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The Commissioner Of Customs vs M/S.Bmw India Private Ltd on 25 April, 2019

1

In the High Court of Judicature at Madras

Dated : 25.4.2019

Coram

The Honourable Mr.Justice T.S.SIVAGNANAM

and

The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN

Civil Miscellaneous Appeal No.2043 of 2019

The Commissioner of Customs,
Chennai II Commissionerate,
Custom House, No.60,
Rajaji Salai, Chennai-1. …Appellant
Vs
M/s.BMW India Private Ltd.,
Kanchipuram-603002. …Respondent

APPEAL under Section 130 of the Customs Act, 1962 against the order

dated 17.9.2018 made in Final Order No.42430 of 2018 on the file of the

Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench,

Chennai in Appeal No.C/40966/2015.

For Appellant : Mr.G.Rajagopalan, ASG assisted by
Mr.V.Sundareswaran, SSC
For Respondent : Mr.Rohan Shah assisted by
Mr.Archit Gupta for Mr.Karthik Sundaram

Judgment was delivered by T.S.SIVAGNANAM,J

We have heard Mr.G.Rajagoplan, learned Additional Solicitor General

assisted by Mr.V.Sundareswaran, learned Senior Standing Counsel for the

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appellant and Mr.Rohan Shah assisted by Mr.Archit Gupta, learned counsel

appearing on behalf of Mr.Karthik Sundaram, learned counsel on record for

the respondent.

2. This appeal filed by the Revenue under Section 130 of the Customs

Act, 1962 (for short, the Act) is directed against the order dated 17.9.2018 in

Final Order No.42430 of 2018 passed by the Customs, Excise and Service

Tax Appellate Tribunal, South Zonal Bench, Chennai (for brevity, the

Tribunal),

3. This appeal has been filed by raising the following substantial

questions of law :

“1. Whether the order of the Tribunal in
rejecting the invocation of extended period of
limitation for short levy under the self assessment
scheme (i.e.) ‘accredited client programme’
scheme under Section 28(4) of the Customs Act,
1962 is perverse, arbitrary, illegal and
unreasonable with regard to the incriminating
records, statement and admitted facts (recorded
at para 22 and from para 31 to 39 and 42 of its
order) ?

2. Whether the Tribunal was correct in
ignoring the law that the events and causes to
invoke the extended period of limitation
enumerated under Clauses (a), (b) and © of
Section 28(4) of the Customs Act, 1962 are
distinct, different and separate for recovery of

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duty short levied or short paid ?

3. Whether the Tribunal was justified in
rejecting the invocation of extended period of
limitation, when the respondent was undisputedly
not entitled for the concessional rate of duty on
import since 01.3.2011?

4. Whether the Tribunal ignored the law
that the limitation for reckoning the ‘relevant date’
i.e. ‘five years’ is attracted only upon the
satisfaction of ingredients envisaged under Sub-
Section 28(4) and not from the date of knowledge
by an officer of the Department ?

5. Whether the order of the Tribunal in
reading into the enabling provision for recovery of
duty short paid or short levied with regard to the
knowledge of the Departmental Authority under
Section 28(4) of the Customs Act, 1962
tantamount to rewriting the statutory provision in
view of the law that the very SectionCustoms Act, 1962
defines and fixes the period of limitation ?

6. Whether the conclusion of the Tribunal
upon sustaining the findings of the Adjudicating
Authority would be denuded by the concept of
knowledge amounting to rendering the defined
term ‘relevant date’ nugatory ?

7. Whether the Tribunal was justified in
reducing the penalty imposed under Section
112(a) of the Customs Act, 1962 without any valid
reasons more so in the light of the factual
admitted findings at para 31 to 39 and 42 of its

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own order ? And

8. Whether the Tribunal was justified in
reducing the redemption fine on the confiscated
mis-declared goods without any reasoning when
no redemption fine was imposed on goods, which
were cleared already ?”

4. The first issue to be decided is as to whether this appeal is

maintainable before us in the given facts and circumstances.

5. The respondent – assessee availed the customs duty benefit under

Sub-Clause (1)(a) to S.No.437 of Notification No.12/2012-Cus dated

17.3.2012 for import of their consignments of motor cars in completely

knocked down (CKD) condition. The Officers of the Special Intelligence and

Investigation Branch (SIIB) of the Customs House, Chennai took up for

verification the import of consignments covered under a few of the Bills of

Entry, to be precise, 20 Bills of Entry as against 712 Bills of Entry from 2012

onwards.

