A very serious reason for generating undue litigation and consequent harassment to the industry is the tendency of Revenue to appeal to the high court while the appeal actually lies to the Supreme Court. It is clearly laid down in the Central Excise Act and Customs Act that if the matter relates to valuation and classification, then the appeal lies with the Supreme Court. Let me reproduce the legal provisions below:
> Section 35G(1) of the Central Excise Act says that an appeal shall lie to the high court from an order passed in appeal by the Appellate Tribunal if the high court is satisfied that the case involves substantial questions of law but not for "an order relating, among other things, to the determination of any question having a relation to the rate of duty or the value of the goods for purpose of assessment".
> Section 35L(b) further lays down that "any order passed by the Appellate Tribunal relating among other things to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment".
Reading together it is crystal clear that against the order of the Tribunal relating to valuation and classification, the appeal has to be filed to the Supreme Court. Similar provisions are there in Section 130E(b) of the Customs Act.
The following Supreme Court and High Court judgments uphold the same view:
> In the case of UOI vs Guwahati Carbon Ltd- 2014(305)ELT26 (SC), the Supreme Court has observed the following, "Since what was done by the Tribunal is the determination of the assessable value of the commodity in question for the purpose of the levy of duty under the Act, in our opinion, the assessee ought to have carried the matter by way of an appeal before this Court under Section 35L of the Central Excise Act, 1944".
> In the case of CC vs Impex-2014(305)ELT38(Cal), the Calcutta High Court has observed, "The language of Section 130E is wide. Appeal to the Supreme Court lies not only from determination of duty or determination of valuation but determination of any question having relation to the rate of duty of customs or to the value of goods."
> In the case of Comm vs Motorola - 2012 (275)ELT53(Kar.), the Karnataka High Court has passed a detailed judgment and has finally given the decision that "the present appeal preferred under Section 130 of the Act is not maintainable before this Court. The appeal is to be preferred to the Supreme Court under Section 130E of the Act. "
> In the case of CCE, Mangalore vs Mangalore Refineries - 2011 (270) ELT 49 (Kar.), the Karnataka High Court has given similar judgment.
> In the case of CCE, Chennai vs HCL Peripherals (Order dated 19/12/14 in CMA No 6 of 2009) the Madras HC also gave similar judgment.
The judgments (there are many others also on this issue) prove beyond doubt that if the order of the Tribunal relates to classification or valuation, then the appeal by Revenue should be filed with the Supreme Court and not in the high court. But we find that the Commissioners in Calcutta, Assam, Karnataka and Tamil Nadu have blatantly ignored this clear position of law and have approached the high courts and got their appeals rejected after several years. My enquiries about Karnataka, both with lawyers and retired officers, confirm the view that in Karnataka, this had been the practice for a long time. The loss to the Department is that the case to the Supreme Court gets time barred and even if there's merit in the case, the Government loses revenue. The bigger loss is to the taxpayer whose future assessments are not finalised and he gets show cause notices every six months and also a dose of arm twisting. I suggest the following three measures:
a) Board to issue a circular stating the correct legal position;
b) Identify the commissioners who have resorted to this irresponsible behaviour causing loss of duty and take disciplinary action against them.
c) Remove the lawyers who argued these cases from the approved panel.
> Section 35G(1) of the Central Excise Act says that an appeal shall lie to the high court from an order passed in appeal by the Appellate Tribunal if the high court is satisfied that the case involves substantial questions of law but not for "an order relating, among other things, to the determination of any question having a relation to the rate of duty or the value of the goods for purpose of assessment".
> Section 35L(b) further lays down that "any order passed by the Appellate Tribunal relating among other things to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment".
Reading together it is crystal clear that against the order of the Tribunal relating to valuation and classification, the appeal has to be filed to the Supreme Court. Similar provisions are there in Section 130E(b) of the Customs Act.
The following Supreme Court and High Court judgments uphold the same view:
> In the case of UOI vs Guwahati Carbon Ltd- 2014(305)ELT26 (SC), the Supreme Court has observed the following, "Since what was done by the Tribunal is the determination of the assessable value of the commodity in question for the purpose of the levy of duty under the Act, in our opinion, the assessee ought to have carried the matter by way of an appeal before this Court under Section 35L of the Central Excise Act, 1944".
> In the case of CC vs Impex-2014(305)ELT38(Cal), the Calcutta High Court has observed, "The language of Section 130E is wide. Appeal to the Supreme Court lies not only from determination of duty or determination of valuation but determination of any question having relation to the rate of duty of customs or to the value of goods."
> In the case of Comm vs Motorola - 2012 (275)ELT53(Kar.), the Karnataka High Court has passed a detailed judgment and has finally given the decision that "the present appeal preferred under Section 130 of the Act is not maintainable before this Court. The appeal is to be preferred to the Supreme Court under Section 130E of the Act. "
> In the case of CCE, Mangalore vs Mangalore Refineries - 2011 (270) ELT 49 (Kar.), the Karnataka High Court has given similar judgment.
> In the case of CCE, Chennai vs HCL Peripherals (Order dated 19/12/14 in CMA No 6 of 2009) the Madras HC also gave similar judgment.
The judgments (there are many others also on this issue) prove beyond doubt that if the order of the Tribunal relates to classification or valuation, then the appeal by Revenue should be filed with the Supreme Court and not in the high court. But we find that the Commissioners in Calcutta, Assam, Karnataka and Tamil Nadu have blatantly ignored this clear position of law and have approached the high courts and got their appeals rejected after several years. My enquiries about Karnataka, both with lawyers and retired officers, confirm the view that in Karnataka, this had been the practice for a long time. The loss to the Department is that the case to the Supreme Court gets time barred and even if there's merit in the case, the Government loses revenue. The bigger loss is to the taxpayer whose future assessments are not finalised and he gets show cause notices every six months and also a dose of arm twisting. I suggest the following three measures:
a) Board to issue a circular stating the correct legal position;
b) Identify the commissioners who have resorted to this irresponsible behaviour causing loss of duty and take disciplinary action against them.
c) Remove the lawyers who argued these cases from the approved panel.