1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10083 OF 2011

COMMISSIONER OF CUSTOMS, BANGALORE-1 .... APPELLANT

VERSUS

M/S MOTOROLA INDIA LTD. .... RESPONDENT

WITH

Civil Appeal No. 7021 /2019 (Arising out of SLP (C)

No. 29444/2012), Civil Appeal No. 7022 /2019 (Arising out of

S.L.P. (C) No. 12755/2015), Civil Appeal No. 7524/2014 and Civil

Appeal No. 9245/2015.

J U D G M E N T

B.R. GAVAI, J.

Leave granted in S.L.P.(C) No. 29444/2012 and S.L.P.(C)

No. 12755/2015.

2. A short question that arises for consideration in these

appeals is, as to whether an appeal from the order of Customs,

Excise and Service Tax Appellate Tribunal (hereinafter referred

to as the “CESTAT”), involving an issue regarding violation of

conditions contained in customs exemption notification, would lie

before the High Court under the provisions of Section 130 of the

Customs Act, 1962 (hereinafter referred to as the “Customs Act”)

2

or to this Court under the provisions of Section 130E of the

Customs Act.

3. The facts in the present matter are not in dispute. For

the sake of convenience, we would refer to the facts in Civil

Appeal No. 10083/2011, inasmuch as the impugned judgment and

order(s) in all other connected appeals are passed following the

judgment and order passed by the Karnataka High Court in CS TA

No. 2/2007.

4. The assessee is a leading manufacturer of pagers. The

assessee is entitled to the benefit of Notification No. 30/1997–

Customs dated 01.04.1997 (hereinafter referred as the said

“notification”) by which the materials imported into India for

the manufacturing of the pagers were exempted from whole of the

customs duty leviable in the First Schedule of the Customs Tariff

Act, 1975 and further whole of the additional duty leviable

thereon under Section 3 of Customs Tariff Act, 1975. As per the

scheme framed under the said notification, the goods imported

under the actual user condition were required to be used only for

the manufacture of the declared final product. A specific

intelligence was received by the Director of Revenue Intelligence

to the effect that the assessee had stopped manufacturing of

pagers and hence a certain portion of the duty free material

imported under the Scheme had been written off in their books of

accounts. The officers of the DRI, therefore, took up further

3

investigation in the matter. The assessee was called upon to

submit the list of such unutilized items, which are imported

under the said notification and lying unutilized. The assessee

submitted a list of such unutilized items with requisite details

and sought for further time to link unutilized items to the bill

of entry at the relevant assessable value. It was further

informed by the assessee that they have ceased to manufacture

pagers and as such materials have become obsolete insofar as they

are concerned.

5. Not satisfied with the contention of the assessee, the

Commissioner of Customs, Bangalore, issued a Notice to the

assessee, calling upon it to show cause as to why the customs

duty amounting to Rs. 96,17,498/- along with interest at the rate

of 24% per annum and the penalty should not be recovered from it.

After following the procedure prescribed, the Commissioner of

Customs passed an Order in Original on 30.04.2002 thereby,

holding that the assessee was liable to pay the aforesaid amount

of Rs. 96,17,498/- along with interest and penalty. Being

aggrieved thereby, the assessee preferred an appeal before the

CESTAT. The CESTAT allowed the appeal. Being aggrieved thereby,

the Commissioner of Customs, Bangalore preferred an appeal before

the Karnataka High Court under the provisions of Section 130 of

the Customs Act. At the stage of final hearing of the appeal, the

assessee raised a preliminary objection contending therein, that

the order impugned before the High Court amongst other things,

4

also relates to the rate of duty of customs and as such the

appeal under Section 130 of the Customs Act was not tenable

before the High Court and the appeal will have to be preferred

before this Court under the provisions of Section 130E of the

Customs Act.

6. The Division Bench of the High Court held that it was

called upon to decide whether the terms and conditions of the

said notification have been complied with by the assessee or not

and whether the levy of duty, interest and penalty were legal or

not and whether the CESTAT was justified in setting aside the

levy of duty, interest and penalty and all these questions were

related to determination of the rate of duty. The Division Bench

of the High Court, therefore, held that the appeal under Section

130 of the Customs Act was not tenable before the High Court but

would be tenable under Section 130E of the Customs Act before

this Court. Being aggrieved thereby, the Revenue is in appeal

before this Court.

