The Supreme Court has held that disputes concerning exemption claim and rate of duty are different and upholds the Jurisdiction of the High Court in entertaining an appeal against CESTAT Order.
The petitioner,M/s. AseanCableship Pvt. Ltd. operates the cable ship CS Asean Explorer for the purposes of laying, repairs and maintenance of submarine cables. Various telecommunication companies entered into an agreement with cableship operators (including the petitioner) to undertake repair and maintenance of the submarine cable wires through cableships such as the vessel AE. The “vessel AE” is stationed at Kochi, India to undertake repairs and maintenance of submarine cables.
A show cause notice was issued proposing to initiate action under Sections 111(b) and (f) of the Act read with Section 125 of the Act. The petitioner resisted the same. It was the case on behalf of the petitioner that CS Asean Explorer, which was subjected to a confiscation order, is a foreign going vessel falling within the definition of Section 2(21) and Section 87 of the Act and therefore entitled to exemption from payment of any duty.The Commissioner of Customs confirmed the demand and also imposed the penalty.
Petitioner aggrieved by the order filedan appeal before the CESTAT. The CESTAT allowed the said appeal and remanded the appeal for determining the extent of applicable duty on the ship’s stores consumed by the petitioner during the period of time that the vessel was engaged in operations in Indian territorial waters and for the normal period. Thus, the CESTAT accepted the case on behalf of the petitioner that vessel AE is a foreign going vessel and Section 87 of the Act is attracted to stores consumption on board and thereforethe petitioner is exempted from payment of duty as per Section 87 of the Act. Aggrieved by the final order passed by the Revenue has preferred appeal before the High Court under Section 130(1) of the Act.
Preliminary objection raised by the petitioner on the maintainability of the appeal before the High court under Section 130(1) of the Act. The petitioner submitted that as the principal question isdetermination of rate of duty, against the order passed by the CESTAT, Appeal under Section 130E (b) shall be maintainable to the Honorable Supreme Court. The High Court overruled the said objection and held that hat 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, whether Section 87 of the Act would be applicable or not. Thus, according to the High Court, the principal question is not the determination of the rate of duty but that the exemption under Section 87 of the Act shall be allowable or not.
Feeling aggrieved and dissatisfied order passed by the High Court petitioner preferred a Special Leave Petition before Honorable Supreme Court.
The two-judge bench of Justice M.R Shah and JusticeB. V. Nagarathna by dismissing the Special Leave Petition has held that “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 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. 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”.
M/s. Asean Cableship Pte. Ltd. vs The Commissioner of Customs
CITATION: 2022 TAXSCAN (SC) 126
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