Dispute Concerning Exemption U/Sec 87 Customs Act Cannot Be Equated With Dispute In Relation To Rate Of Duty: Supreme Court

The Supreme Court observed that an appeal under Section 130(2) of the Customs Act will be maintainable before the High Court if the impugned order relates to claim of exemption under Section 87 of the Act.

Dispute concerning an exemption cannot be equated with a dispute in relation to the rate of duty, the bench comprising Justices MR Shah and BV Nagarathna observed.

In this case, the CESTAT held that vessel AE is a foreign going vessel and Section 87 of the Act is attracted to stores consumption on board and therefore it is exempted from payment of duty as per Section 87 of the Act.  The Revenue filed appeal before the Kerala High Court under Section 130(2).

Under 130(2) , 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 the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.

A preliminary objection was filed before the High Court contending that as the principal question is determination of rate of duty, against the order passed by the CESTAT, Appeal under Section 130E(b) shall be maintainable to the Supreme Court. The High Court overruled the said objection holding 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, whether Section 87 of the Act would be applicable or not. 

Before the Apex Court bench, the petitioner submitted that the dispute can be said to be having a relation to the rate of duty for the purpose of assessment and hence the appeal shall be maintainable to Supreme Court only. The issue, thus, considered by the bench was 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 ?

While rejecting the contention raised by the petitioner, the bench observed thus:

"Whether the assessee is entitled to exemption as claimed or not, such an issue cannot be said to be an issue relating, amongst other things, to the determination of any question having relation to the rate of duty. The submission on behalf of the petitioner that the duty will be NIL and if not, which is the case of the Customs Department, it will be the applicable rate of duty and therefore, such a dispute can be said to be in relation to the rate of duty, has no substance. The dispute with respect to the exemption claimed and the dispute with regard to the rate of duty are both different, distinct and mutually exclusive. We are of the firm opinion that the dispute concerning an exemption cannot be equated with a dispute in relation to the rate of duty"

While dismissing the SLP, the bench said:

Therefore, 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. We are in complete agreement with the view taken by the High Court.

Headnotes

Customs Act, 1962 ; Sections 87,130(2), 130E(b) - Dispute concerning an exemption cannot be equated with a dispute in relation to the rate of duty -  Whether the assessee is entitled to exemption as claimed or not, such an issue cannot be said to be an issue relating, amongst other things, to the determination of any question having relation to the rate of duty. (Para 4)

Summary: SLP against High Court order which rejected preliminary objection to the appeal filed by Revenue holding 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, whether Section 87 of the Act would be applicable or not - Dismissed - 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 Ac

Case details

Asean Cableship Pte. Ltd. vs Commissioner of Customs | 2022 LiveLaw (SC) 293 | SLP(C) 2208 OF 2022 | 15 March 2022

Coram : Justices MR Shah and BV Nagarathna

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