Ruchi Soya Industries Ltd. vs Commissioner of Customs

Harsha Devani, J. (Oral)—By this application, the applicant has raised a preliminary objection to the maintainability of the appeal on the ground that this Court has no jurisdiction to entertain and adjudicate the appeal and that the same is required to be filed before the Supreme Court in view of the provisions of Section 130E of the Customs Act, 1962 (hereinafter referred to as "the Act").

Mr. G.L. Raval, Senior Advocate, learned Counsel for the applicant invited the attention of the Court to the facts of the case, to submit that the Central Government had issued an exemption Notification No. 21/2002-Cus., dated 1-3-2002 in exercise of powers conferred upon it under Section 25 of the Act which was amended by Notification No. 120/2003, dated 1-8-2003 whereby in public interest, the basic Customs duty came to be reduced from 75% to 65% ad valorem subject to the condition that the imported Crude Palm Oil has acid value of 2% or more and beta carotene value is within the range of 500 to 2500 mg./kg. in bulk or loose. Once the carotene and acid values are found to be within the range, the imported CPO would be classified under Chapter Heading 1511 10 00 attracting concessional duty at the rate of 65%, otherwise it would be classified under Chapter Heading 1511 90 90 of the Customs Tariff Act, 1975 with rate of duty being 75%.

2.1. It was submitted that it was the case of the Revenue that the goods imported by the applicant were "Other Palm Oil" classifiable under CTH 1511 90 90 attracting basic Customs duty at the rate of 75% and tariff value of USD 471 PMT. Accordingly, a show cause notice dated 30-3-2005 came to be issued to the applicant calling upon it to show cause, inter alia, as to why the subject goods should not be confiscated under Sections 111(d) and 111(f) of the Act. The show cause notice culminated into an order dated 28-7-2006 passed by the adjudicating authority holding that the applicant had declared the goods as Crude Palm Oil and suppressed the fact that the goods had beta carotene value less than 500 mg./kg. so as to wrongly avail the benefit of the exemption notification. Accordingly, the goods came to be confiscated under Sections 111(f) and 111(m) of the Act and redemption fine, penalties, etc., also came to be imposed. The applicant carried the matter in appeal before the Tribunal, which held that the goods were not liable to confiscation under Section 111(f) of the Act as the description in the Import General Manifest (IGM) is required to be given broadly and precise description of the imported goods is not the requirement. It was submitted that the basic controversy between the parties is that as per the contention of the applicant herein, the Crude Palm Oil imported by the applicant satisfied the requirement of the aforesaid exemption notifications and the subject goods were liable to be classified under Chapter Heading 1511 10 00 attracting concessional duty and lower tariff value; whereas as per the version of the Revenue, the subject goods did not meet with the requirements of the above exemption notifications and were liable to be classified under Chapter Heading 1511 90 90 with rate of duty being 75%, which shall be calculated at the tariff value of USD 471 PMT. It was further submitted that it is the case of the Revenue in the instant appeal that the applicant has mis-declared the goods as Crude Palm Oil while claiming classification under CTH 1511 10 00 attracting concessional duty at the rate of 65% which duty shall be calculated at tariff value of USD 454, whereas in the subject goods, beta carotene value was less than 500 mg./kg. as stated above and that the same were liable to be classified as "Other Palm Oil" under CTH 1511 90 90 which attracted basic Customs duty at the rate of 75% which was liable to be calculated at tariff value of USD 471 PMT. It was submitted that therefore, in the present appeal, it has been pleaded that with a view to evade appropriate Customs duty, the applicant has mis-declared the goods which were liable to confiscation under Section 111(m) of the Act. It was submitted that therefore, the appeal involves issues relating amongst other things, to the determination of question having relation to the rate of duty of customs and also to the value of goods for the purpose of assessment and therefore, this Court has no jurisdiction to entertain and decide the appeal in view of the provisions of Section 130 of the Act. Under the circumstances, the appeal is not maintainable before this Court and is required to be filed before the Supreme Court in view of the provisions of Section 130E of the Act.

