Delhi High Court - Orders
Ashish Bhandari vs The Principal Commissioner Of Customs on 20 January, 2025
Author: Prathiba M. Singh
Bench: Prathiba M. Singh, Dharmesh Sharma
$~56 & 58
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CUSAA 36/2025 & CM APPLs.3366/2025, 3367/2025
ASHISH BHANDARI .....Appellant
Through: Mr. Tarun Gulati, Sr. Adv. with Mr.
Kishore Kunal, Mr. Vinayak
Bhandari, Ms Runjhun Pare, Mr.
Jayesh Sitlani & Mr. Pramod Kandpal,
Advs. (M: 9425901526)
versus
THE PRINCIPAL COMMISSIONER OF CUSTOMS.....Respondent
Through: Mr. Aditya Singla, Mr. Ritwik Saha
and Mr. Umang Misra, Advs. (M:
8851493323)
58 AND
+ CUSAA 37/2025 & CM APPls.3449/2025, 3450/2025
M/S. ILISHAN BIOTECH (P) LTD .....Appellant
Through: Mr. Tarun Gulati, Sr. Adv. with Mr.
Kishore Kunal, Mr. Vinayak
Bhandari, Ms Runjhun Pare, Mr.
Jayesh Sitlani & Mr. Pramod Kandpal,
Advs. (M: 9727886844)
versus
THE PRINCIPAL COMMISSIONER OF CUSTOMS.....Respondent
Through: Mr. Aditya Singla, Mr. Ritwik Saha
and Mr. Umang Misra, Advs.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE DHARMESH SHARMA
ORDER
% 20.01.2025
1. This hearing has been done through hybrid mode. CM APPL.3367/2025 (for exemption) in CUSAA 36/2025 CM APPL.3450/2025 (for exemption) in CUSAA 37/2025
2. Allowed, subject to all just exceptions. Applications are disposed of.
CUSAA 36/2025 & 37/2025 Page 1 of 9This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:42 CUSAA 36/2025 & CM APPL.3366/2025 (for interim relief) CUSAA 37/2025 & CM APPL.3449/2025 (for interim relief)
3. The present appeals are filed by the Appellant under Section 130 of the Customs Act, 1962 challenging the Final Order No. 59388-59389/2024 dated 29th October, 2024 passed by the ld. CESTAT.
4. The appeals raise an interesting issue as to whether ELISA food testing kits would qualify for the exemption from customs duty or not. The CESTAT Tribunal has held that the same would not qualify for exemption. Hence, the present appeals.
5. Mr. Singla, ld. Counsel for the Department raises a preliminary issue on maintainability against filing of this appeal. He submits that the question of exemption shall fall under the scope of Section 35G of Central Excise Act, 1944 i.e., it relates to the determination of the rate of duty of excise or to the value of goods for purposes of assessment. Therefore, the appeal would lie before the Supreme Court.
6. However, Mr. Gulati, the ld. Counsel for Appellant submits that the question as to eligibility for exemptions shall not fall under Section 35G as applicability of an exemption notification is different from a question of the quantum of duty applicable. The latter presumes imposition of duty, and questions the extent of the imposed duty whereas the former questions the imposition of duty itself.
7. On the issue of maintainability, two decisions have been cited by the Ld. Counsels. Mr. Singla, ld. Counsel relies upon the decision of the Coordinate Bench of this Court in M/s. Bans International v. Principal Commissioner of Customs (Import) & Anr., [CUSAA 90/2023, decided on 24th October, 2024] to argue that whenever there is a question of applicability CUSAA 36/2025 & 37/2025 Page 2 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:42 of exemption notification, the matter directly affects the rate of duty, and hence the appeal would be liable before the Supreme Court. The relevant paragraphs of the said decision is read as under:
"6. Mr Singla, learned counsel appearing for the Revenue submits that the issue is, essentially, as to the rate of the tax, and therefore, the appeal against the impugned order passed by the learned CESTAT would lie with the Supreme Court under Section 130E of the Customs Act, 1962. He referred to the decision of the Division Bench of this Court in The Commissioner of Customs (Export) v. M/s. Sipca India Ltd. & Ors. wherein this Court had considered the decisions in the case of Commissioner of Service Tax v. Ernst & Young Private Limited and Naveen Chemicals Manufacturing and Trading Company Limited v. Collector of Customs and had held that an appeal before this Court regarding an issue of exemption under a notification which was available in respect of specified products, would not be maintainable. The relevant extract of the said decision is set out below: -
"6. Given the nature of the aforesaid dispute and having examined the ratio of the decision in case of Ernst & Young Private Limited (supra), we donot think that this High Court has jurisdiction to entertain and adjudicate the present appeal. The question raised in the present appeal amongst other things relates to determination of a question relating to the rate of duty of customs and whether or not duty of customs was leviable in view of the exemption Notification 40/2006. Decision in the case of Ernst & Young Private Limited (supra) refers an earlier decision in case of Naveen Chemicals Manufacturing and Trading Company Limited v. Collector of Customs 1993 (68) ELT 3 (SC) wherein, it has been observed as under:
"11. It will be seen that subsection (5) uses the said CUSAA 36/2025 & 37/2025 Page 3 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43 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 saved as 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 Expression expressly confines the definition of the said expression to subsection (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 there for the purposes of assessment, questions arise directly CUSAA 36/2025 & 37/2025 Page 4 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43 and proximately as to the rate of duty or the value of goods."
