2025 (9) TMI 1550 - HC - Customs

Appeal dismissed as not maintainable under Instruction dated 02.11.2023 since goods plus penalty below Rs.1 crore threshold

HC dismissed the appeal as not maintainable under the Instruction dated 02.11.2023 because the disputed goods' total value (Rs.49,74,605) plus penalty ... Maintainability of the present appeal - minimum threshold monetary value for filing appeal is Rs. 1 crore - outright smuggling of gold and confiscation - HELD THAT:- From a bare perusal of the Instruction dated 02.11.2023, it is seen that only on satisfaction of any of the three conditions, i.e., where the matter involves challenge to the constitutional validity of an Act/Rule; where the Notification/Instruction/Order/ Circular has been held illegal; or where classification and refund issues are legal/ recurring in nature, appeal will be maintainable irrespective of the monetary limits. With respect, we are not able to agree with the decision of the Meghalaya High Court that appeal will be maintainable notwithstanding the monetary limits, if the goods under investigation is smuggled one. The ‘smuggled goods’ is not included in any of the three conditions laid down in Para 2 of the Instruction dated 02.11.2023 and the same is incorporated by judicial interpretation. Such a construction of statute cannot be adopted when the wordings in the relevant rules are clear. Resort to the golden rule of interpretation of statute can be resorted when the words in the rules are ambiguous and in order to achieve the object of the statute. In the case of Patheja Bros. Forgings & Stamping v. ICICI Ltd. [2000 (7) TMI 852 - SUPREME COURT], a three Judge Bench of the Hon’ble Supreme Court held that “12. We have analysed the relevant words in Section 22 and found that they are clear and unambiguous and that they provide that no suit for the enforcement of a guarantee in respect of any loan or advance granted to the industrial company concerned will lie or can be proceeded with without the consent of the Board or the appellate authority - In the present case, the Instruction dated 02.11.2023 does not mention the words ‘smuggled goods’ in Para 2 for maintainability of the appeal irrespective of the minimum monetary limits. In the circumstances, we are of the considered opinion that the category of ‘smuggled goods’ cannot be read into Para 2 of the Instruction dated 02.11.2023. Even if the ‘smuggled goods’ has to be read into Para 2 as held by Meghalaya High Court, the decision will not be applicable to the facts of the present case. The Customs, Excise & Service Tax Appellate Tribunal, Kolkota has held in para 12.5 of the impugned order dated 29.04.2024 in Custom Appeal No. 75171 of 2016 that the authority could not establish that the gold bars were smuggled into India. Since the total value of the gold bars of ₹49,74,605/- only along with the penalty of ₹10,00,000/- only is less than the minimum threshold limit of ₹1 crore for filing appeal before High Court in terms of the Instruction dated 02.11.2023, the present appeal is not maintainable and hence the same is dismissed on this ground alone. Application disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the appeal is maintainable before the High Court in light of the Central Board Instruction dated 02.11.2023 prescribing a monetary threshold of Rs.1 crore for filing appeals by the Department to the High Courts. 2. Whether the Instruction dated 02.11.2023 is binding on the Revenue and applicable to the present dispute involving alleged smuggling, confiscation and imposition of penalty under the Customs Act, 1962. 3. Whether the exceptions in Para 2 of the Instruction (constitutional validity, illegality/ultra vires of Notification/Instruction/Order/Circular, and classification/refund legal or recurring issues) include or should be read to include appeals arising from smuggled goods/confiscation cases. 4. Whether the present appeal raises any substantial question of law so as to permit adjudication despite the monetary threshold (i.e., whether factual findings of the Tribunal preclude a legal question under Section 130/129B(4) of the Customs Act, 1962). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability under Instruction dated 02.11.2023 Legal framework: The Central Board issued an Instruction dated 02.11.2023 (exercising powers under Section 131BA of the Customs Act, 1962 and analogous provisions) fixing monetary limits for departmental appeals: CESTAT Rs.50 lakh, High Court Rs.1 crore, Supreme Court Rs.2 crore, and providing limited exceptions in Para 2. Precedent treatment: Several High Court and Supreme Court decisions have applied earlier and revised monetary-limit instructions to dismiss revenue appeals as not maintainable for low tax effect; those decisions were relied upon by parties and considered by the Court. Interpretation and reasoning: The Instruction is intended to reduce low-value government litigation and expressly prescribes the threshold monetary limits and specified exceptions. The Court accepts that the Instruction applies to pending cases (para 3 enabling withdrawal) and that the monetary threshold must be applied to determine maintainability. The seized goods were valued at Rs.49,74,605/-, below the Rs.1 crore threshold for High Court appeals; therefore, on the face of the Instruction the appeal is not maintainable. Ratio vs. Obiter: Ratio - departmental appeals below prescribed monetary limits are not maintainable unless they fall within the explicit exceptions in the Instruction. Conclusion: The appeal is not maintainable