2025 (9) TMI 687 - AT - Customs

Revenue appeal dismissed as non-maintainable under CBIC litigation monetary-limit circular; technical member's opinion held incorrect

CESTAT ALLAHABAD (AT) dismissed the appeal filed by the Revenue, holding the matter non-maintainable under the CBIC litigation monetary-limit circular. ... Maintainability of appeal - monetary limit prescribed for litigation before the CESTAT - difference of opinion - matter referred to third member - majority order prevailed. Whether in view of the contrary view expressed by the Delhi Bench after referring to the same instructions issued by the Board, the matter needs to be referred to Larger Bench as has been held by Member (Technical)? HELD THAT:- It is found that the learned Member (Judicial), without going into the merits of the case, has dismissed the appeal as the amount involved in the present appeal is below the monetary limit prescribed for litigation before the CESTAT vide CBIC’s Circular F.No. 390/Misc/30/2023-JC dated 02.11.2023. Further, the learned Member (Judicial) has relied upon decisions of Kolkata Bench in the case of Commissioner vs. M/s Enterprise International Ltd [2024 (11) TMI 1505 - CESTAT KOLKATA] and Chennai Bench in the case of Commissioner vs. M/s Fabulous Traders [2024 (11) TMI 1506 - CESTAT CHENNAI] on the same issue; finally, the learned Member (Judicial) has come to the conclusion that the present appeal needs to be dismissed under the litigation policy and accordingly, dismissed the same. Further it is found that the learned Member (Technical), by referring the decision of New Delhi Bench in the case of Commissioner vs. CMR Nikkei India Pvt Ltd [2024 (9) TMI 170 - CESTAT NEW DELHI], has come to the conclusion that New Delhi Bench of the Tribunal has taken a contrary view than that of Kolkata and Chennai benches, therefore, according to him, the matter needs to be referred to Larger Bench to resolve the controversy. This issue has been considered by the Hon’ble Supreme Court, various High Courts as well as various benches of the Tribunal in the cases relied upon by the learned Counsel for the appellant, wherein the Courts have been dismissing the appeal of the Revenue by relying upon the CBIC’s Circular F.No. 390/Misc/30/2023-JC dated 02.11.2023. In this regard, reference made to decision of Hon’ble Supreme Court in the case of Principal Commissioner of Customs vs. CMR Nikkei India Pvt Ltd [2024 (9) TMI 170 - CESTAT NEW DELHI] wherein the Hon’ble Apex Court has dismissed the Revenue’s appeal owing to low tax effect, leaving the question of law, is any, open. Since this issue has been consistently considered by the Hon’ble Supreme Court, the High Courts and various benches of the Tribunal, therefore, by following the ratios of the decisions, the opinion expressed by the learned Member (Judicial) is legally correct and the same opinion is held. It is also held that when there are judgments of the Hon’ble Supreme Court and the High Courts on the same issue then there is no necessity to refer the matter to the Larger Bench of the Tribunal, accordingly, the opinion expressed by the learned Member (Technical) is not correct in law - Now, let the matter be placed before the Regular Division Bench for drawing majority view. In view of the majority order, the appeal filed by the Appellant Revenue is dismissed by relying upon the CBIC’s Circular F. No.390/ Misc./30/2023-JC dated 02.11.2023. ISSUES PRESENTED AND CONSIDERED 1. Whether the CBIC Instruction fixing monetary limits for departmental appeals (providing that appeals below Rs.50 lakh to CESTAT shall not be filed) is binding on the Tribunal so as to warrant dismissal of Revenue appeals without adjudication on merits. 2. Whether, when a proper officer re-assesses value under Section 17(4) of the Customs Act and the importer gives written consent to the enhanced value and pays differential duty (thereby obviating a speaking order under Section 17(5)), the Commissioner (Appeals) is obliged under Section 128A(3)(b)(ii) to remit the matter to the adjudicating authority rather than decide the appeal on merits. 3. Whether divergent views of different Benches of the Tribunal and of High Courts/Supreme Court on the applicability/mandatory nature of the CBIC Instruction require reference to a Larger Bench or third Member for resolution. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Binding effect of CBIC Instruction prescribing monetary limits for departmental appeals Legal framework: The Instruction issued by the Board under Section 131BA of the Customs Act prescribes monetary thresholds below which the Department shall not file appeals before CESTAT/High Courts/Supreme Court and contemplates withdrawal/ non-pressing of pending appeals. Administrative circulars and instructions have recognized binding effect on departmental officers but their effect vis-à-vis courts/tribunals is governed by judicial precedents. Precedent Treatment: Coordinate benches and several High Courts and the Supreme Court have applied or upheld the CBIC Instruction to dismiss departmental appeals as part of litigation reduction policy; conversely some benches (notably a Principal Bench/Delhi) have held that circulars are not binding on judicial/quasi-judicial bodies and that Tribunal must prioritize interests of justice and ensure opportunity of hearing. Interpretation and reasoning: One view (Member (Judicial) and adopted by majority) holds that the Instruction, issued under statutory power, is a policy directive aimed at reducing litigation and has been repeatedly followed by Apex Court and High Courts in dismissing low-tax-effect appeals; where courts have dismissed departmental appeals under the Instruction, the Tribunal may decline to entertain appeals below threshold and dismiss them under litigation policy leaving questions of law open. The contrary view (Member (Technical)) stresses that circulars/instructions bind departmental officers but do not bind tribunals/superior courts; tribunals must consider whether enforcing the Instruction would prejudice fair hearing or be contrary to