7. After quoting the aforesaid paragraph, in Ernst & Young Private Limited (supra), it has been held as under:
"18. On reading of the said paragraph, it is lucid and clear that Supreme Court had stated that questions relating to rate of duty and valuation for the purpose of assessment as defined in the explanation to subsection (5) to Section 129D of the Customs Act, would include question relating to classification of goods under the tariff, whether or not they are covered by exemption notification; whether value for the purpose of assessment should be enhanced or reduced etc. It was further observed that statutory definition accords to the meaning given to the expression above. For the purpose of present controversy we are inclined to ignore and not take into consideration explanation 5 to Section 129Dor sub- section (5) to Section 35E. However, in spite of the said position, we do not think that the decision in the case of Delhi Gymkhana Club Ltd. (supra) is required to be referred to a Larger Bench. Determination of any question relating to rate of tax would necessarily directly and proximately involve the question, whether activity falls within the charging Section and Service Tax is leviable on the said activity. The said determination is integral and an important injunct to the question of rate of tax. In case Service Tax is not to be levied or imposed and cannot be imposed under the charging Section, no tax would be payable. The said determination would be direct or proximate to the issue of rate of tax, which will include nil tax, when no tax is chargeable.CUSAA 36/2025 & 37/2025 Page 5 of 9
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43
19. If the reasoning given by the Revenue is to be accepted, it will lead to anomaly and substantial confusion. All assessments necessarily have to determine and decide the rate of tax after determining and deciding whether or not activity is chargeable or tax can be levied. Assessments against the assessee would decide the rate of tax applicable once it is held that the activity is chargeable to tax under the F. Act. The words 'rate of tax' in relation to rate of tax would include the question whether or not the activity is eligible to tax under a particular or specific provision. This will be a reasonable and appropriate interpretation and will not cause or result in confusion or ambiguity regarding the appellate forum. Line between eligibility and rate of tax as propounded can be rather thin and superfluous in the present statutory context."
8. In view of the aforesaid interpretation, in the context of Sections 130 and 130E of the Customs Act, 1962, it has to be held that the present appeal is not maintainable before this High Court as one of the issues amongst other things which is required to be determined and decided has a relation to the rate of duty of customs. The appeal is accordingly held to be not maintainable. The appellant obviously has to approach the Supreme Court under Section 130E of the Customs Act, 1962. We clarify that we have not expressed any view on the merits of the appeal.
9. The appeal is accordingly dismissed as not maintainable."
7. In the present case, the petitioner's grievance is, essentially, regarding the rate of duty as is imposed on the goods in question as the rate of duty on the goods falling in CTH 9616 is higher than the rate of duties specified for products falling under CTH 8424.
CUSAA 36/2025 & 37/2025 Page 6 of 9This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43
8. The present appeal is, accordingly, dismissed being not maintainable. The pending application also stands disposed of."
8. This is opposed by Mr. Gulati, ld. Senior Counsel on behalf of the Appellant, who submits that in Asean Cableship Private Limited v. Commissioner of Customs, (2023) 14 SCC 194, the Supreme Court has categorically held that if the case of the Petitioner is that the applicable duty rate is nil due to an exemption notification, then the same would is liable to be filed before the High Court. The relevant paragraphs of the said decision is read as under:
"4.1 While considering the aforesaid issue the main controversy and/or the principal question is required to be addressed. It was/is the case on behalf of the petitioner that the vessel AE being a foreign-going vessel the imported stores are eligible to the exemption under Section 87 of the Act. Therefore, the principal question/issue is the exemption claimed under Section 87 of the Act. 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.
5. A somewhat similar question had arisen before this Court in the case of Commissioner of Customs vs. CUSAA 36/2025 & 37/2025 Page 7 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43 Motorola (India) Ltd., (2019) 9 SCC 563. 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 130E of the Act.
6. 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. In view of the above, the present Special Leave Petition deserves to be dismissed and is accordingly dismissed."
9. The parties shall firstly address this issue on the next date of hearing with their written submissions. They are free to file their written note of arguments, if so advised.
CUSAA 36/2025 & 37/2025 Page 8 of 9This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43
10. No coercive steps shall be taken in the meantime towards the recovery as Mr. Gulati submits that the mandatory pre-deposit has already been deposited before the CESTAT.
11. List on 28th February, 2025 at top of the Board.
PRATHIBA M. SINGH, J.
DHARMESH SHARMA, J.
JANUARY 20, 2025/dk/Am CUSAA 36/2025 & 37/2025 Page 9 of 9 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/02/2025 at 23:49:43