before the High Court if the revenue effect is below Rs.1 crore under the Instruction dated 02.11.2023, subject to the exceptions analysis below. Issue 2 - Binding nature and applicability of the Instruction to the present case Legal framework: Executive/Board Instructions issued under statutory powers and Article 162/73 may be binding on the Department so long as they do not conflict with law; the Instruction here is issued under statutory authority and is procedural/policy in nature governing departmental litigation. Precedent treatment: The Court relies on established authority holding that executive instructions are binding on the executive/department and that the Revenue is bound by Board circulars/instructions in litigational policy and filing of appeals. Interpretation and reasoning: The Court accepts that the Instruction dated 02.11.2023 is binding on the Revenue and must be applied to maintainability questions. The Instruction's text and purpose (reduction of government litigation) are clear and unambiguous; therefore it governs whether the Department may prefer appeals, and its limits apply to the present appeal unless an explicit exception is triggered. Ratio vs. Obiter: Ratio - the Instruction is binding on the Department and applicable to determine maintainability of departmental appeals in the specified fora. Conclusion: The Instruction binds the Revenue and is applicable to the present appeal; maintainability must be assessed in accordance with it. Issue 3 - Whether 'smuggled goods' or confiscation cases fall within Para 2 exceptions Legal framework: Para 2 of the Instruction lists three categories of adverse judgments that may be contested irrespective of monetary limits: (a) constitutional validity of an Act/Rule; (b) Notification/Instruction/Order/Circular held illegal or ultra vires; (c) classification and refund issues of legal/recurring nature. Precedent treatment: A conflicting view exists in a High Court decision that read an implicit exception for smuggled goods/confiscation into the Instruction; other High Courts and Supreme Court orders have consistently applied the Instruction as drafted and dismissed low-value appeals not falling into Para 2 exceptions. Interpretation and reasoning: The Court emphasizes the clear and unambiguous wording of Para 2. It declines to judicially read an additional exception for smuggled goods into the Instruction: where statutory language is clear, courts must give effect to it rather than broaden it by implication. The policy/objective of limiting low-value litigation does not, in the Court's view, warrant importing the category of 'smuggled goods' into Para 2 absent textual support. The Court distinguishes the Meghalaya High Court decision that held otherwise, observing that that decision adopts a construction not found in the Instruction and that an SLP challenging that decision is pending; therefore the Meghalaya view is not followed. Ratio vs. Obiter: Ratio - the three exceptions in Para 2 are exhaustive for the purpose of maintainability under the Instruction; smuggling/confiscation is not an automatic exception unless it falls within the enumerated categories. Conclusion: Smuggled goods/confiscation cases do not ipso facto fall within Para 2 exceptions; the Instruction's exceptions are limited to those expressly listed and cannot be expanded by judicial interpretation in the absence of ambiguity. Issue 4 - Whether the appeal raises any substantial question of law or is precluded by factual findings Legal framework: Section 129B(4) and Section 130 (as referenced) indicate tribunal factual findings ordinarily have finality and that appeals should involve substantial questions of law to proceed; the Instruction further contemplates that exceptions arise only in specified legal contexts. Precedent treatment: Authorities were cited for the proposition that revenue appeals which do not raise substantial questions of law and are below monetary threshold are prima facie non-maintainable; Tribunal factual findings are accorded deference. Interpretation and reasoning: The Tribunal found that the authority failed to establish that the gold was smuggled (i.e., no material to substantiate smuggling). Given that factual determination, the Court holds there is no substantial question of law that would fall within Para 2 exceptions. Even if smuggling were an exception (contrary to the Court's primary view), the Tribunal's factual finding that smuggling was not established would negate applicability of any such exception to these facts. Therefore, the appeal neither engages Para 2 exceptions nor raises a substantial legal question warranting departure from the Instruction's threshold. Ratio vs. Obiter: Ratio - where the tribunal's factual findings negate the factual predicates for an exception, an appeal cannot be sustained as raising a substantial question of law merely to bypass the Instruction's monetary limits. Conclusion: The present appeal does not raise a substantial question of law under the enumerated exceptions and is further precluded by the Tribunal's factual finding that smuggling was not proved; maintenance of the appeal is therefore barred by the Instruction. Overall Conclusion of the Court (ratio) The Instruction dated 02.11.2023 is binding and applicable; its Para 2 exceptions are exhaustive as worded and do not include smuggled goods by implication. The seized gold's valuation is below the Rs.1 crore threshold and the Tribunal found no proof of smuggling; accordingly the appeal is not maintainable and is dismissed on that ground.