interests of justice, and divergent bench views warrant Larger Bench consideration. Ratio vs. Obiter: The majority conclusion that the CBIC Instruction mandates dismissal of departmental appeals below the threshold (subject to exceptions listed in the Instruction) is treated as ratio for the present appeal; observations about the limits of circulars versus judicial authority (that circulars bind department but not courts) drawn from comparative precedent are treated as interpretative legal reasoning supporting the majority view. The technical member's emphasis on tribunal discretion and need for Larger Bench is obiter relative to the majority outcome but recorded as separate opinion. Conclusions: The Tribunal, by majority, holds that departmental appeals below the prescribed monetary limit are not maintainable and may be dismissed under the litigation policy, citing consistent judicial treatment; exceptions in the Instruction (constitutional challenges, ultra vires of notifications/instructions, recurring classification/refund issues) remain applicable. However, the question of whether every bench must follow the Instruction in all factual contexts is acknowledged as litigationally significant and potentially requiring Larger Bench clarification where bench divergence persists. Issue 2 - Effect of importer's written consent to reassessed value and duties payable under Sections 17 and 128A(3) Legal framework: Section 17(4) empowers the proper officer to reassess duty where self-assessment is incorrect; Section 17(5) requires a speaking order after reassessment except where importer/exporter confirms acceptance in writing. Section 128A(3)(b)(ii) directs the Commissioner (Appeals) to refer matters back to adjudicating authority where 'no order or decision has been passed after re-assessment under section 17.' Principles of natural justice and statutory mandate to afford department opportunity to be heard are implicated. Precedent Treatment: Supreme Court authority recognizes that no formal assessment order is required when there is no dispute as to classification/rate and importer's acceptance; tribunals and appellate authorities have remanded matters for speaking orders where reassessment produced no speaking order and an appeal has been filed nevertheless. Interpretation and reasoning: The Court reasoned that where reassessment is effected and importer accepts in writing leading to absence of speaking order, an appeal filed by importer should trigger referral back to the proper officer under Section 128A(3)(b)(ii) so that the department is not deprived of opportunity of hearing. Commissioner (Appeals) setting aside reassessed value without remand violates express statutory procedure and amounts to prejudice/violation of natural justice. The Instruction on monetary limits cannot override the statutory mandate ensuring departmental hearing rights where reassessment procedure under Section 17 is engaged. Ratio vs. Obiter: The finding that Commissioner (Appeals) erred in setting aside reassessed value without remand to the adjudicating authority is ratio on the statutory point in this appeal and limits application of litigation policy where statutory procedural safeguards (remand under Section 128A(3)(b)(ii)) are implicated. Observations about the interplay between litigation policy and procedural statute are ratio insofar as they decide the present challenge to the impugned Commissioner (Appeals) order. Conclusions: Where reassessment under Section 17 has occurred and no speaking order was required due to importer's written acceptance, the appellate forum must refer the matter back to the adjudicating authority under Section 128A(3)(b)(ii) rather than decide merits; dismissal under litigation policy cannot be used to deprive the Department of its statutory right to be heard in such circumstances. Issue 3 - Need for Larger Bench/third Member due to conflicting Bench precedents Legal framework: Judicial discipline among coordinate Benches requires that conflicting decisions on identical questions be referred to a Larger Bench for authoritative resolution; Tribunal rules and precedent emphasize consistency and avoidance of contradictory coordinate bench decisions. Precedent Treatment: Several Supreme Court and High Court decisions emphasize referral to Larger Bench where coordinate Benches take conflicting views; multiple Tribunal Benches have taken diverging positions on the CBIC Instruction's applicability, and higher courts have on occasions dismissed low-tax-effect appeals relying on the Instruction. Interpretation and reasoning: The Technical Member advocated reference to a Larger Bench given divergence between Kolkata/Chennai Benches (dismissing appeals under litigation policy) and the Delhi Principal Bench (taking a contrary view treating circulars as not binding on Tribunal). The Third Member reviewed authorities and subsequent High Court/Supreme Court decisions applying the Instruction and concluded that consistent higher court treatment reduces need for Larger Bench reference; where Supreme Court/High Court have already dismissed revenue appeals on low tax effect relying on the Instruction, referral is unnecessary. Ratio vs. Obiter: The Third Member's conclusion that prior adjudications by superior courts obviate need for Tribunal Larger Bench is ratio for determination of whether to refer the present controversy further; the Technical Member's call for Larger Bench is recorded as a separate/opposing view (obiter as not adopted by majority). Conclusions: The Tribunal, by majority, declined to refer the matter to a Larger Bench because the issue has been consistently considered and applied by the Supreme Court and various High Courts and Tribunal Benches in dismissing departmental appeals under the CBIC Instruction; thus the majority proceeded to dismiss the departmental appeal under the litigation policy. A procedural referral to a third Member was made earlier because of initial difference of opinion, and the majority view stands that dismissal under the Instruction is appropriate in the present factual matrix.