[Cites 17, Cited by 0]
Madras High Court
The Commissioner Of Customs vs M/S.Pepsico India Holdings Pvt Ltd on 12 March, 2026
Author: N.Anand Venkatesh
Bench: N.Anand Venkatesh
C.M.A(MD)No.256 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 12.03.2026
CORAM:
THE HON'BLE MR JUSTICE N.ANAND VENKATESH
AND
THE HON'BLE MR JUSTICE P.DHANABAL
C.M.A(MD)No.256 of 2021
and CMP (MD) No.2177 of 2021
The Commissioner of Customs
Custom House,
New Harbour Estate,
Turicorin – 628 004. ... Appellant/Respondent
Vs.
M/s.Pepsico India Holdings Pvt Ltd.,
Level 3-6, Pioneer Square,
Sector-62, Near Golf Course Extension Road,
Gurgaon-122 101. ... Respondent/Appellant
PRAYER:- Civil Miscellaneous Appeal is filed under Section 130 of
the Customs Act 1962, to to consider the above appeal and set aside
the impugned order of the CESTAT, South Zone, Chennai, in Final
Order No.40831 of 2020 dated 29.10.2020.
1/18
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C.M.A(MD)No.256 of 2021
For Appellant : Mr. Gowri Shankar
for Mr.B.Vijay Karthikeyan
For Respondent : Mr.Raghavan Ramabadran
for M/s.Lakshmikumaran
and Sridharan Attorneys
JUDGMENT
(Judgment of the Court was delivered by
N.ANAND VENKATESH, J.)
This appeal has been filed by the Commissioner of Customs
under Section 130 of “the Customs Act, 1962” (for brevity hereinafter
referred to as “the Act”), against the order passed by “the Customs,
Excise and Service Tax Appellate Tribunal” (in short “CESTAT”).
2. The respondent filed 34 numbers of refund claims from
September 2013 to February 2017 in respect of 209 Bills of Entry for the
refund of 4% Special Additional Duty (SAD) under Notification No.
102/2007-Customs dated 14.09.2007. On scrutiny, it was found that the
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goods sold were different from the goods imported and hence, further
investigation was done by the Special Intelligence and Investigation
Branch. As per the investigation conducted, it was found that the
importer had sent the imported oats to the job workers, who had
undertaken three types of job work on the imported oats and thereby, the
goods sold assumed a different character and therefore, the respondent
did not fulfil the conditions specified in paragraph 2 of the Notification
No.102/2007. Since the imported goods were not sold as such without
being subjected to any further process, an Order-in-Original dated
09.05.2017 came to be passed by the Assistant Commissioner of Customs
to the following effect:
“1. I hold that M/s Pepsico India Holding (P) Ltd. is
not eligible to claim the refund of Rs.5,42,34,576/- being the
SAD claimed by them vide their refund claims listed in the
annexure to the Show Cause Notice C.No.VIII/20/112/2017-
RF dated 07.02.2017 in as much as they have diverted the
imported Oats for further manufacture of excisable Oats and
exempted Oats products by a other manufacturers and
therefore I reject the claim of refund Rs.5,42,34,576/.
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2. I hold that refund claim in respect of Bills of
Entry No. 3709692/04.11.2013; 3716441/05.11.2013;
4255649/03.01.2014; 2119891/03.08.2015;
2754567/29.09.2015; 2754618/29.09.2015 and
7235623/31.10.2014 are hit by period of limitation and the
same are rejected in view of the discussion above.
3. I hold M/s Pepsico India Holding (P) Ltd. to be
liable for imposition of penalty under section 114AA of
Customs Act, 1962 and accordingly, I impose a penalty of Rs.
25,00,000/- (Rupees Twenty five lakhs only) on M/s Pepsico
India Holding (P) Ltd., Gurgoan.”
3. Aggrieved by the above order, the respondent filed an appeal
before the Commissioner (Appeals) and the original order was confirmed
in the appeal by order dated 27.12.2017. Aggrieved by the same, the
respondent filed an appeal before the CESTAT, Chennai, in Customs
Appeal No.40891 of 2018. The CESTAT, on considering the grounds
raised on either side, came to the conclusion that the respondent is
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entitled for refund and the order passed by the Assistant Commissioner
and which was confirmed in appeal by the Commissioner (Appeals),
came to be set aside. Aggrieved by the same, the present appeal has been
filed before this Court under Section 130 of the Act.
4. When this appeal was admitted, this Court framed the
following questions of law :
“i) Whether the exemption as provided under
Notification No.102/2007-Cus dated 14.09.2007 can be
allowed when the conditions specified therein are not
fulfilled?
ii) Whether the Board's Circular No.34/2010-Customs
dated 15.09.2010 is having a bearing on the conditions
specified in the Notification No.102/2007-Cus dated
14.09.2007?
iii) Whether the limitation period for filing refund
provided under Notification No.102/2007-Cus dated
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14.09.2007 as amended vide Notification No.93/2008-
Customs dated 01.08.2008 has to be interpreted strictly in view
of the Constitutional Bench Judgment in Commissioner of
Customs (Import), Mumbai v. Dilip Kumar & Company,
reported in 2018 (361) ELT 577 (SC)?
iv) Whether penalty can be imposed under Section 114
AA of the Customs Act, 1962 when there is suppression and
misdeclaration in the refund application?”
