Breach of condition of notification cannot be said to be a dispute with respect to valuation

Commissioner of Central Excise Customs And Service Tax Mysore Vs Such Silk International Ltd. (Supreme Court of India)

High Court has dismissed the appeal filed by the Department under Section 130 of the Customs Act as not maintainable by observing that as the dispute can be said to be a dispute with respect to valuation and therefore the appeal would not lie to the High Court but an appeal would lie to this Court.

The issue involved is whether with respect to the dispute in question, the appeal would be maintainable before the High Court or before this Court is squarely covered by a recent decision of this Court in the case of M/s Asean Cableship Pvt. Ltd. vs. The Commissioner of Customs [SLP (C) No. 2208 of 2022] decided on 15.03.2022. After considering the binding decision of this Court in the case of Commissioner of Customs vs. Motorola (India) Ltd.  (2019) 9 SCC 563, it is observed in para 5 as under:-

“… 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 130Eof the Act.“

In the present case, the dispute also is with respect to breach of condition of notification which may ultimately lead to subsequent demand of duty or imposition, but that itself cannot be said to be a dispute with respect to valuation. Therefore, the High Court is wrong in not entertaining the appeal on the ground that the same was not maintainable. The impugned order passed by the High Court is just contrary to the decisions of this Court in Motorola (India) Ltd. (supra) as well as Asean Cableship Pte. Ltd. (supra) and the same deserves to be quashed and set aside.

FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER

Delay condoned.

Leave granted.

We have heard Mr. Arijit Prasad, learned Senior Advocate, appearing for the Revenue and Ms. Charanya Lakshmikumaran, learned Advocate, appearing on behalf of the respondent-assessee, who is on caveat.

Feeling aggrieved and dissatisfied with the impugned judgment and order dated 23.09.2021 passed by the High Court of Karnataka at Bengaluru in CSTA No. 8 of 2018, by which the High Court has dismissed the said appeal filed by the Department under Section 130 of the Customs Act as not maintainable by observing that as the dispute can be said to be a dispute with respect to valuation and therefore the appeal would not lie to the High Court but an appeal would lie to this Court.

The issue involved is whether with respect to the dispute in question, the appeal would be maintainable before the High Court or before this Court is squarely covered by a recent decision of this Court in the case of M/s Asean Cableship Pte. Ltd. vs. The Commissioner of Customs [SLP (C) No. 2208 of 2022] decided on 15.03.2022. After considering the binding decision of this Court in the case of Commissioner of Customs vs. Motorola (India) Ltd.  (2019) 9 SCC 563, it is observed in para 5 as under:-

“… 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 130Eof the Act.“

breach of condition of notification cannot be said to be a dispute with respect to valuation

In the present case, the dispute also is with respect to breach of condition of notification which may ultimately lead to subsequent demand of duty or imposition, but that itself cannot be said to be a dispute with respect to valuation. Therefore, the High Court is wrong in not entertaining the appeal on the ground that the same was not maintainable. The impugned order passed by the High Court is just contrary to the decisions of this Court in Motorola (India) Ltd. (supra) as well as Asean Cableship Pte. Ltd. (supra) and the same deserves to be quashed and set aside.

In view of the above and for the reasons stated above, the present Appeal succeeds. The impugned judgment and order passed by the High Court dismissing the appeal as not maintainable is hereby quashed and set aside. We hold that the appeal before the High Court was maintainable. The appeal before the High Court is ordered to be restored to the file which shall be considered by the High Court in accordance with law and on its own merits. We make it clear that we have not expressed anything on the merits of the dispute in favour of either of the parties.

The present Appeal is, accordingly, allowed. No costs.

Delay condoned.

Leave granted.

The present Appeal is allowed in terms of the signed order. Pending applications, if any, stand disposed of.