Appellate Authority Cannot Decide Time-Barred Appeal on Merits: CESTAT Remands Customs Classification of Toyota Kriloskar [Read Order]
The Authority was directed to decide only the limited issue of whether the appeal was time-barred, affording Toyota an opportunity to be heard, and to pass a speaking order within ninety days.
Toyota Kriloskar - Taxsca
Toyota Kriloskar - Taxsca
In a ruling in case of Toyota Kriloskar, the Chennai Regional Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that an appellate authority cannot decide the merits of an appeal without first determining if the appeal is time-barred, and remanded the matter back to the First Appellate Authority.
The Commissioner of Customs, Chennai, the appellant, filed an appeal against the order of the Commissioner of Customs (Appeals) which had upheld the Adjudicating Authority's decision. The dispute concerned the classification of 'Side Outer Panels for Motor Vehicle' imported by M/s Toyota Kirloskar Motor Pvt. Ltd., the respondent.
The Revenue sought to classify the goods under tariff heading 8708 9900 (at a higher duty rate), while Toyota had classified them under 7326 1910. This resulted in a demand for short-levy of customs duty of Rs.71,08,910/-.
The Revenue contended that the imported panels were specifically designed for use as motor vehicle doors and had attained the 'essential character' of a finished door. Citing Rule 2A of the General Rules for Interpretation, they argued that as unfinished articles with the essential character of the complete article, the panels should be classified under tariff heading 8708 9900 as 'other parts and accessories for motor vehicles'.
M/s Toyota Kirloskar, represented by their counsel, raised a preliminary objection that the Revenue's appeal before the First Appellate Authority was time-barred, filed beyond the three-month period prescribed under Section 129D(3) of the Customs Act, 1962. They argued this procedural lapse was not examined by the Commissioner (Appeals).
On merits, Toyota contended that the panels required substantial further processing like deburring, polishing, and welding before becoming a car door and thus did not possess the essential character of a finished part. They maintained the classification under 7326 1910 was correct as per Rule 1 of the Customs Tariff Act.
The bench comprising Mr. P. Dinesha (Member-Judicial) and Mr. M. Ajit Kumar (Member-Technical) held that the issue of whether the appeal was time-barred was a threshold question that the First Appellate Authority ought to have decided first.
Relying on judgments from the Supreme Court and High Courts, the Tribunal stated that an appellate authority commits an illegality by deciding the merits of a case without first addressing the preliminary issue of limitation. The Tribunal observed that the proper function of an appellate court is to correct errors of the court below, not to usurp its jurisdiction.
Based on these legal principles, the Tribunal set aside the order of the Commissioner (Appeals) and remanded the matter back to the First Appellate Authority. The Authority was directed to decide only the limited issue of whether the appeal was time-barred, affording Toyota an opportunity to be heard, and to pass a speaking order within ninety days.
The CESTAT clarified that it has not expressed any opinion on the question of limitation or the merits of the classification dispute.
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