7. We have heard Ms. Pinky Anand, learned Additional

Solicitor General appearing on behalf of the appellant-Revenue

and Mr. Balbir Singh, learned Senior Counsel appearing on behalf

of the respondent-assessee.

5

8. For appraising the rival contentions, it would be

apposite to refer to Section 130 and Section 130E of the Customs

Act, 1962 (as it existed prior to its amendment by the Finance

Act, 2018). They read as follows:

“130. Appeal to High Court-

(1)An appeal shall lie to the High Court from every

order passed in appeal by the Appellate Tribunal on

or after the 1st day of July, 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.

(2)The Principal Commissioner of Customs or Commissioner

of Customs or the other party aggrieved by any order

passed by the Appellate Tribunal may file an appeal

to the High Court and such appeal under this sub-

section shall be –

(a)Filed within one hundred and eighty days from

the date on which the order appealed against is

received by the Principal Commissioner of Customs or

Commissioner of Customs or the other party;

(b)Accompanied by a fee of two hundred rupees where

such appeal is filed by the other party;

(c)In the form of a memorandum of appeal precisely

stating therein the substantial question of law

involved.

(2A)The High Court may admit an appeal after the expiry

of the period of one hundred and eighty days referred

to in clause (a) of sub-section (2), if it is

satisfied that there was sufficient cause for not

filing the same within that period.

(3)Where the High Court is satisfied that a substantial

question of law is involved in any case, it shall

formulate that question.

(4)The appeal shall be heard only on the question so

formulated, and the respondents shall, at the hearing

of the appeal, be allowed to argue that the case does

not involve such question:

Provided that nothing in this sub-section shall be

deemed to take away or abridge the power of the Court to

hear, for reasons to be recorded, the appeal on any other

6

substantial question of law not formulated by it, if it

is satisfied that the case involves such question.

(5)The High Court shall decide the question of law so

formulated and deliver such judgment thereon

containing the grounds on which such decision is

founded and may award such cost as it deems fit.

(6)The High Court may determine any issue which–

(a)has not been determined by the Appellate

Tribunal; or

(b)has been wrongly determined by the Appellate

Tribunal, by reason of a decision on such question of

law as is referred to in sub-section(1).

(7)When an appeal has been filed before the High Court,

it shall be heard by a bench of not less than two

Judges of the High Court, and shall be decided in

accordance with the opinion of such Judges or of the

majority, if any, of such Judges.

(8)Where there is no such majority, the Judges shall

state the point of law upon which they differ and the

case shall, then, be heard upon that point only by

one or more of the other Judges of the High Court and

such point shall be decided according to the opinion

of the majority of the Judges who have heard the case

including those who first heard it.

(9)Save as otherwise provided in this Act, the

provisions of the Code of Civil Procedure, 1908 (5 of

1908) relating to appeals to the High Court shall, as

far as may be, apply in the case of appeals under

this section.

Xxx

130E. Appeal to the Supreme Court-An appeal shall

lie to the Supreme Court from–

(a)Any judgment of the High Court delivered-

(i) In an appeal made under Section 130; or

(ii) On a reference made under Section 130 by the

Appellate Tribunal before the 1

st

day of July,

2003;

(iii) On a reference made under Section 130A,

in any case which, on its own motion or on an oral

application made by or on behalf of the party

aggrieved, immediately after the passing of the

judgment, the High Court certifies to be a fit one

for appeal to the Supreme Court; or

7

(b)Any order passed [before the establishment of the

National Tax Tribunal] 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 the purposes of

assessment.”

9. Upon a conjoint reading of the aforesaid provisions, it

could thus be seen that an appeal shall lie to the High Court

against every order passed in appeal by the Appellate Tribunal,

if the High Court is satisfied that the case involves a

substantial question of law. The only exception carved out is

that an appeal shall lie before this Court and shall not lie

before the High Court against the order relating, amongst other

things, to the determination of any question having relation to

the rate of duty of customs or to the value of goods for the

purposes of assessment.

10. It could thus clearly be seen that, only if any question

having relation to the rate of duty is involved in an appeal or

if it relates to value of goods for the purpose of assessment,

the appeal would lie to this Court and in all other cases it

would lie before the High Court.

