Orders against CESTAT - Appeal to HC or SC?
AS per Section 35G of the Central Excise Act, an appeal lies to the High Court from every order passed by the CESTAT, except an order, among other things, relating to classification (rate of duty) or valuation.
As per Section 35L, an appeal shall lie to the Supreme Court from an order passed by CESTAT among other things, relating to classification (rate of duty) or valuation.
Similar provisions are applicable for Customs and Service Tax.
This means that even if valuation or Classification is one of the issues among many other issues, the appeal from an order of the CESTAT lies to the Supreme Court and the High Court is barred from appellate jurisdiction. It is another matter that the Writ jurisdiction of the High Court cannot be taken away by any law.
Why this bifurcation of jurisdiction in appeals? The Karnataka High Court, recently tried to answer this question in a case, we are carrying today. []. The High Court explained,
“ The intention behind this bifurcation of jurisdiction between the Apex Court and the High Court seems to be that more often than not, any decision on these aspects not only affects the interest of the manufacturers who are parties thereto, but also to the manufacturers of those products throughout the country. In a country governed by Parliamentary legislation because of the territorial bifurcation in forming states and because of the divergent opinion, which is possible, the excise duty payable would vary from place to place. In order to bring uniformity in the levy of excise duty throughout the country and consequently to see that the country's finance is not affected, the Parliament has vested the jurisdiction to decide the disputes with the Apex Court. Therefore, we see a duty policy underlining this bifurcation of the jurisdiction between the Apex Court and the High Courts. All other matters other than what is set out above which relates to the individual manufacturers and all disputes based on assessment orders which have attained finality, such as the benefits to which they are entitled to refunds, duty drawbacks, rebates, etc., which relate to a particular manufacturer falls within the jurisdiction of the High Courts ”.
But then, most of the issues before any particular High Court are applicable to hundreds of assesses all over India, even though they may not relate to classification or valuation. Even the Karnataka High Court has delivered a landmark judgement on CENVAT Credit on outward transport in the ABB case (copy of the order is not yet made available) and the Delhi High Court is to deliver a judgement on renting of immovable property service. These issues certainly have all India ramifications. For that matter, even decisions of the Tribunal Benches have all India effect and but for that rare exception, Tribunal Benches respectfully follow the decisions of other Benches.
Perhaps there should be some other reason.
Have a look at History. Way back in 1982, when the Tribunal (called CEGAT then) was established, classification and valuation were hot issues and of course having all India effect. As per Section 35D(2), as it then existed, appeals to the Tribunal from orders of the Commissioners, relating to, among other things, classification or valuation, had to be heard by a Special Bench of the Tribunal consisting of three members and the Special Bench had all India jurisdiction. Appeals from these Special Benches, which were dealing with classification/valuation matters, were to lie to the Supreme Court. This was a substantive right of the appellant irrespective of whether a question of Law or a question of fact was involved.
Over the years, Classification and valuation lost their importance in litigation and the Special Benches of the tribunal were abolished in 1995 and now all Benches of the CESTAT can hear matters relating to Classification and Valuation. When the Special Benches were abolished, there was no reason to continue direct appeals to the Supreme Court on classification/valuation matters. But somebody forgot to make the changes and we are stuck with this system and all matters relating to classification/valuation are still going straight to Supreme Court from the Tribunal. In fact, the Karnataka High Court, based on its order that we are carrying today, has dismissed several appeals by Revenue for want of jurisdiction as the issue involves classification/valuation. Several other orders are in the pipeline. And the Revenue will take them all to the Supreme Court seeking condonation of delay. Lawyers will have a good time ahead!