6. It is stated that on verification, it was found that the relevant details

and description of individual part/sub-assemblies, which were imported, were

not furnished among other things. Therefore, the Revenue, after noticing that

the importer did not have complete details/description/particulars of imported

goods, called for a detailed container-wise packing list from the Customs

House Agent (CHA). It appears that the CHA submitted unsigned copies of

the details sought for. The consignments were examined by the Officers on

08.3.2013 in the presence of the representative of the importer/assessee and

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it was found that the goods, which are imported, were single independent

complete pre-assembled engines and pre-assembled gear boxes with unique

identification numbers engraved on each.

7. Therefore, the Revenue took a stand that the assessee was not

eligible to avail the concessional rate of duty prescribed under Notification

No.12/2012 dated 17.3.2012 and on the reasonable belief that the

consignment was liable to confiscation under Section 111(o) of the Act, the

respective Bills of Entry were seized under Section 110 of the Act.

Subsequently, the other Bills of Entry were also subjected to such

examination and the matter was investigated further. A statement was

recorded under Section 108 of the Act. The result of the investigation

culminated in a show cause notice dated 26.8.2013.

8. The respondent – assessee filed their reply and contested the

proposal made in the said show cause notice.

9. The Commissioner of Customs, by Order-in-Original dated

13.2.2015, held that the motor cars declared as “BMW cars in CKD….” in

different Bills of Entry imported during the period from 01.3.2011 to

11.4.2013 by M/s.BMW India Private Limited, Chennai for manufacturing

various models of BMW motor cars at their Chennai Plant as imports of

‘motor car in CKD kit with engine and gearbox in pre-assembled condition.’

Further, the assessee was denied the benefit of Notification No.21/2002-Cus

dated 01.3.2002 as amended. The Adjudicating Authority confirmed the

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demand of differential customs duty of Rs.6,96,44,66,115/- in respect of 706

Bills of Entry from 01.3.2011 to 11.4.2013 (excluding six seized

consignments) filed with the Customs, Chennai under Section 28(8) of the

Act along with applicable interest under Section 28AA of the Act and ordered

confiscation of the goods imported under the subject 706 Bills of Entry and

cleared through Chennai Customs totally valued at Rs.24,99,31,14,405/-

under Section 111(m) and (o) of the Act. Since the goods were physically not

available, the Commissioner refrained from levying redemption fine against

the said goods under Section 125(1) of the Act. A penalty of

Rs.6,96,44,66,115/- was imposed along with applicable interest under

Section 114A of the Act. There was an order of finalisation of provisional

assessment in respect of six Bills of Entry under Section 18(2) of the Act.

There was an order for enforcement of bank guarantee of Rs.8,19,04,067/-

furnished by the respondent herein – assessee and confiscation of the goods

imported under provisionally assessed Bills of Entry valued at

Rs.29,42,38,781/- under Section 111(m) and (o) of the Act with an option to

the respondent herein – assessee to redeem the same on payment of fine of

Rs.3 Crores under Section 125(1) of the Act. There was also imposition of

penalty of Rs.3 Crores on the respondent herein – assessee under Section

112(a) of the Act.

10. Being aggrieved by the said Order-in-Original dated 13.2.2015, the

respondent herein – assessee preferred an appeal before the Tribunal, which

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framed the following issues for consideration :

“I. Whether imports made by the appellant

(i). are CKD imports for the period
01.3.2011 to 23.3.2011, entitled to a rate of
customs duty at 10% (as claimed by the
appellant) or a rate of customs duty at 60% (as
claimed by the Department) ?

(ii). are CKD imports for the period
24.3.2011 to 11.4.2013, entitled to a rate of
customs duty at 10% (as claimed by the
appellant) or a rate of customs duty at 30% (as
claimed by the Department) ?

II. Whether, in the facts and circumstances
of the present case, the longer period of limitation
under Section 28(4) of the Customs Act, 1962
could be involved ? And
III. Whether, in the facts and
circumstances of the present case, the imposition
of penalty under Sections 114A and Section112(a) of the
Customs Act, 1962 as well as the imposition of
redemption fine in lieu of confiscation under
Section 125 of the Customs Act, 1962 is
justified ? ”

11. So far as issue I (i) and (ii) is concerned, it was decided against

the respondent herein – assessee. Further, issues II and III were decided

against the Revenue – appellant herein. Consequently, the Tribunal, while

upholding the demand, restricted it to the normal period of limitation and

only for the purpose of re-quantification of the demand for the normal period

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with interest liability as applicable, the matter was remanded to the

Adjudicating Authority. The penalty imposed under Section 114A of the Act

was set aside. The confiscation of the goods under Section 111(m) and (o) of

the Act was upheld. The redemption fine, which was imposed, was upheld.

