2024 (3) TMI 1363 - SC - Customs

Maintainability of appeal - low tax effect - Interpretation of Circular Instructions regarding monetary limits for filing appeals before the Tribunal - HELD THAT - There is no exception made in the Circular/Instructions with regard to the manner in which the duty or tax is demanded. It may be that in the instant case, there was a misdeclaration of goods and the duty demanded was Rs.10,91,500/-. However, the fact remains that a portion of the said amount was adjusted at the instance of the petitioner herein and therefore before the Tribunal, the disputed amount was less than Rs.10,00,000/. The appeal before the Tribunal was by the revenue and as the assessee had accepted the demand and had got a small portion of the demand even adjusted to make the disputed amount less than Rs.10,00,000/-, the appeal was not maintainable. The Revenue could not have maintained the appeal before the Tribunal having regard to the extant Circular/Instructions dated 17.12.2015 which bears the threshold limit of Rs.10,00,000/- or above. The object and purpose of issuing these instructions is to reduce litigation by the Revenue as a measure of sound litigation policy. Despite the Circular/Instruction the Revenue filed an appeal before the Tribunal as well as before the High Court assailing the Tribunal s order. The High Court was not right in entertaining the appeal and remanding the matter to the Tribunal to consider the same on merits by accepting the contention of the respondent herein that the threshold limit would include even interest and penalty along with duty when that was not at all to be considered having regard to the Circular/Instructions dated 17.08.2011 which remained unchanged by the subsequent Circular/Instruction dated 17.12.2015. The Review Petition is allowed.

Summary

Issues:
1. Interpretation of Circular Instructions regarding monetary limits for filing appeals before the Tribunal.
2. Determining the maintainability of an appeal based on the disputed duty amount.
3. Review of the High Court's decision to entertain an appeal and remand the matter.

The Supreme Court reviewed a case where the Tribunal dismissed an appeal by the Revenue due to a 'low tax effect' based on Circular Instructions setting the monetary limit for appeals. The High Court entertained the Revenue's appeal, leading to a Special Leave Petition in the Supreme Court. The Court dismissed the Special Leave Petition, prompting a Review Petition. The Court found that the Revenue's appeal before the Tribunal was not maintainable as the disputed amount was below the prescribed limit of Rs.10,00,000. The Circular Instructions clarified that the limit applies to disputed duty only, not total duty demanded.

The Court analyzed the contention that the duty/tax under dispute, not including interest and penalty, should determine the maintainability of an appeal. The Revenue argued that the total duty payable, considering misdeclaration, exceeded the threshold amount. However, the Court held that the disputed amount, adjusted by the assessee, was below Rs.10,00,000, making the appeal by the Revenue not maintainable. The Circular/Instructions aim to reduce litigation and should be strictly followed.

The Court emphasized that the Circular/Instructions do not consider total duty demanded but focus on disputed duty. Despite misdeclaration leading to higher total duty, the adjusted disputed amount governs appeal eligibility. The High Court erred in remanding the matter based on including interest and penalty in the threshold amount. The Court recalled its previous order, allowing the Review Petition and restoring the Special Leave Petition for further consideration.

In a subsequent Civil Appeal arising from the Special Leave Petition, the Court applied the same reasoning, setting aside the High Court's decision and reinstating the Tribunal's order. The disputed duty amount, not the total demanded, determines appeal eligibility. The Court reiterated that the monetary limit applies to disputed duty only. The appeal was allowed, with no costs awarded. All pending applications were disposed of accordingly.