Customs - Order passed by Tribunal on a miscellaneous application cannot be said to be an order passed under Sec 129B - Appeal to HC against such order not maintainable: Karnataka HC

Customs - Order passed by Tribunal on a miscellaneous application cannot be said to be an order passed under Sec 129B - Appeal to HC against such order not maintainable: Karnataka HC


By TIOL News Service
BANGALORE, NOV 24, 2011: THE assessee filed an appeal before CESTAT against an Order-in-Original passed by the Commissioner of Customs, Bangalore. The Tribunal allowed the appeal by setting aside the order passed by the Commissioner with consequential relief. However, during the investigation stage, the assessee was coerced by the department to pay Rs. 5.92 crores towards duty. Consequent to the final order of the Tribunal, which the Revenue did not choose to appeal and attained finality, the assessee claimed refund of the entire amount paid by them with interest, amounting to Rs. 7.6 crores cumulatively.
However, the lower authority ordered refund of only Rs. 5.92 crores paid by the assessee and disallowed the claim of interest on the ground that the refund was granted within a period of three months from the date of claim and therefore, the assessee would not be entitled to any interest. The matter once again reached the Tribunal, with the assessee filing an application under Rule 41 of CESTAT (Procedure) Rules, 1982 claiming interest. After considering the entire factual matrix, CESTAT observed that the department held back the amount of duty paid by the assessee even when it was not due and therefore, the Revenue was directed to pay interest on the amount withheld unlawfully.
Revenue is before the High Court challenging this order passed by CESTAT. The counsel for the assessee raised a preliminary objection pointing out that this appeal preferred under section 130 of Customs Act, 1962 is not maintainable in as much as no appeal lies against the said interlocutory order. It was contended that the appeal would lie to the High Court only against an order passed in appeal.
After considering the factual matrix, the High Court observed that this very question came up for consideration before the Division Bench of Bombay High Court in Commissioner of Customs (Import) Mumbai vs. Pride Foramer = 2006-TIOL-154-HC-MUM-CUS. In that judgment, enunciating the point of law on this matter, Bombay High Court held as follows:

"The first requirement for maintaining the appeal to the High Court is that such an appeal is from the order passed by the Tribunal in appeal on or after the 1st day of July, 2003 not being an order relating 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. The second pre-requisite is that such an appeal must involve a substantial question of law. If the order of the Appellate Tribunal that is impugned in the appeal under Section 130 is not an order passed in appeal by the Tribunal, obviously, such appeal shall not be maintainable. Can the order dated 5th September, 2005 passed by the Tribunal on the miscellaneous application be said to be an order passed in appeal by the Tribunal? In our view, it is not. An order in appeal by the Appellate Tribunal is an order under Section 129B. Such order is passed in the appeal preferred under Section 129A. The application made by M/s. Pride Foramer for enforcement of the Tribunal's order is surely not an appeal under Section 129A. Rather, miscellaneous application made by M/s. Pride Foramer appears to be an application under Rule 41 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 which empowers the Tribunal to make such orders or give such directions as may be necessary or expedient to give effect or in relation to its orders or to prevent abuse of its process or to secure the ends of justice. The order passed thereon is not an order under Section 129B of the Customs Act, 1962. The said order, by no stretch of imagination, can be said to be an order in appeal. The appeals came to be disposed of by the Tribunal on 30th June, 2003 and further appeals from the said order came to be dismissed by the Supreme Court on 14th February, 2005. We fail to understand, how in this fact situation the impugned order dated 5th September, 2005 can be said to be an order passed by the Tribunal in appeal. This is an order passed by the Tribunal in miscellaneous application made under Rule 41 and such order, in our opinion, is not amenable to appeal under Section 130 of the Customs Act, 1962."

The High Court agreed with the aforesaid enunciation of law by Bombay High Court and held that the Revenue appeal against the Tribunal order was not maintainable. With the result, the appeal was dismissed as not maintainable.

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CA. Mukesh Saran
M.Com.,FCA, ISA-ICAI