By TIOL News Service

NEW DELHI, APRIL 18, 2017: ORDER on the admission of this appeal has been kept pending to enable the Court to ascertain the true sweep and purport of the appellate power of the Supreme Court under Section 130E (b)of the Customs Act, 1962 (as amended). The language of the provision of the Act having indicated a very broad and expansive appellate jurisdiction, the precise contours thereof were felt necessary to be determined and the admissibility of the present appeal tested on the aforesaid basis.

History of the taxation regime under the Act and the changes that had occurred from time to time:

Against the assessment of customs duty made by different assessing authorities under the Act, viz., Deputy Collector of Customs/Collector of Customs, initially, an executive appellate remedy before the Collector of Customs and before the Central Board of Customs Excise and Customs, depending on the authority which has passed the initial order of assessment, was provided. There was a power of suo motu revision with the Board as well as a revisional jurisdiction to be exercised on an application by an aggrieved person. The Central Government under Section 131 (originally enacted) and under Section 129DD (Substituted by Act 21 of 1984) was also vested with a revisional jurisdiction.

By the Finance Act No.2 of 1980, a quasijudicial authority, namely, Customs Excise and Gold (Control) Appellate Tribunal (CEGAT) was constituted to hear appeals against orders of the Collector as well as the orders of the Board. The said Tribunal came to be known as Customs, Excise and Service Tax Appellate Tribunal (CESTAT), with the introduction of levy of service tax. The CEGAT and its successor CESTAT were constituted as specialized quasi-judicial appellate bodies to decide all issues relating to duty assessment under the Customs Act.

There was no provision of appeal to the jurisdictional High Court against the order of the appellate tribunal. However, under Section 130 of the Act a Reference jurisdiction was vested in the High Court on a question of law not relating to the determination of any question having a relation to the rate of duty of customs or to the value of the goods for the purpose of assessment .

Under Section 130A , introduced by the Finance Act, 1980, a Reference jurisdiction was also conferred in the Supreme Court in case the Appellate Tribunal was of the opinion that on account of a conflict in the decisions of the High Courts on the same question of law, a reference to the Supreme Court is necessary.

Under Section 130E (a) an appeal was provided to the Supreme Court from any judgment of the High Court delivered on a Reference, where the High Court certified the case to be a fit one for appeal to the Supreme Court.

Under Section 130E (b) against any order passed 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 purposes of assessment, an appeal was also provided to the Supreme Court.

Section 130F of the Customs Act, 1962 provided that the provisions of Civil Procedure Code, 1908 relating to appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under Section 130 as they apply in the case of appeals from decrees of a High Court.

This position was again altered in the year 2003. Against an order passed by the Appellate Tribunal on or after 1.7.2003 (not being order relating to determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment) an appeal was provided to the High Court if the High Court is satisfied that the case involves a substantial question of law. Simultaneously, under Section 130A , the Reference Jurisdiction of the High Court was continued in respect of orders passed by the Tribunal on or before 1.7.2003.

Under the 2003 Amendment, as against an order passed by the High Court in appeal or on a reference, an appeal to the Supreme Court continued to be provided [Section 130(E)a]. Section 130E (b) remained and continued to provide that against an order passed by the Appellate Tribunal relating among other things determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment, appeal shall lie to the Supreme Court. Section 130F was retained on similar terms as before.

By the National Tax Tribunal Act, 2005, a National Tax Tribunal was constituted under Section 5 thereof to hear appeals from "every order passed in appeal by the Income Tax Appellate Tribunal and the Central Excise and Service Tax Appellate Tribunal if the National Tax Tribunal is satisfied that the case involves substantial question of law" (Section 15). Under Section 23 of the National Tax Tribunal Act, 2005 on and from the notified date all proceedings including appeals and references under direct taxes, and indirect taxes pending before all High Courts stood stand transferred to the National Tax Tribunal. Section 24 provided for an appeal to the Supreme Court against any decision or order of the National Tax Tribunal. With the enactment of the National Tax Tribunal Act, 2005 provisions contained in Section 130A , B, C, D of the Customs Act, 1962 were repealed and the corresponding changes were also brought in Section 130E of the said Act. Section 130F continued to remain in the same form.

However, the aforesaid repeal effected by the National Tax Tribunal Act, 2005 would not be very relevant for the present inasmuch as the National Tax Tribunal Act, 2005 has been invalidated by the Supreme Court in the case of Madras Bar Association Vs. Union of India and Another - 2014-TIOL-82-SC- MISC -CB. Therefore, it is, the provisions of the Customs Act, 1962 as prevailing prior to the enactment of the National Tax Tribunal, 2005 which is presently holding the field.

Based on the above historical facts, the Supreme Court observed,

Under the Customs Act, 1962, (as amended), against an order of the appellate tribunal on a question not relating to duty or to classification of goods, an appeal lies to the High Court on a substantial question of law.

At the same time, a direct appeal to the Supreme Court against an order of the appellate tribunal on a question relating to the rate of duty or classification of goods has also been provided for.

No conditions, restrictions or limitations on the availability of the appellate remedy before the Supreme Court is envisaged in the main Section [ 130E (b)] though under Section 130F conditions to the exercise of the appellate power seem to have been imposed, the precise application of which is the determination required to be made in this case.

The history of the customs duty regime traced out above would go to show that after constitution of the Appellate Tribunal, the proceedings of which were/are deemed under the Act to be judicial proceedings, the duty of determining the correctness of questions relating to rate of duty or classification of goods has been primarily cast by the Act on the Tribunal.

A direct appeal lies to the Supreme Court against an order passed by the appellate tribunal relating to the question of duty or classification of goods [Section 130E (b)]. Section 130F has weathered all amendments and make the provisions of the Code of Civil Procedure relating to an appeal to the Supreme Court applicable to appeals under Section 130 of the Act.

Section 130E (b) of the Act provides for a direct appeal to the Supreme Court against an Order of the appellate tribunal, broadly speaking, on a question involving 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 interpretation 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 130E (b) of the Act which would also be consistent with the role and jurisdiction of the Supreme Court of India as envisaged under the Constitution. Viewed from the aforesaid perspective, the jurisdiction of the Supreme Court under Section 130E (b) of the Act or the pari materia provisions of any other Statute would be in harmony with those contained in Chapter IV of Part V of the Constitution.

The Supreme Court held that before admitting an appeal under Section 130E (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 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 130E (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 necessitating 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 occasioning a failure of justice.

The above parameters, by no means should be considered to be exhaustive.

In the present case the Supreme Court noticed that the findings recorded by the appellate tribunal on the basis of which the appeal of the present appellant has been dismissed are findings of fact arrived at on due consideration of all relevant materials on record. If that is so, the Supreme Court will have no occasion to have a re-look into the matter in the exercise of its appellate jurisdiction under Section 130E (b) of the Act.

The appeal, consequently, is dismissed by refusing admission.

(See 2017-TIOL-173-SC-CUS)