5. When the matter was taken up for hearing today, a
preliminary objection was raised by the learned counsel for the
respondent to the effect that the present appeal filed before this Court
under Section 130 is not maintainable since the effect of refund based on
the exemption notification has a relation to the rate of duty of customs or
the value of the goods for the purposes of assessment. Therefore, it was
contended that the appeal will only lie before the Apex Court under
Section 130E of the Act.
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6. Considering the preliminary objection raised on the side of
the respondent, this Court wanted to deal with that issue at the outset
since it touches upon the jurisdiction of this Court.
7. The exemption notification that is involved in the present
case is Notification No.102/2007-CUS dated 14.09.2007. This
notification exempts the goods from the whole of additional duty of
customs leviable under sub-section (5) of Section 3 of the Customs Tariff
Act, when imported into India for subsequent sale, if the conditions
stipulated in paragraph 2 of the notification are fulfilled.
8. The CESTAT, while setting aside the Order-in-Original
passed by the Assistant Commissioner and the order in appeal passed by
the Commissioner (Appeals), came to the conclusion that the respondent
is entitled for exemption.
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9. The learned counsel for the respondent, by placing reliance
upon the judgment of the Apex Court in Navin Chemicals Mfg. and
Trading Co. Ltd. v. Collector of Customs, reported in 1993 (68) ELT 3,
submitted that the appeal will lie only before the Hon'ble Supreme Court
under Section 130E. The portions in the judgment relied upon by the
learned counsel for the respondent are extracted hereunder:
“8. Before we consider whether the case of the appellant
fails within the said expression, we must note that Section
130, Sub-section (l) and Section 130-E, Clause (b) of the
said Act also use the said expression and they refer
respectively to the Statement of Case to the High Court on a
reference by CEGAT and an appeal to the Supreme Court
directly. Section 130(1) states that the Collector of Customs
or the other party may require CEGAT to refer to the High
Court any question of law arising out of an order under
appeal before it provided it is not an order relating among
other things to the 'determination of any question having a
relation to the rate of duty of customs or to the value of
goods for purposes of assessment'. Clause (b) of Section
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130E provides that an appeal shall lie to the Supreme Court
from 'any order passed by the Appellate Tribunal relating,
among other things, to the determination of any question
having a relation to the rate, of duty of customs or to the
value of goods for purposes of assessment'.
9. The importance of the present appeal lies not so much
in deciding which appeals can be heard by a member of
CEGAT sitting singly and which by a Special Bench thereof
as in determining where a reference can be made by CEGAT
to the High Court and in which cases an appeal against an
order of CEGAT can be filed directly before the Supreme
Court. Where an appeal lies to the Supreme Court, the
necessity of the reference on a question of law to the High
Court is obviated. An appeal to this Court is provided
where, as aforementioned, the questions in issue, relating to
the rates of duty or the value of goods for the purposes of
assessment, have relevance not only for the parties there
c6ncerned but for other importers as well.
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10. Section 129D deals with the powers of the Central
Board of Excise and Customs and the Collector of Customs
to call for and examine the record of any proceedings before
authorities subordinate thereto and examine the legality or
propriety thereof and also to direct such authorities to file
appeals. Sub-section 5 was added to Section 129-D by the
Customs & Central Excise Laws Amendment Act, 1988 and
it reads thus:
“(5) The provisions of this section shall not apply to any
decision or order in which the determination of any question
having a relation to the rate of duty or to the value of goods
for the purposes of assessment of any duty is in issue or is
one of the points in issue.
Explanation - For the purposes of this sub-
section, the determination of a rate of duty in relation to any
goods or valuation of any goods or valuation of any goods
for the purposes of assessment of duty includes the
determination of a question.-
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(a) relating to the rate of duty for the time being
in force, whether under the Customs Tariff Act, 1975 (51 of
1975), or under any other Central Act providing for the levy
and collection of any duty of customs, in relation to any
goods on or after the 28th day of February, 1986; or
(b) relating to the value of goods for the purposes
of assessment of any duty in cases where the assessment is
made on or after the 28th day of February, 1986; or
(c) whether any goods fall under a particular
heading or sub-heading of the First Schedule or the Second
Schedule to the Customs Tariff Act, 1975 (51 of 1975), or
that any goods are or not covered by a particular notification
or order issued by the Central Government granting total or
partial exemption from duty; or
(d) whether the value of any goods for the
purposes of assessment of duty shall be enhanced or
reduced by the addition or reduction of the amounts in
respect of such matters as are specifically provided in this
Act.