However, the redemption fine was reduced to Rs.1 Crore. The imposition of

penalty under Section 112(a) of the Act was upheld. However, the penalty

was reduced to Rs.1 Crore.

12. Being aggrieved by that portion of the order of the Tribunal, the

respondent herein – assessee preferred an appeal before the Hon’ble

Supreme Court in Civil Appeal No.12233 of 2018. The Hon’ble Supreme

Court, vide order dated 09.1.2019, issued notice in the appeal as well as in

the stay application returnable in four weeks. On 29.3.2019, when the matter

was again listed before the Hon’ble Supreme Court, the counsel on record for

the Revenue circulated a letter seeking adjournment for filing a counter

affidavit. Hence, the matter was directed to be put up after four weeks. We

are informed that the appeal is listed on 29.4.2019.

13. The Revenue has preferred this appeal against that portion of the

order, by which, the Tribunal decided issue II and with regard to reduction of

penalty while answering issue III.

14. At the very inception of hearing of this appeal, this Court has

posed a question to the learned Additional Solicitor General as to whether the

appeal filed by the Revenue is maintainable before this Court, when the order

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impugned before us is a subject matter of challenge before the Hon’ble

Supreme Court in Civil Appeal No.12233 of 2018.

15. Mr.G.Rajagopalan, learned Additional Solicitor General, assisted by

Mr.V.Sundareswaran, learned Senior Standing Counsel for the Revenue

submits that this appeal is restricted only in respect of the issues as to

whether the Revenue was justified in invoking the extended period of

limitation and as to whether the deletion of penalty under Section 114A of

the Act and the reduction of redemption fine and penalty imposed in the said

Order-in-Original was proper. Therefore, it is submitted that the appeal is

maintainable before this Court on the issues, which are canvassed by the

Revenue and raised in the memorandum of grounds of appeal and the

substantial questions of law framed for consideration.

16. Per contra, Mr.Rohan Shah, learned counsel assisted by Mr.Archit

Gupta, learned counsel appearing behalf of Mr.Karthik Sundaram, learned

counsel on record for the respondent herein – assessee has drawn the

attention of this Court to Sections 130 and Section130E(b) of the Act and submitted

that the present appeal before this Court by the Revenue challenging a

portion of the order passed by the Tribunal is not maintainable.

17. To support his contention, Mr.Rohan Shah, learned counsel has

placed reliance on

(i) the decision of the Division Bench of the
Karnataka High Court in the case of
Commissioner of Central Excise, Customs

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Service Tax Vs. Jindal South West Steel Ltd.

[reported in (2011) 273 ELT 165];

(ii) the decision of the Division Bench of the
Punjab and Haryana High Court in the case of
Principal Commissioner of Central Excise
Service Tax Vs. Raja Dyeing [reported in
2015 (5) GSTL 231]; and

(iii) the decision of the Hon’ble Supreme
Court in the case of Navin Chemicals
Manufacturing Trading Co. Ltd. Vs.
Collector of Customs [reported in (1993) 68
ELT 3].

18. It is further submitted by the learned counsel for the respondent –

herein – assessee that it would be well open to the appellant – Revenue to

file an appeal before the Hon’ble Supreme Court, but yet the appellant –

Revenue has to satisfy the Hon’ble Supreme Court that there exists a

substantial question of law for consideration. In this regard, the learned

counsel has referred to the decision of the Hon’ble Supreme Court in the case

of Steel Authority of India Ltd. Vs. Designated Authority, Directorate

General of Anti Dumping and Allied Duties [reported in (2017) 349

ELT 193].

19. We have carefully considered the contentions raised by both the

parties and perused the materials on record.

20. Section 130 of the Act deals with appeals to High Court. In terms

of Sub-Section (1) of Section 130 of the Act, an appeal shall lie to the High

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Court from every order passed in appeal by the Appellate Tribunal on or after

the 01.7.2003 (not being an order relating, among other things, to the

determination of any question having a relation to the rate of duty of

customs or to the value of goods for purposes of assessment), if the High

Court is satisfied that the case involves a substantial question of law.