2.2. In support of his submissions, the learned Counsel placed reliance upon the decision of the Supreme Court in the case of Navin Chemical Mfg. & Trading Co. Ltd. v. Collector of Customs, 1993 (68) E.L.T. 3 (S.C.), wherein it has been held thus :

"10. Section 129D deals with the powers of the Central Board of Excise and Customs and the Collector of Customs to call for and examine the record of any proceedings before authorities subordinate thereto and examine the legality or propriety thereof and also to direct such authorities to file appeals. Sub-section (5) was added to Section 129D by the Customs & Central Excise Laws Amendment Act, 1988 and it reads thus :

(5) The provisions of this section shall not apply to any decision or order in which the determination of any question having a relation to the rate of duty or to the value of goods for the purposes of assessment of any duty is in issue or is one of the points in issue.

Explanation. - For the purposes of this sub-section, the determination of a rate of duty in relation to any goods or valuation of any goods or valuation of any goods for the purposes of assessment of duty includes the determination of a question. -

(a) relating to the rate of duty for the time being in force, whether under the Customs Tariff Act, 1975 (51 of 1975), or under any other Central Act providing for the levy and collection of any duty of customs, in relation to any goods on or after the 28th day of February, 1986; or

(b) relating to the value of goods for the purposes of assessment of any duty in cases where the assessment is made on or after the 28th day of February, 1986; or

(c) whether any goods fall under a particular heading or sub-heading of the First Schedule or the Second Schedule to the Customs Tariff Act, 1975 (51 of 1975), or that any goods are or not covered by a particular notification or order issued by the Central Government granting total or partial exemption from duty; or

(d) whether the value of any goods for the purposes of assessment of duty shall be enhanced or reduced by the addition or reduction of the amounts in respect of such matters as are specifically provided in this Act.

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 expression 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 exemption notification; and 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. Although this Explanation expressly confines the definition of the said expression to sub-section (5) of Section 129D, 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. Questions 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 notification 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 purposes 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 assessment, questions arise directly and proximately as to the rate of duty or the value of the goods."

2.3. Reliance was also placed upon the decision of the Supreme Court in the case of Ferro Alloys Corporation Ltd. v. Collector of Customs and Central Excise - 1996 (82) E.L.T. 173 (S.C.); the decision of this Court in the case of Commissioner of Customs (Preventive) v. Adani Exports Ltd. [2013 (295) E.L.T. 678 (Guj.)]; the decision of this Court in the case of Commissioner v. Kich Industries - 2014 (305) E.L.T. 107 (Guj.); the decision of the Bombay High Court in the case of Union of India v. Auto Ignation Ltd. - 2002 (142) E.L.T. 292 (Bom.); the decision of the Bombay High Court in the case of Commissioner of Customs & Central Excise, Goa v. Primella Sanitary Products (P) Ltd. - 2002 (145) E.L.T. 515 (Bom.); the decision of the Delhi High Court in the case of Jeet Enterprises v. Commissioner of Central Excise, Delhi-I - 2015 (315) E.L.T. 369 (Del.); the decision of the Delhi High Court in the case of Commissioner of Service Tax v. Ernst & Young Pvt. Ltd. - 2014 (34) S.T.R. 3 (Del.); the decision of the Karnataka High Court in the case of Commissioner of Customs, Bangalore v. Sajawat Industries Ltd. - 2010 (255) E.L.T. 24 (Kar.) and the decision of the Karnataka High Court in the case of Jagadish Bajaj v. Commissioner of Customs, Bangalore - 2012 (281) E.L.T. 71 (Kar.), for the proposition that when the controversy involved in the case relates to the determination of the rate of duty of customs, the appeal is not maintainable before the High Court under Section 130 of the Customs Act.

On the other hand, Mr. Y.N. Ravani, learned Senior Standing Counsel for the respondent invited the attention of the Court to the questions on which the appeal came to be admitted by an order dated 3rd July, 2014, to point out that the same relate to the interpretation of the provisions of Section 111(f) and (m) of the Act. It was submitted that the issue involved in this case is as to whether the Tribunal committed an error in the interpretation of the above provisions in allowing the appeal despite the fact that incomplete/incorrect description was given in Import General Manifest (IGM). It was submitted that, therefore, the question involved in the appeal does not relate to the classification of the goods in question, but to the contents of the IGM. Under the circumstances, the question involved in the appeal does not relate to the determination of any question having a relation to the rate of duty of customs or value of goods for the purpose of assessment.

