2023 (12) TMI 920 - HC - Customs

Advance ruling remains binding despite Supreme Court dismissal in similar cases under Section 28J

Bombay HC allowed writ petition challenging order-in-original (O-I-O) in betel nuts smuggling case. Respondents argued advance ruling was not binding due ... Applicability of advance ruling under Section 28J: binding nature and change of law/facts exception - Preclusivity and limited precedential effect of tribunal decisions and dismissal by the Supreme Court - Writ jurisdiction under Article 226 for orders passed without jurisdiction despite alternate statutory remedy - Classification of goods under Customs Tariff: Chapter 21 (betel nut product) versus Chapter 8Applicability of advance ruling under Section 28J: binding nature and change of law/facts exception - Preclusivity and limited precedential effect of tribunal decisions and dismissal by the Supreme Court - Classification of goods under Customs Tariff: Chapter 21 (betel nut product) versus Chapter 8 - Advance ruling dated 31 March 2017 pronounced by the AAR in the petitioner's case is binding on the customs authorities in respect of the petitioner and has not been displaced by any change of law or facts. - HELD THAT: - Section 28J(1) makes an advance ruling binding on the applicant and the relevant customs authorities in respect of that applicant, while Section 28J(2) excepts cases where there is a change in law or facts. The respondent's reliance on the CESTAT Chennai Bench decisions and dismissal of related appeals by the Supreme Court does not, as a matter of law or precedent, constitute a change of law or facts that would nullify the AAR ruling in the petitioner's case. A CESTAT bench decision is binding only inter se the parties before it and a dismissal by the Supreme Court, without consideration of merits, operates as res judicata between the parties to that litigation and does not declare a binding rule of law applicable to unrelated parties. Moreover, the facts in the cited CESTAT decision were distinguishable on material aspects (including findings about the absence of processing), and the respondents had itself accepted the AAR ruling insofar as they had not pursued a successful challenge: their review application before the AAR was dismissed and neither the AAR ruling nor that dismissal was set aside by a higher forum. For these reasons there was no change of law or facts to disentitle the petitioner to classification under Chapter 21 as per the AAR ruling. [Paras 12, 13, 14, 16, 17]The AAR ruling dated 31 March 2017 is binding on the respondents in respect of the petitioner and could not be set aside on the ground of a purported change of law or facts arising from the cited tribunal decisions or their dismissal in other proceedings.Writ jurisdiction under Article 226 for orders passed without jurisdiction - The writ petition challenging the O-I-O dated 11 November 2022 is maintainable notwithstanding the availability of an alternate appellate remedy because the impugned order was passed without jurisdiction. - HELD THAT: - It is settled that writ jurisdiction can be invoked despite the existence of an alternate statutory remedy where the order is without jurisdiction, breaches fundamental rights, or violates principles of natural justice. The impugned O-I-O disregarded the binding AAR ruling and, therefore, was in excess of jurisdiction. The factual and legal errors identified by the Court disentitle the respondents to insist on relegation to an appellate remedy; accordingly, the High Court exercised its constitutional jurisdiction to quash the order rather than direct the petitioner to pursue appeal. [Paras 8, 18, 19]Writ jurisdiction was rightly invoked and the petitioner need not be relegated to the appellate remedy because the impugned O-I-O was passed without jurisdiction.Final Conclusion: Impugned Order-in-Original dated 11 November 2022 passed by the Deputy Commissioner of Customs is quashed and set aside; rule made absolute and petition allowed, with no costs. Issues Involved:1. Challenge to the Order-in-Original (O-I-O) dated 11th November 2022.2. Binding nature of the Authority for Advance Rulings (AAR) decision.3. Jurisdiction and applicability of writ jurisdiction under Article 226.4. Alternate remedy and its applicability.Summary:1. Challenge to the Order-in-Original (O-I-O) dated 11th November 2022:The petitioner challenges the O-I-O dated 11th November 2022 passed by the Deputy Commissioner of Customs, Nhava Sheva, on the grounds that it defies the AAR order dated 31 March 2017, which classified the petitioner's imported betel nut products under Customs Tariff Heading (CTH) 2106 90 30.2. Binding Nature of the Authority for Advance Rulings (AAR) Decision:The petitioner argues that the AAR's ruling on 31st March 2017, which classified their products under CTH 2106 90 30, is binding under Section 28J(1) of the Customs Act, 1962. The respondents' contention that the dismissal of an appeal by the Supreme Court against a CESTAT Chennai Bench decision changes the law, making the AAR ruling non-binding, was rejected. The court emphasized that the CESTAT decision is not binding on the petitioner or authorities outside its jurisdiction and does not constitute a change in law under Section 28J(2).3. Jurisdiction and Applicability of Writ Jurisdiction under Article 226:The court held that despite the availability of an alternate statutory remedy, writ jurisdiction under Article 226 can be invoked if there is a breach of fundamental rights, natural justice, or if the order is without jurisdiction. The court found that the O-I-O was passed without jurisdiction, contrary to Section 28J of the Customs Act, and thus, the writ petition is maintainable.4. Alternate Remedy and its Applicability:The respondents argued for dismissal of the petition on the grounds of an alternate remedy. However, the court noted that the decisions cited by the respondents pertain to show cause notices where jurisdiction was not in question. Given that the O-I-O was passed without jurisdiction, the court ruled that the petitioner need not resort to an appellate remedy.Conclusion:The court quashed and set aside the impugned O-I-O dated 11th November 2022, making the rule absolute in terms of prayer clause (a) of the petition. No costs were awarded.