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11. It will be seen that Sub-section (5) uses the said
expression 'determination of any question having a relation
to the rate of duty or to the value of goods for the purposes
of assessment' and the Explanation thereto provides a
definition of it 'for the purposes of this sub-section'. The
Explanation says that the expression includes the
determination of a question relating to the rate of duty; to
the valuation of goods for purposes of assessment; to the
classification of goods under the Tariff and whether or not
they are covered by an exemption notification; and whether
the value of goods for purposes/of assessment should be
enhanced or reduced having regard to certain matters that
the said Act provides for. Although this Explanation
expressly confines the definition of the said expression to
Sub-section 5 of Section 129-D, it is proper that the said
expression used in the other parts of the said Act should be
interpreted similarly. The statutory definition accords with
the meaning we have, given to the said expression above.
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Questions relating to the rate of duty and to the value of
goods for purposes of assessment are questions that squarely
fall within the meaning of the said expression. A dispute as
to the classification of goods and as to whether or not they
are covered by an exemption notification relates directly and
proximately to the rate of duty applicable thereto for
purposes of assessment. Whether the value of goods for
purposes of assessment is required to be increased or
decreased is a question that relates directly and proximately
to the value of goods for purposes of assessment. The
statutory definition of the said expression indicates that it
has to be read to limit its application to cases where, for the
purposes of assessment, questions arise directly and
proximately as to the rate of duty or the value of the goods.
12. This, then, is the test for the purposes of determining
whether or not an appeal should be heard by a Special
Bench of CEGAT, whether or not a reference by CEGAT
lies to the High Court and whether or not an appeal lies
directly to the Supreme Court from a decision of CEGAT :
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does the question that requires determination have a direct
and proximate relation, for the purposes of assessment, to
the rate of duty applicable to the goods or to the value of the
goods.”
10. The above judgment of the Apex Court brings out the
distinction between Section 130 and Section 130E of the Act which
provides for appeal to the High Court and to the Supreme Court from the
order passed by the CESTAT. In a case which involves determination of
any question having relation to the rate of duty of customs or to the value
of goods for the purposes of assessment, such appeal can be filed only
before the Supreme Court. The above judgment also gives a clarity where
the subject matter of challenge touches upon an exemption notification
and if that exemption notification relates directly or proximately to the
rate of duty applicable for the purposes of assessment, that will also fall
within the ambit of Section 130E of the Act and consequently, the appeal
would lie only before the Supreme Court.
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11. The above judgment of the Apex Court has been
subsequently followed in various judgments and it will suffice to take
note of those judgments hereunder:
1. Steel Authority of India Ltd. v. Designated Authority, Directorate
General of Anti- Dumping & Allied Duties [2017 (349) E.L.T. 193
(S.C.)
2. Commissioner of Customs, Bangalore - 1 v. Motorola India Ltd.
[2019 (368) E.L.T. 3 (S.C.)]
3. Maruti Udyog Ltd. v. Commr. Of Cus., Chennai [2019 (369) E.L.T.
354 (Mad.)]
4. Commissioner of C. Ex., Chennai Vadapalani Press [2015 (320)
E.L.T. 238 (Mad.)]
5. Coimbatore Polytex Ltd. v. CESTAT, Chennai [2015 (319) E.L.T.
293 (Mad.)]
6. Commissioner of Customs (Exports), Chennai v. D. S. Metal (P)
Ltd. [2015 (323) E.L.T. 328 (Mad.)]
7. Commr. of Cus., C. Ex. & Service Tax v. Jubilant Life Sciences
Ltd. [2014 (306) E.L.T. 212 (All.)]
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12. In the case in hand, the respondent is seeking for
exemption from payment of Special Additional Duty of Customs by
relying upon Notification No.102/2007-Cus dated 14.09.2007. The
applicability of this notification relates directly and proximately to the
rate of duty applicable thereto for the purposes of assessment. Therefore,
as per the above judgment, the combined reading of sub-section (1) of
Section 130 and clause (b) of Section 130E of the Act makes it clear that
the order passed by the CESTAT can be put to challenge only before the
Supreme Court.
13. In the light of the above discussion, this appeal is closed
and it is left open to the department to file an appeal before the Supreme
Court, if so advised and proceed further in accordance with law.
Consequently, connected miscellaneous petition is closed.
14. The Registry is directed to return the original order passed
by the CESTAT, Chennai, to the learned Standing Counsel for the
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department, to enable the department to file an appeal before the Apex
Court.
[N.A.V., J.] [P.D.B., J.]
12.03.2026
NCC :Yes/No
Index :Yes/No
PKN
To
1.The Customs, Excise and Service Tax Appellate Tribunal,
South Zone, Chennai.
2.The Record Keeper (Vernacular Records),
Madurai Bench of Madras High Court,
Madurai.
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N. ANAND VENKATESH,J.
AND
P.DHANABAL,J.
PKN
12.03.2026
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