Appeals on Breach of Exemption Notification Conditions Lie with HC u/s 130 of Customs Act: Supreme Court [Read Judgement]
The Karnataka High Court had earlier dismissed the Department’s appeals filed under Section 130 as not maintainable, holding that the matter lay exclusively with the Supreme Court, however the same was set aside
Exemption Notification
Exemption Notification
The Supreme Court has ruled that appeals concerning the breach of conditions under an exemption notification fall within the jurisdiction of the High Courts under Section 130 of the Customs Act, 1962, and not directly before the Supreme Court under Section 130E.
The issue dealt in this case was whether the assessee had violated the conditions of an exemption notification by failing to utilize imported materials for manufacturing the declared final product, becoming liable for duty, interest, and penalty.
The apex court, referring to its earlier decision in Commissioner of Customs, Bangalore-1 vs. Motorola India Ltd. (2019), held that when the dispute is confined to a breach of exemption notification conditions, no question of classification, valuation, or determination of rate of duty arises.
Hence, such appeals are maintainable before the jurisdictional High Court under Section 130. The Court stated that Section 130E would apply only where substantial questions relating to classification or valuation are involved.
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In the present case, the Karnataka High Court had earlier dismissed the Department’s appeals filed under Section 130 as not maintainable, holding that the matter lay exclusively with the Supreme Court.
However, noting that such a view would leave the Department remedial, the bench of Justice Manoj Misra and Justice Sandeep Mehta invoked its powers under Article 142 of the Constitution to set aside the High Court’s rejection order and directed restoration of the appeals to their original numbers for adjudication on merits.
The court also clarified that all contentions of both parties remain open before the High Court. The Court also permitted reconstitution of records if they had been weeded out.
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