Appeal Against CESTAT Order, On Classification Of Goods, And Determination Of Customs Duty Lies Before The Supreme Court: Bombay High Court
The Bombay High Court has ruled than an appeal from an order passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), involving the question with respect to classification of goods under the Customs Act, 1962, would lie before the Supreme Court under Section 130E of the Customs Act, since it is primarily related to determination of the rate of customs...
The Bombay High Court has ruled than an appeal from an order passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), involving the question with respect to classification of goods under the Customs Act, 1962, would lie before the Supreme Court under Section 130E of the Customs Act, since it is primarily related to determination of the rate of customs duty applicable.
The Bench, consisting of Justices K.R. Shriram and N.R. Borkar, held that to determine whether there was a short levy of customs duty under Section 28 of the Customs Act, 1962, the revenue department has to decide the classification of goods in order to ascertain the rate of customs duty to be levied, therefore an appeal involving issues relating to Section 28 of the Customs Act was maintainable only before the Supreme Court.
The revenue authority passed an order changing the classification of goods exported by the respondent Axiom Cordages, resulting in confirmation of the demand for customs duty, along with interest and penalty on the respondent. The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) quashed the order passed by the revenue authority. The Commissioner of Customs filed an appeal before the Bombay High Court against the order passed by the CESTAT.
The Counsel for the respondent Axiom Cordages submitted before the High Court that under Section 130(1) of the Customs Act, 1962 an appeal shall lie to the High Court from every order passed by the CESTAT, not being an order relating to determination of any question having a relation to the rate of customs duty or the value of goods for assessment. The Counsel contended that any order passed by the CESTAT relating to determination of any question having a relation to the rate of customs duty or value of goods for the purposes of assessment, shall be appealable before the Supreme Court of India under Section 130E of the Customs Act.
The Counsel averred that the questions of law proposed in the appeal filed by the revenue department indicated that appeal was made against the question relating to classification of goods, which is a question in relation to the rate of customs duty of the goods, and therefore the appeal should be filed before the Supreme Court of India and not before the High Court.
The Counsel added that the order passed by the CESTAT and the appeal memo clearly indicated that the question involved in the case related to determination of the nature of classification, which related directly and proximately to the rate of duty applicable for the purpose of assessment. Therefore, the Counsel submitted that the appeal would lie only before the Supreme Court.
The High Court held that the main question involved in the appeal was with respect to the nature of classification and hence, an appeal would lie before the Supreme Court under Section 130E of the Customs Act.
Against the contentions made by the revenue department that issues relating to Section 28 of the Customs Act were involved, which did not constitute a controversy relating to classification of goods, the Court noted that Section 28 of the Customs Act provides for recovery of customs duty which is not levied or short levied, or is erroneously refunded. The Court ruled that to determine whether there was a short levy of duty, the department had to decide the classification of goods in order to ascertain the rate of customs duty to be levied and whether there was any short payment of duty or not. The Court thus held that in order to decide as to whether there is short levy of customs duty, there has to be a determination on the classification of goods.
The Court ruled that the entire controversy related to the classification of goods, which is related to the determination of the rate of customs duty applicable. The Court thus dismissed the appeal, holding that it had no jurisdiction and that the revenue department may prefer an appeal before the Supreme Court.
Case Title: The Commissioner of Customs II versus Axiom Cordages Ltd
Citation: 2022 LiveLaw (Bom) 141
Dated: 06.04.2022 (Bombay High Court)
Counsel for the Appellant: Mr. Jitendra B. Mishra, Mr. Ashutosh Mishra and Ms. Maya Majumdar
Counsel for the Respondent: Dr. Sujay Kantawala, Mr. Brijesh Pathak, Mr. Sujit Sahoo, Mr. Mahadev Lomde and Mr. Aditya Talpade