Clandestine Removal Issues not Maintainable u/s 35-L: Supreme Court invokes Extraordinary Jurisdiction, Sets aside HC’s 10 year Old Order [Read Order]

The Supreme Court has clarified that appeals involving issues of clandestine removal of manufactured goods are not maintainable under Section 35-L of the Central Excise Act, 1944. The court, while setting aside the Karnataka HighCourt’s order, invoked extraordinary powers to restore the matter back.

In the case of the appeal filed by the department against M/s Saravana Alloys Steel Pvt. Ltd., where the High Court of Karnataka had earlier dismissed the Department’s appeal as not maintainable under Section 35-G, holding that such matters fell within the exclusive jurisdiction of the Supreme Court under Section 35-L.

The apex court, however, referred to its earlier judgment in Commissioner of Central Excise, Bhavnagar vs. Fact Paper Mills Pvt. Ltd. (2015), held that disputes relating to clandestine removal or clandestine manufacture do not fall within the scope of Section 35-L.

The apex court, applying that precedent, observed that the issue in the present case directly related to clandestine removal of goods and hence could not be entertained under Section 35-L.

The bench of Justices Manoj Misra and Sandeep Mehta that dismissal of the appeal would leave the appellant without any remedy, the Supreme Court invoked its extraordinary jurisdiction under Article 142 of the Constitution.

It set aside the Karnataka High Court’s 10 year old order dated 4th September 2014, which had rejected the appeals as not maintainable, and directed that the matters be restored to their original numbers before the High Court for adjudication on merits. It was also clarified that all contentions of both parties remain open for consideration before the High Court.

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