Gujarat High Court Faults CESTAT For 'Difficult To Decipher' Remand Order In Customs Classification Dispute

The Gujarat High Court has recently set aside a CESTAT order remanding a customs classification dispute, questioning how the tribunal directed the adjudicating authority to re-examine CBEC circulars despite an earlier Gujarat High Court judgment requiring the Union of India to undertake that exercise.

"We fail to understand how the Tribunal, in the facts of the present case, adopted the very same directions and remanded the matter to the Adjudicating Authority to re-look into the said Circulars, despite the fact that this Court had directed the Union of India itself to undertake such an exercise," a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed.

The bench added that the tribunal merely reproduced the relevant provisions of the Customs Tariff Act before issuing "incongruous directions."

The bench also held that the tribunal's final directions were "difficult to decipher," making its order unsustainable.

Since all the facts and documentary evidence were already before it, the court said that the tribunal ought to have decided the appeal on merits instead of sending the matter back.

The dispute arose after the petitioner exported Flexible Intermediate Bulk Containers (FIBCs), commonly known as "Jumbo Bags," by classifying them as textile sacks and bags under the Customs Tariff. Customs authorities took a different view after a chemical examiner reported that the products were woven plastic articles made from polypropylene strip yarn. They instead classified them as plastic packing articles.

The Commissioner of Customs (Appeals) ruled in favor of the assessee after examining the nature of the goods and relying on judgments of the Supreme Court and the Bombay High Court. The revenue challenged that decision before the tribunal.

Before the tribunal, the taxpayer relied on the Gujarat High Court's decision in CTM Technical Textiles Ltd. v. Union of India (2020). Instead of deciding the appeal, however, the tribunal sent the matter back to the adjudicating authority. It also directed the authority to re-look into CBEC Circular No. 8/92 and CBEC Trade Notice No. 78/94.

The high court held that the tribunal had failed to appreciate the true purport of its earlier judgment, which had directed the Union of India, and not the adjudicating authority, to re-examine those circulars.

It also said it was unable to decipher the basis of the tribunal's conclusions. Despite having all the relevant facts, documentary evidence and judgments governing the issue before it, the tribunal chose to remand the matter instead of deciding the appeal on merits.

Accordingly, the high court quashed the tribunal's order and remanded the appeal to the tribunal for fresh adjudication after hearing both parties. The appeal needs to be decided within 4 months

For Petitioners: Advocates Amal Paresh Dave and Paresh M. Dave.

For Respondents: Advocate C.B. Gupta