21. Mr.Rohan Shah, learned counsel is right in his submission that

there are two limbs to Section 130(1) of the Act, the first of which being that

it should be an eligible order in the sense that it should not be an order

relating to determination of any question having a relation to the rate of duty

of customs or to the value of goods for purposes of assessment. The second

limb is that if the order passed by the Appellate Tribunal is found to be an

eligible order i.e. an order, which does not relate to determination as to the

rate of duty or value of the goods, then an appeal can be entertained if the

High Court is satisfied that the case involves a substantial question of law.

Admittedly, the order impugned before us is an order relating to rate of duty

of customs and therefore, against the order passed by the Tribunal, an

appeal is not maintainable before this Court under Section 130 of the Act.

22. The argument of Mr.G.Rajagopalan, learned Additional Solicitor

General is that so far as the rate of duty of customs is concerned, the finding

of the Tribunal is against the respondent herein – assessee and that they

have already filed an appeal before the Hon’ble Supreme Court. However, the

other issues namely as to whether the extended period of limitation can be

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invoked, whether imposition of penalty under Section 114A of the Act was

justified and whether the Tribunal was justified in reducing the redemption

fine and penalty do not relate to the rate of duty of customs or the value of

the goods and therefore, it is contended that the appeal is maintainable.

23. Section 130E of the Act deals with appeal to Hon’ble Supreme

Court. Clause (b) of Section 130E of the Act would be relevant for the

purpose of this case and it states that any order passed by the Appellate

Tribunal relating, among other things, to the determination of any question

having a relation to the rate of duty of customs or to the value of goods for

purposes of assessment shall lie to the Hon’ble Supreme Court.

24. Thus, the question would be as to whether the order passed by the

Tribunal can be truncated and decided by two different courts at two different

levels ?

25. The answer to the said question should be in the negative in the

sense that an order passed by the Tribunal cannot be truncated and two

courts cannot test the correctness of that order.

26. We support such a conclusion by referring to the decision cited

before us by Mr.Rohan Shah, learned counsel appearing on behalf of the

respondent herein – assessee. An identical question arose for consideration

in the decision in the case of Jindal South West Steel Ltd. The assessee

therein approached the Hon’ble Supreme Court under Section 35L of the

Central Excise Act, as the question was relating to the rate of duty and the

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civil appeal was numbered and was pending before the Hon’ble Supreme

Court. The Revenue preferred an appeal to the High Court challenging that

portion of the order of the Tribunal, which disallowed the case of the Revenue

on the ground of limitation and it was argued that the appeal was

maintainable before the High Court. However, the Division Bench of the High

Court of Karnataka held that the question of bar of limitation as well as

setting aside penalty is dependent on the leviability of excise duty on the

impugned product and this amount should be decided by the Apex Court, as

the matter was already seized of and pending. It was further held that the

since findings on that issue would have a direct bearing in deciding the issues

arisen in those appeals before the High Court of Karnataka and as all those

issues arose out of the very same order, it is settled law that those issues

could not be bifurcated and decided by the High Court. It was also held that

order of the Tribunal was a composite order, that the issue before the High

Court also had to be decided by the Hon’ble Apex Court and that the

Revenue had to file an appeal under Section 35L of the Central Excise Act

before the Apex Court, as the High Court had no jurisdiction to entertain the

appeals. Accordingly, the appeals were rejected as not maintainable

reserving liberty to the Revenue to approach the Hon’ble Supreme Court

under Section 35L of the Central Excise Act.

27. Similar issue arose in Raja Dyeing, which was also a case under

the SectionCentral Excise Act. While the Court was deciding the maintainability of

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the appeal, it took note of the words ‘among other things’ in Section 35L of

the Central Excise Act and on the question of maintainability, it has been held

as follows :

“14. Whether an appeal lies to the High
Court under Section 35G or to the Supreme Court
under Section 35L cannot possibly depend upon
the nature or scope of the appeal that the party
intends filing. A party may seek to challenge only
that part of the order of the Tribunal which relates
to questions other than those relating to the rate
of duty of excise or the value of the goods for the
purposes of assessment. Such an appeal would,
absent any other questions, lie to the High Court.
Once it is held that an appeal against the order of
the Tribunal which deals with questions that fall
within the ambit of Section 35L as well as other
questions lies to the Supreme Court under Section
35L, the mere fact that the party chooses to
challenge only that part of the order that falls
within the ambit of Section 35G would make no
difference. In other words, it cannot be said that
the party that chooses to challenge the order of
the Tribunal only so far as it relates to the
determination of questions falling within the ambit
of Section 35G must file the appeal before the
High Court even though the order also deals with
questions that fall within the ambit of Section 35L.

