Customs Duty Dispute: Supreme Court Clarifies High Court’s Discretion in Reference Cases

The case of Commissioner of Customs and Central Excise, Goa vs. M/s Adani Exports Ltd. dealt with an important question regarding the powers of the High Court under Section 130A of the Customs Act. The key issue was whether the High Court is mandatorily required to call for a statement from the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) when a reference application is made under this provision. The Supreme Court’s judgment clarifies this aspect, ensuring consistency in legal interpretations of customs duty disputes.

Background of the Case

The appellant, the Commissioner of Customs and Central Excise, Goa, challenged the decision of the High Court, which had refused to call for a statement from the Tribunal and had dismissed the reference application outright. The Revenue contended that the High Court was bound to call for a statement from the Tribunal before deciding the matter.

The dispute primarily arose under Section 130A(1) & (4) of the Customs Act, which governs the process of applying to the High Court for a reference in customs matters. The section allows either the Commissioner of Customs or the affected party to apply to the High Court to direct the Tribunal to refer a question of law.

Key Legal Provisions

The relevant provisions of the Customs Act state:

Section 130A(1): The Commissioner of Customs or the other party may, within one hundred and eighty days of the date upon which he is served with notice of an order under section 129B, apply to the High Court to direct the Appellate Tribunal to refer to the High Court any question of law arising from such order.

Section 130A(4): If, on an application made under sub-section (1), the High Court directs the Appellate Tribunal to refer the question of law raised in the application, the Tribunal shall, within one hundred and twenty days of the receipt of such direction, draw up a statement of the case and refer it to the High Court.

Arguments by the Appellant

The Commissioner of Customs, represented by senior counsel, argued that the High Court erred in dismissing the reference without first calling for a statement from the Tribunal. They relied on a previous judgment in Commissioner of Customs, Bangalore v. Central Manufacturing Tech. Institute (2002), which held that the High Court must first obtain a statement from the Tribunal before deciding the reference.

Arguments by the Respondent

M/s Adani Exports Ltd. countered that Section 130A(4) uses the word “if,” which implies discretion for the High Court. They contended that there is no mandatory requirement for the High Court to always call for a statement from the Tribunal and that it can decide on the reference application based on the merits of the case.

Supreme Court’s Key Observations

The Supreme Court, after examining the statutory provisions, made the following observations:

• The wording of Section 130A(4) is discretionary, as it begins with “if,” meaning the High Court has the power to decide whether to call for a statement.
• The earlier decision in Commissioner of Customs, Bangalore (2002) was incorrect in holding that the High Court is mandatorily required to call for a statement in every case.
• The High Court has discretion and is not bound to seek a statement from the Tribunal before deciding a reference application.

Important Judicial Statement

The Supreme Court explicitly overruled the previous decision and held:

“We do not find anything in the text of Section 130A which implies that the High Court is mandatorily required to call for a statement from the Tribunal in every case, where a reference is made.”

Final Verdict

The Supreme Court ruled in favor of the respondent and dismissed the appeal, affirming that the High Court has discretion in calling for a statement from the Tribunal. The judgment clarifies the interpretation of Section 130A and prevents unnecessary procedural delays in customs disputes.

Petitioner Name: Commissioner of Customs and Central Excise, Goa.
Respondent Name: M/s Adani Exports Ltd..
Judgment By: Justice Rohinton Fali Nariman, Justice S. Ravindra Bhat, Justice V. Ramasubramanian.
Place Of Incident: Goa.
Judgment Date: 11-02-2020.

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