11. However, the issue is no more res integra. In a catena of

the judgments, right from the judgment of this Court in the case

of Navin Chemicals Manufacturing & Trading Company Ltd. vs.

Collector of Customs, reported in (1993) 4 SCC 320, the position

8

has been clarified. We may gainfully refer to paragraphs 6, 7 and

11 of the said judgment wherein, this Court considered the

provisions of Section 130 and Section 130E of the Customs Act.

They read thus:

“6. It is, upon a plain reading of the section,

clear that appeals against orders which involve ‘determi -

nation of any question having a relation to the rate of

duty of customs or to the value of goods for purposes of

assessment’ are specially treated and are required to be

heard by a Special Bench. This is what sub-section (3) of

Section 129-C provides. Appeals in other matters are to

be heard by a Bench consisting of one judicial member and

one technical member, subject to the provisions of sub-

section (4). Sub-section (4) carves out an exception to

the general provisions of sub-section (2) and provides

that a member of CEGAT sitting singly can hear appeals in

the matters enumerated therein provided that they are not

cases where 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’ is in question.

7. The controversy, therefore, relates to the mean -

ing to be given to the expression ‘determination of any

question having a relation to the rate of duty of customs

or to the value of goods for purposes of assessment’. It

seems to us that the key lies in the words ‘for purposes

of assessment’ therein. Where the appeal involves the de -

termination of any question that has a relation to the

rate of customs duty for the purposes of assessment that

appeal must be heard by a Special Bench. Similarly, where

the appeal involves the determination of any question

that has a relation to the value of goods for the pur -

poses of assessment, that appeal must be heard by a Spe -

cial Bench. Cases that relate to the rate of customs duty

for the purposes of assessment and which relate to the

value of goods for the purposes of assessment are advis -

edly treated separately and placed before Special Benches

for decision because they, more often than not, are of

importance not only to the importers who are parties

thereto but also to many other importers who import or

propose to import the same or similar goods. Since the

decisions of CEGAT in such matters would have wide appli -

cation they are, by the terms of the statute, to be ren -

dered by Special Benches. The phrase “relation to” is,

9

ordinarily, of wide import but, in the context of its use

in the said expression in Section 129-C, it must be read

as meaning a direct and proximate relationship to the

rate of duty and to the value of goods for the purposes

of assessment.

11. It will be seen that sub-section (5) uses

the said expression ‘determination of any question having

a relation to the rate of duty or to the value of goods

for the purposes of assessment’ and the Explanation

thereto provides a definition of it ‘for the purposes of

this sub-section’. The Explanation says that the expres -

sion includes the determination of a question relating to

the rate of duty; to the valuation of goods for purposes

of assessment; to the classification of goods under the

Tariff and whether or not they are covered by an exemp -

tion notification; and whether the value of goods for

purposes of assessment should be enhanced or reduced hav -

ing regard to certain matters that the said Act provides

for. Although this Explanation expressly confines the

definition of the said expression to sub-section (5) of

Section 129-D, it is proper that the said expression used

in the other parts of the said Act should be interpreted

similarly. The statutory definition accords with the

meaning we have given to the said expression above. Ques -

tions relating to the rate of duty and to the value of

goods for purposes of assessment are questions that

squarely fall within the meaning of the said expression.

A dispute as to the classification of goods and as to

whether or not they are covered by an exemption notifica -

tion relates directly and proximately to the rate of duty

applicable thereto for purposes of assessment. Whether

the value of goods for purposes of assessment is required

to be increased or decreased is a question that relates

directly and proximately to the value of goods for pur -

poses of assessment. The statutory definition of the said

expression indicates that it has to be read to limit its

application to cases where, for the purposes of assess -

ment, questions arise directly and proximately as to the

rate of duty or the value of the goods.

12. It could thus clearly be seen that, this Court, while

considering the provisions of Section 130 and Section 130E of the

Customs Act, has held that where an appeal involves determination

10

of any question that has relation to customs duty for the purpose

of assessment or where an appeal involves determination of any

question that has relation to the value of goods for the purposes

of assessment, such cases will have to be treated separately and

have to be given special treatment.