In that event, if the other party files an appeal
against the order of the Tribunal on issues that

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fall within the ambit of Section 35L in the
Supreme Court, the very purpose of Section 35G
of bringing the appeals either before the Supreme
Court or before the High Court would be defeated.
It can hardly be suggested that in that case, the
appeal filed under Section 35G before the High
Court ought to stand transferred to the Supreme
Court. The scheme of the Act in general and
Sections 35G and Section35L in particular do not indicate
such a mechanism.”

28. In the decision in the case of Navin Chemicals Manufacturing

Trading Co. Ltd., while deciding the question as to whether a Member of the

Customs, Excises and Gold (Control) Appellate Tribunal (CEGAT), sitting

singly, could, in law, have heard the appeal before it, after referring to

Section 129C of the Act and the Explanation contained therein, it was held

that although the Explanation expressly confines the definition of the said

expression to Sub-Section 5 of Section 129D, it is proper that the said

expression used in the other parts of the said Act should be interpreted

similarly and that the statutory definition accords with the meaning given to

the said expression. It was further held that the questions relating to the rate

of duty and to the value of the goods for the purpose of assessment were

questions that squarely fall within the meaning of the said expression. It was

also held that the dispute as to the classification of the goods and as to

whether or not they are covered by exemption notification relates directly

and proximately to the rate of duty applicable thereto for purposes of

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assessment and whether the value of goods for purposes of assessment is

required to be increased or decreased is a question that relates directly and

proximately to the value of goods for purposes of assessment. It was further

held that the the test was for the purposes of determining whether or not an

appeal should be heard by a Special Bench of the CEGAT, whether or not a

reference by the CEGAT lies to the High Court and whether or not an appeal

lies directly to the Supreme Court from a decision of CEGAT and does the

question that requires determination have a direct and proximate relation, for

the purposes of assessment, to the rate of duty applicable to the goods or to

the value of the goods.

29. Thus, a proper reading of the statutory provisions would make the

position clear that the Revenue, if aggrieved by the order passed by the

Tribunal, has to file an appeal before the Hon’ble Supreme Court under

Section 130E of the Act and not before this Court, as, already, the order

impugned before us is the subject matter of appeal before the Hon’ble

Supreme Court at the instance of the respondent herein – assessee.

Therefore, we hold that this appeal is not maintainable reserving liberty to

the appellant – Revenue to approach the Hon’ble Supreme Court under

Section 130E of the Act.

30. Mr.Rohan Shah, learned counsel appearing on behalf of the

respondent, by referring to the decision of the Hon’ble Supreme Court in the

case of Steel Authority of India Ltd., has contended that even before the

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Supreme Court, the Revenue has to establish that there is a substantial

question of law involved in the matter and the question, which fell for

consideration before the Hon’ble Supreme Court in the said case was to

ascertain the true sweep and purport of the appellate power of the Apex

Court under Section 130E(b) of the Act and while answering the said

question, the Hon’ble Supreme Court pointed out that while construing the

extent of the appellate jurisdiction to be exercised by the Supreme Court

under a statutory enactment, the role of the Supreme Court as envisaged by

The Constitution cannot altogether be lost sight of, particularly when different

statutes like the SectionElectricity Act, 2003; the SectionCompanies Act, 2013, the SectionNational

Green Tribunal Act, 2010, etc., expressly limit the appellate power of the

Supreme Court to determination of substantial questions of law. Therefore, it

was held that the position should be no different in construing the provisions

of Section 130E(b) of the Act though it omits to specifically mention any such

limitation.

31. In our considered view, having held that the appeal is not

maintainable before us, we are not justified in making any observation on the

arguments advanced by Mr.Rohan Shah, learned counsel appearing on behalf

of the respondent herein – assessee by placing reliance on the decision of the

Hon’ble Supreme Court in the case of Steel Authority of India Ltd., and

we leave it open to the respondent herein – assessee to canvass all issues

before the Hon’ble Supreme Court.

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32. In the result, the appeal is held to be not maintainable and is

accordingly dismissed reserving liberty to the appellant – Revenue to

approach the Hon’ble Supreme Court under Section 130E of the Act. No

costs.

25.4.2019
Speaking order
Index : Yes
Internet : Yes

To
The Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench,
Chennai.

RS

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19

T.S.SIVAGNANAM,J
AND
V.BHAVANI SUBBAROYAN,J

RS

CMA.No.2043 of 2019

25.4.2019

http://www.judis.nic.in

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