heard by a Spe- cial Bench. Cases that relate to the rate of customs duty for the purposes of assessment and which relate to the value of goods for the purposes of assessment are advis- edly treated separately and placed before Special Benches for decision because they, more often than not, are of importance  not  only  to  the  importers  who  are  parties thereto but also to many other importers who import or propose to import the same or similar goods. Since the decisions of CEGAT in such matters would have wide appli- cation they are, by the terms of the statute, to be ren- dered by Special Benches. The phrase “relation to” is,

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ordinarily, of wide import but, in the context of its use in the said expression in Section 129-C, it must be read as meaning a direct and proximate relationship to the rate of duty and to the value of goods for the purposes of assessment.

11. It will be seen that sub-section (5) uses the said expression ‘determination of any question having a relation to the rate of duty or to the value of goods for  the  purposes  of  assessment’  and  the  Explanation thereto provides a definition of it ‘for the purposes of this sub-section’. The Explanation says that the expres- sion includes the determination of a question relating to the rate of duty; to the valuation of goods for purposes of assessment; to the classification of goods under the Tariff and whether or not they are covered by an exemp- tion notification; and whether the value of goods for purposes of assessment should be enhanced or reduced hav- ing regard to certain matters that the said Act provides for.  Although  this  Explanation  expressly  confines  the definition of the said expression to sub-section (5) of Section 129-D, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly.  The  statutory  definition  accords  with  the meaning we have given to the said expression above. Ques- tions relating to the rate of duty and to the value of goods  for  purposes  of  assessment  are  questions  that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notifica- tion relates directly and proximately to the rate of duty applicable  thereto  for  purposes  of  assessment.  Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for pur- poses of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to cases where, for the purposes of assess- ment, questions arise directly and proximately as to the rate of duty or the value of the goods.

12. It could thus clearly be seen that, this Court, while

considering the provisions of Section 130 and Section 130E of the

Customs Act, has held that where an appeal involves determination

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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.  

13. Recently, again this Court, in a decision, in the case of

Steel  Authority  of  India  Ltd.  Vs.  Designated  Authority,

Directorate General of Anti-Dumping & Allied Duties, reported in

(2017) 13 SCC 1, has reiterated the same position. It would be

appropriate to refer to para 18 of the said judgment which reads

as follows:

“18. Section 130-E(b) of the Act provides for a di- rect appeal to the Supreme Court against an order of the Appellate Tribunal, broadly speaking, on a question in- volving government revenue. This seems to be in view of the fact that the order that would be under appeal i.e. (order of the Appellate Tribunal) may go beyond the inter se dispute between the parties and effect upon a large number of assessees. The issue, in such an event, surely will be one of general/public importance. Alternatively, the question raised or arising may require interpretation of the provisions of the Constitution. Such interpreta- tion may involve a fresh or a relook or even an attempt to understand the true and correct purport of a laid down meaning of the constitutional provisions that may come into focus in a given case. It is only such questions of importance, alone, that are required to be decided by the Supreme Court and by the very nature of the questions raised or arising, the same necessarily have to involve issues of law going beyond the inter partes rights and extending to a class or category of assessees as a whole. This is the limitation that has to be understood to be inbuilt in Section 130-E(b) of the Act which, in our con- sidered view, would also be consistent with the role and jurisdiction of the Supreme Court of India as envisaged under the Constitution. Viewed from the aforesaid per- spective,  the  jurisdiction  of  the  Supreme  Court  under Section 130-E(b) of the Act or the pari materia provi-

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sions of any other statute would be in harmony with those contained in Chapter IV of Part V of the Constitution.”

14. It could thus be seen that, this Court has 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

has 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 this Court. It has further been held

that, by the very nature of a question raised or arising, the

same necessarily has to involve issue of law going beyond the

inter  partes  rights  and  extending  to  a  class  or  category  of

assessees as a whole.

15. This Court in the case of Steel Authority (supra), after

considering  the  earlier  judgments  of  this  Court,  carved  out

certain  conditions  which  are  required  to  be  satisfied  before

admitting an appeal under Section 130E of the Customs Act. It

will be apposite to refer to paragraphs 21 and 22 of the said

judgment. Paragraphs 21 and 22 read thus:

“21. On the basis of the discussion that has preceded, it must therefore be held that before admitting an appeal under Section 130-E(b) of the Customs Act, the following conditions must be satisfied:

(i) The question raised or arising must have a direct and/or proximate nexus to the question of determi- nation 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

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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 necessi- tating 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 occa- sioning a failure of justice.

22.     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 pri- mary question indicated at the outset of the present or- der, namely, whether this appeal deserves to be admit- ted.“

16. We are of the considered view 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 this 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.“

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17. Reverting to the present case, it could clearly be seen

that the only question that is involved is 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 arises in the

present case. The 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  the

exemption  notification  or  not.  Undisputedly,  the  goods  are

covered by the said notification. The only question is as to

whether  the  assessee  has  breached  the  conditions  which  are

imposed by the notification for getting exemption from payment of

the customs duty or not. The 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  the  parties  and  is  required  to  be

adjudicated upon the facts available.

18. In that view of the matter, we find that the High Court

was  not  justified  in  holding  that  the  appeals  are  not

maintainable under Section 130 of the Customs Act but are tenable

before this Court under Section 130E of the Customs Act.

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19. In the result, the appeals are allowed and the impugned

orders passed by the High Court are set aside. The appeals are

remitted back to the High Court for     de novo consideration of

the appeals on their own merits.

20. In the facts and circumstances of the case, there shall

be no order as to costs.    

...................J.                              [ARUN MISHRA]

...................J.                              [M. R. SHAH]

...................J. [B.R. GAVAI]

NEW DELHI; SEPTEMBER 5, 2019.