13. Recently, again this Court, in a decision, in the case of

Steel Authority of India Ltd. Vs. Designated Authority,

Directorate General of Anti-Dumping & Allied Duties, reported in

(2017) 13 SCC 1, has reiterated the same position. It would be

appropriate to refer to para 18 of the said judgment which reads

as follows:

“18. Section 130-E(b) of the Act provides for a di -

rect appeal to the Supreme Court against an order of the

Appellate Tribunal, broadly speaking, on a question in -

volving 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 interpreta -

tion 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 130-E(b) of the Act which, in our con -

sidered view, would also be consistent with the role and

jurisdiction of the Supreme Court of India as envisaged

under the Constitution. Viewed from the aforesaid per -

spective, the jurisdiction of the Supreme Court under

Section 130-E(b) of the Act or the pari materia provi -

11

sions of any other statute would be in harmony with those

contained in Chapter IV of Part V of the Constitution.”

14. It could thus be seen that, this Court has found that

when an order of the Appellate Tribunal would go beyond inter se

disputes between the parties and may affect a large number of

cases, such an issue will be one of general public importance. It

has further been found that certain questions raised or arising

may require interpretation of the Constitution. It is held that

only such questions of general public importance alone are

required to be decided by this Court. It has further been held

that, by the very nature of a question raised or arising, the

same necessarily has to involve issue of law going beyond the

inter partes rights and extending to a class or category of

assessees as a whole.

15. This Court in the case of Steel Authority (supra), after

considering the earlier judgments of this Court, carved out

certain conditions which are required to be satisfied before

admitting an appeal under Section 130E of the Customs Act. It

will be apposite to refer to paragraphs 21 and 22 of the said

judgment. Paragraphs 21 and 22 read thus:

“21. On the basis of the discussion that has preceded, it

must therefore be held that before admitting an appeal

under Section 130-E(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 determi -

nation 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

12

non for the admission of the appeal before this

Court under Section 130-E(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 necessi -

tating 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 occa -

sioning a failure of justice.

22. The above parameters, which by no means

should be considered to be exhaustive, may now be applied

to the case of the parties before us to decide the pri -

mary question indicated at the outset of the present or -

der, namely, whether this appeal deserves to be admit -

ted.“

16. We are of the considered view that the Legislature has

carved out only following categories of cases to which it has

intended to give a special treatment of providing an appeal

directly to this court.

“(i) determination of a question relating to a rate of

duty;

(ii) determination of a question relating to the

valuation of goods for the purpose of assessment;

(iii) determination of a question relating to the

classification of goods under the Tariff and whether or

not they are covered by an exemption notification;

(iv) whether the value of goods for purposes of

assessment should be enhanced or reduced having regard to

certain matters that the said Act provides for. “

13

17. Reverting to the present case, it could clearly be seen

that the only question that is involved is whether the assessee

had violated the conditions of the exemption notification by not

utilizing the imported materials for manufacturing of the

declared final product and was, therefore, liable for payment of

duty, interest and penalty. Neither any question with regard to

determination of rate of duty arises nor a question relating to

valuation of goods for the purposes of assessment arises in the

present case. The appeals also do not involve determination of

any question relating to the classification of goods, nor do they

involve the question as to whether they are covered by the

exemption notification or not. Undisputedly, the goods are

covered by the said notification. The only question is as to

whether the assessee has breached the conditions which are

imposed by the notification for getting exemption from payment of

the customs duty or not. The appeals do not involve any question

of law of general public importance which would be applicable to

a class or category of assessees as a whole. The question is

purely inter-se between the parties and is required to be

adjudicated upon the facts available.

18. In that view of the matter, we find that the High Court

was not justified in holding that the appeals are not

maintainable under Section 130 of the Customs Act but are tenable

before this Court under Section 130E of the Customs Act.

14

19. In the result, the appeals are allowed and the impugned

orders passed by the High Court are set aside. The appeals are

remitted back to the High Court for de novo consideration of

the appeals on their own merits.

20. In the facts and circumstances of the case, there shall

be no order as to costs.

...................J.

[ARUN MISHRA]

...................J.

[M. R. SHAH]

...................J.

[B.R. GAVAI]

NEW DELHI;

SEPTEMBER 5, 2019.