The Delhi High Court has dismissed an appeal filed by the Principal Commissioner of Customs against an order by the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ). The appeal was dismissed due to the duty amount involved in the subject being less than the monetary limit set by the Central Board of Indirect Taxes and Customs ( CBIC ) for filing appeals before the High Court.
The respondent, M/s Linear Technologies India Pvt. Ltd., faced a demand of Rs. 86,34,821/- in customs duty along with penalties and a redemption fine. The company challenged the demand before CESTAT, which ruled in favor of them and set aside the original order. Consequently, the Principal Commissioner of Customs appealed the CESTAT order before the High Court.
The respondents, represented by Ashok Kumar Mehta and Praveen Kumar Sood, contended that the duty amount involved in the subject appeal was below the threshold limit set by the CBIC, making the appeal inadmissible before the High Court.
The department argued that the total amount involved, including duty involved of Rs. 86,34,821/-, penalty of Rs. 10,00,000/-, and redemption fine of Rs. 15,00,000/- (Total Rs. 1,31,34,821/-), exceeded the monetary limit for filing appeals before the High Court.
The High Court agreed with the argument of the petitioner company. It referred to the CBIC circulars, which set the monetary limit for filing appeals.
The division bench of Justices Sanjeev Sachdeva and Ravinder Dudeja emphasised that the ‘duty element’ is the decisive factor for determining the threshold limit and clarified that penalties and fines are not considered when calculating the threshold limit, unless duty itself is the issue.
Since the duty element involved in the subject appeal is less than the threshold limit set by the CBIC, the court dismissed the appeal on the ground of low tax effect.
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