2019 (5) TMI 930 - HC - Customs

Maintainability of appeal - appropriate forum - Section 130 of the Customs Act, 1962 - Extended period of limitation - short levy under the self assessment scheme - 'accredited client programme' scheme - import of their consignments of motor cars in completely knocked down (CKD) condition - benefit under Sub-Clause (1)(a) to S.No.437 of Notification No.12/2012-Cus dated 17.3.2012 - HELD THAT - Section 130 of the Act deals with appeals to High Court. In terms of Sub-Section (1) of Section 130 of the Act, an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 01.7.2003 (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. There are two limbs to Section 130(1) of the Act, the first of which being that it should be an eligible order in the sense that it should not be an 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. The second limb is that if the order passed by the Appellate Tribunal is found to be an eligible order i.e. an order, which does not relate to determination as to the rate of duty or value of the goods, then an appeal can be entertained if the High Court is satisfied that the case involves a substantial question of law - Admittedly, the order impugned before us is an order relating to rate of duty of customs and therefore, against the order passed by the Tribunal, an appeal is not maintainable before this Court under Section 130 of the Act. Section 130E of the Act deals with appeal to Hon'ble Supreme Court. Clause (b) of Section 130E of the Act would be relevant for the purpose of this case and it states that 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 shall lie to the Hon'ble Supreme Court. Whether the order passed by the Tribunal can be truncated and decided by two different courts at two different levels? - HELD THAT - The answer to the said question should be in the negative in the sense that an order passed by the Tribunal cannot be truncated and two courts cannot test the correctness of that order. Thus it can be concluded that the Revenue, if aggrieved by the order passed by the Tribunal, has to file an appeal before the Hon'ble Supreme Court under Section 130E of the Act and not before this Court, as, already, the order impugned before us is the subject matter of appeal before the Hon'ble Supreme Court at the instance of the respondent herein assessee. This appeal is not maintainable reserving liberty to the appellant Revenue to approach the Hon'ble Supreme Court under Section 130E of the Act.

Summary

Issues Involved:
1. Maintainability of the appeal before the High Court.
2. Eligibility for concessional rate of duty under Notification No. 12/2012-Cus.
3. Invocation of the extended period of limitation under Section 28(4) of the Customs Act, 1962.
4. Justification for imposition and reduction of penalties under Sections 114A and 112(a) of the Customs Act, 1962.
5. Justification for reduction of redemption fine on confiscated goods.

Issue-wise Detailed Analysis:

1. Maintainability of the Appeal:
The court first addressed whether the appeal by the Revenue was maintainable before the High Court given the facts and circumstances. The respondent argued that the appeal should be filed before the Supreme Court as it related to the rate of duty, which falls under Section 130E(b) of the Customs Act, 1962. The court agreed, stating that the impugned order was related to the rate of duty of customs, making it ineligible for appeal under Section 130 of the Act. The court cited precedents, including decisions from the Karnataka High Court and the Punjab and Haryana High Court, which held that issues related to the rate of duty should be appealed to the Supreme Court.

2. Eligibility for Concessional Rate of Duty:
The respondent-assessee imported motor cars in completely knocked down (CKD) condition and claimed a concessional rate of duty under Notification No. 12/2012-Cus. The Revenue's investigation revealed that the imports included pre-assembled engines and gearboxes, which did not qualify for the concessional rate. The Tribunal upheld the Revenue's stance, denying the benefit of the notification for the period from 01.3.2011 to 11.4.2013.

3. Invocation of the Extended Period of Limitation:
The Tribunal decided against the Revenue regarding the invocation of the extended period of limitation under Section 28(4) of the Customs Act, 1962. The Tribunal restricted the demand to the normal period of limitation, requiring re-quantification of the demand for the normal period with applicable interest. The Revenue challenged this decision, arguing that the extended period should apply due to the nature of the imports and the respondent's actions.

4. Justification for Imposition and Reduction of Penalties:
The Tribunal set aside the penalty imposed under Section 114A of the Customs Act, 1962, and reduced the redemption fine and penalty under Section 112(a). The Revenue contended that the Tribunal's decision to reduce the penalties was unjustified and lacked valid reasons. The Tribunal upheld the confiscation of goods under Sections 111(m) and (o) but reduced the redemption fine to ?1 Crore and the penalty to ?1 Crore.

5. Justification for Reduction of Redemption Fine:
The Tribunal's decision to reduce the redemption fine on the confiscated goods was contested by the Revenue. The Tribunal upheld the confiscation but reduced the fine, which the Revenue argued was without sufficient reasoning, especially given the facts admitted in the Tribunal's own order.

Conclusion:
The High Court concluded that the appeal was not maintainable before it, as the issues involved related to the rate of duty, which should be appealed to the Supreme Court under Section 130E of the Customs Act, 1962. The court dismissed the appeal, reserving liberty for the Revenue to approach the Supreme Court. The court refrained from making observations on the merits of the case, leaving it open for the respondent to argue all issues before the Supreme Court.