2022 (3) TMI 760 - SC - Customs

Maintainability of appeal before the High Court - appropriate forum - Claiming exemption from duty of customs on foreign going going vessel - Whether against the order passed by the CESTAT impugned before the High Court the appeal would be maintainable before the High Court under Section 130(1) of the Act or the appeal before this Court would be maintainable under Section 130E(b) of the Act? - HELD THAT - Similar question had arisen before this Court in the case of Commissioner of Customs vs. Motorola (India) Ltd., 2019 (9) TMI 229 - SUPREME COURT . The question involved in the said case was, whether, the assessee violated the conditions of the exemption notification by not utilising the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. The High Court held that the appeals before the High Court would not be maintainable but were tenable before this Court under Section 130E of the Act. While setting aside the order passed by the High Court, this Court observed and held that neither any question with respect to determination of rate of duty arises nor a question relating to valuation of the goods for the purposes of assessment arises and the appeals also do not involve determination of any question relating to the classification of goods. By observing so, this Court observed that the High Court was not justified in holding that the appeals were not maintainable under Section 130(1) of the Act but were tenable before the Supreme Court under Section 130E of the Act. In the facts and circumstances of the present case the High Court is right in observing that the principal question in the present case is not in relation to the rate of duty but determining whether vessel AE is a foreign going vessel or not, and if the vessel AE is a foreign going vessel, Section 87 of the Act will be applicable or not. Therefore, with respect to such an issue, against the order passed by the CESTAT, the appeal would be maintainable before the High Court under Section 130 of the Act. The present Special Leave Petition deserves to be dismissed and is accordingly dismissed.

Summary

Issues:
1. Maintainability of appeal before High Court under Section 130(1) of the Customs Act, 1962.
2. Interpretation of Section 87 of the Act regarding exemption from payment of duty for a foreigngoing vessel.
3. Determination of whether the principal question relates to the rate of duty or exemption under Section 87 of the Act.

Analysis:

Issue 1:
The petitioner challenged the maintainability of the appeal before the High Court under Section 130(1) of the Customs Act, 1962. The High Court overruled the objection, holding that the principal question was not about the rate of duty but determining whether the vessel in question was a foreigngoing vessel and if Section 87 of the Act applied. The High Court's decision was based on the distinction between the rate of duty and the exemption claimed under Section 87. The petitioner argued that the appeal should be maintainable before the Supreme Court under Section 130E(b) due to the rate of duty issue. However, the Court held that the exemption claim and the rate of duty were distinct issues, and the dispute concerning an exemption cannot be equated with a dispute in relation to the rate of duty.

Issue 2:
The case involved the interpretation of Section 87 of the Act regarding the exemption from payment of duty for a foreigngoing vessel. The petitioner claimed that the vessel in question was a foreigngoing vessel and, therefore, eligible for exemption under Section 87. The Customs Department disputed this claim and argued for the imposition of duty. The CESTAT had ruled in favor of the petitioner, stating that the vessel was a foreigngoing vessel and exempt from duty under Section 87. This decision was challenged by the Revenue before the High Court, leading to the current appeal.

Issue 3:
The Court referenced a similar case involving a dispute over exemption conditions and duty payment in Commissioner of Customs vs. Motorola (India) Ltd. The Court highlighted that disputes over exemption claims and rate of duty are distinct and mutually exclusive issues. The judgment in the Motorola case was cited to support the argument that appeals concerning exemption claims are maintainable before the High Court under Section 130 of the Act. The Court agreed with the High Court's interpretation that the principal question in the present case was not about the rate of duty but determining the vessel's status as a foreigngoing vessel and the applicability of Section 87 of the Act.

In conclusion, the Supreme Court dismissed the Special Leave Petition, upholding the High Court's decision on the maintainability of the appeal under Section 130(1) of the Act. The judgment emphasized the distinction between disputes over exemption claims and rate of duty, affirming that the appeal was rightly maintainable before the High Court based on the principal question of the vessel's classification as a foreigngoing vessel under Section 87 of the Act.