3.1. In support of his submissions, the learned Counsel placed reliance upon the decision of the Karnataka High Court in the case of Commissioner of S.T., Bangalore v. Scott Wilson Kirkpatrick (I) Pvt. Ltd. - 2011 (23) S.T.R. 321 (Kar.) as well as the decision of this Court in the case of Ruchi Soya Industries Ltd. v. Union of India - 2014 (307) E.L.T. 852 (Guj.). It was, accordingly, urged that the application being devoid of merits, deserves to be rejected.

Before entering into the merits of the rival submissions, it may be germane to refer to the controversy before the Tribunal so as to examine as to whether the present case falls within the ambit of Section 130 of the Act. A perusal of the order of the Tribunal, which is subject matter of challenge in the appeal, reveals that the Tribunal has recorded that the main issue involved in the appeal is whether the description of imported cargo given in the IGM will make those goods liable to confiscation under Section 111(f) and Section 111(m) of the Customs Act, 1962. The entire issue before the Tribunal as revealed from its order was as regards the description of the imported goods in the IGM, and as to whether the same have been correctly described. The Tribunal placed reliance upon an earlier decision of its New Delhi Bench in the case of Sigma Electronics v. Collector of Customs, Jaipur - 1997 (91) E.L.T. 401 (Tribunal), wherein it was held that the description of the goods in IGM is required to be given broadly and precise description is not the requirement and that no confiscation is warranted under Section 111(f) of the Customs Act, 1962. The Tribunal held that in the present case also, it has not been brought on record by the Revenue that the carotene value is required to be shown in the IGM.

Another argument before the Tribunal was that Notification No. 21/2002-Cus. along with its amendments does not convey that palm oil of edible grade having specified acid value and beta carotene value will only be considered as Crude Palm Oil. The Tribunal, after referring to the relevant entry of the notification, observed that Crude Palm Oil of edible grade which meets with the specifications provided in the notification will be entitled to the benefit of the notification, however, the notification does not say that palm oil having such specifications alone will be Crude Palm Oil. According to the Tribunal, there can be other categories of palm oil of edible grade which do not meet with the specifications provided in the notification. The Tribunal, accordingly, held that there was no mis-declaration on the part of the appellants therein when the goods were described as Crude Palm Oil of edible grade.

At this juncture reference may be made to Section 130 of the Customs Act, which to the extent the same is relevant for the purpose, provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal 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. On a plain reading of the above provision, it is apparent that what is excluded from the jurisdiction of the High Court are orders 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. In the present case, the proceedings right from the inception relate to the question as to whether the imported goods are liable to confiscation and do not relate to any assessment proceedings. Therefore, the basic requirement of the section for the purpose of excluding the jurisdiction of the High Court, namely that the order which is subject matter of appeal should be relating to the rate of duty or value of goods for the purposes of assessment is not satisfied in the present case.

From the facts noted herein above, it is clear that the controversy before the Tribunal was as to whether the applicant herein had correctly described the goods imported by it. It is in the context of the above controversy, that the Tribunal has rendered its findings. From the findings recorded by the Tribunal, it is clear that none of the findings touch any issue relating to the determination of the rate of duty or value of goods for the purposes of assessment. The entire controversy relates only to the description of the goods in the IGM in connection with the question as to whether such goods are liable to confiscation. None of the issues decided by the Tribunal are in the context of determination of the rate of duty or the value of goods for the purposes of assessment. Under the circumstances, the appeal squarely falls within the ambit of Section 130 of the Act and has, therefore, rightly been filed before this Court.

In the opinion of this Court, the applicant has sought to create a ghost that the matter relates to the determination of the rate of duty and value of goods for the purposes of assessment by advancing specious arguments, even when the basic requirements for taking the appeal out of the ambit of Section 130 of the Act are not satisfied.

In the light of the aforesaid factual findings recorded by this Court, it is not necessary to enter into any discussion on the various decisions cited by the learned Counsel for the respective parties.

For the foregoing reasons, the application being devoid of any merit, fails and is, accordingly, rejected. It may be noted that there are a large number of matters pending before this Court and litigants have been pleading that their respective matters be taken up for hearing and this Court is hard pressed for time. Despite the aforesaid position, frivolous applications like the present one are filed before the Court wasting precious judicial time. Under the circumstances, with a view to discourage litigants from filing such frivolous applications, the Court deems it fit to impose costs quantified at Rs. 25,000/-.