3 May, 2017
The Hon’ble Supreme Court of India (SC), in the recent case of Steel Authorities of India Ltd.[i], considered the question of admissibility of an appeal, against an order of the Central Excise and Service Tax Appellate Tribunal (CESTAT), filed before the SC under Section 130E(b) of the Customs Act, 1962 (Customs Act).
The SC analysed the provisions pertaining to the appellate mechanism laid down under the Customs Act juxtaposed with the role of the SC and its appellate powers, as envisaged under the Constitution of India (Constitution). It concluded that the appellate powers of the SC in relation to appeals filed against orders of the CESTAT are no different from the said powers of SC in case of an appeal against a judgment/ order of the High Court (HC).
Interestingly however, the SC laid down a non-exhaustive list of conditions for determining the admissibility of appeals, against an order of the CESTAT filed before it. They were as follows:
The sine qua non for the admission of an appeal before the SC requires that the question involved in the appeal shall have direct/proximate nexus to the determination of the applicable rate of the duty or the value of the goods for the purposes of the assessment. The question raised must involve a substantial question of law, which has not been answered or on which, there is a conflict of decisions necessitating a resolution.
If the CESTAT, on consideration of the material and relevant facts, has arrived at a possible conclusion, the same must be allowed to rest even if the SC is inclined to take another view of the matter.
The CESTAT has acted in gross violation of the procedure or principles of natural justice occasioning failure of justice.
This is a significant ruling by the SC, as it reiterates and enlists the conditions that may be referred to by the SC for determining the admissibility of appeals against the orders of the CESTAT.
While doing so, the SC, in the present case, has highlighted the inherent limitation of its powers, provided under Article 132, 133, 134 and 134A of the Constitution, in relation to entertaining appeals against the decisions of the CESTAT. The said Articles empower the SC to entertain appeals from any judgment or decree or final order of the HC, in exercise of its civil, criminal or any other jurisdiction, provided the HC certifies that the case involves (i) a substantial question of law as to the interpretation of the Constitution; or (ii) a substantial question of law of general importance, which, in the opinion of the HC, needs to be decided by the SC.
In this regard, the SC had relied on its judgment in the case of Collector of Customs, Bombay v. Swastic Woollens (P) Ltd. and Ors [AIR 1988 SC 2176], wherein the applicability of such inherent limitation to appeals filed, even under Section 130E(b) of the Customs Act, has been taken note of by the SC. In the said case, the SC noted that where the fact-finding authority, i.e. CESTAT, holds a view in terms of legal principles and by way of bona fide and honest consideration of material and relevant facts, the mere fact that the appellate forum has a different opinion shall not be a ground to interfere with the finding of facts in the said appeal.
Further, the said point of law in the context of appeals under Section 130E(b) of the Customs Act was also discussed by the SC in the case of Siddachalam Exports Private Ltd. v. Commissioner of Central Excise, Delhi-III [2011 (5) SCC 114], wherein it was held that the ambit of Section 130E(b) of the Customs Act, in relation to the rate of duty of customs or to the value of goods for the purpose of the assessment, is very wide. However, where the CESTAT, being a fact-finding authority, had arrived at a finding by taking into consideration all material and relevant facts and has applied the correct legal principles, the SC would not be inclined to interfere with such findings even where another view might be possible on the same set of facts.
In the case of Siddachalam Exports Private Ltd. (supra.), the SC, while reiterating the ratio of its judgment in the case of Swastic Woollens (P) Ltd. (supra.), has gone further to clarify that in this context, if it is shown that the conclusion under challenge is such that it could not have possibly have been arrived at by a person duly instructed upon the material before him, i.e. to say the conclusion is perverse or that the CESTAT had failed to apply the correct position of law, the SC is competent to substitute its own opinion for that of the CESTAT.
In view of the aforementioned, the Hon’ble SC in the present case has observed that the findings recorded by the CESTAT on the basis of which the appeal of the Steel Authority of India Limited has been dismissed are findings of fact arrived at on due consideration of all the materials on record. Therefore, there is no occasion to relook into the said matter.
Accordingly, the Customs Act may provide for an unfettered right to appeal before the SC, against all orders of the CESTAT in cases involving a question as to the rate of duty or valuation of goods. However, such right, by virtue of the role of the SC, as envisaged under the Constitution of India, can be exercised by the assessee or the revenue, only in a case where a substantial question of law remains unanswered or the CESTAT has acted in violation of the principles of natural justice and has not taken the material and relevant facts of the matter into consideration and has arrived at a conclusion which is not plausible.
The listing down of conditions by the SC, though non-exhaustive, would serve as an indicative check-list of conditions with which to measure the admissibility of an appeal, against the order of the CESTAT, under Section 130E(b) of the Customs Act, before the SC. Such conditions will assist the assessee to self-assess its case and understand better whether an appeal has the legs to stand the test of admissibility of the appeal before the SC.
This should hopefully result in reduction in the filing of frivolous appeals, which are prima facie not admissible in terms of the said list of conditions laid down by the SC. Therefore, the said ruling would potentially reduce the burden of the judiciary at the apex level by streamlining the appellate mechanism.
[i] Steel Authorities of India Ltd. v. Designated Authority, Directorate General of Anti-Dumping & Allied Duties and Ors. [Civil Appeal No. 241 of 2017, Order Dt. April 14, 2017]
For further information, please contact:
Mekhla Anand, Partner, Cyril Amarchand Mangaldas
mekhla.anand@cyrilshroff.com
