Customs Appeals Involving Prohibited Goods Not Exempt From ₹1 Crore Monetary Threshold: Delhi High Court

The Delhi High Court has held that the mere involvement of prohibited goods in a customs dispute does not exempt the Customs Department from complying with the minimum ₹1 crore monetary threshold prescribed for filing appeals before the High Court.

The Division Bench of Justices Avneesh Jhingan and Shail Jain observed that the instructions issued by the Central Board of Indirect Taxes and Customs (CBIC) on November 2, 2023, expressly provide only three exceptions to the monetary limit, and cases involving prohibited goods do not fall within them.

“There is no exception with regard to the involvement of the prohibited items carved out in the instructions,” the Court observed while dismissing an appeal filed by the Commissioner of Customs.

The appeal was filed under Section 130A of the Customs Act, 1962, challenging a CESTAT order.

At the outset, senior counsel appearing for the respondent raised a preliminary objection to the maintainability of the appeal, relying on the CBIC instructions dated November 2, 2023.

The instructions, issued in exercise of powers under Section 131BA of the Customs Act, prescribe monetary limits below which the Department should not file appeals before CESTAT, High Courts and the Supreme Court.

Under the revised instructions, the monetary threshold for departmental appeals is fixed at ₹50 lakh before CESTAT, ₹1 crore before High Courts and ₹2 crore before the Supreme Court.

Opposing the preliminary objection, counsel for the Customs Department argued that the monetary limit would not apply because the dispute concerned prohibited items.

The Department did not dispute that the amount involved in the appeal was less than ₹1 crore. Its contention was confined to the argument that cases involving prohibited goods should be treated as falling outside the monetary restriction.

Examining the instructions, the High Court noted that the CBIC had specifically identified three categories of cases in which adverse judgments could be challenged irrespective of the amount involved.

These include cases where the constitutional validity of a provision of an Act or Rule is under challenge; cases where a notification, instruction, order or circular has been held illegal or ultra vires; and classification or refund issues involving questions of a legal or recurring nature.

The Court observed:

“The instruction are unambiguous that only three exceptions have been carved out to which the monetary limit shall not apply.”

It held that the instructions did not provide any additional exception for cases concerning prohibited goods. Consequently, the Department could not avoid the prescribed monetary threshold merely by asserting that the dispute involved prohibited items.

For Appellant: Advocates Satish Aggarwala, SSC with Mala Sharma, SPP, Aman Triapthi & Neha Kamboj

For Respondent: Senior Advocate Kaadambari Singh with Advocate Mayank Tripathi & Gyan Sancheti