Supreme Court Declines To Interfere With HC Order On PepsiCo's ₹5.42 Crore SAD Refund For Processed Oats
Kirit Singhania
2 Nov 2026 10:51 AM IST
The Supreme Court on Monday refused to interfere with the Madurai Bench of the Madras High Court's order closing the appeal filed by the Commissioner of Customs against a CESTAT order allowing PepsiCo India Holdings Pvt Ltd to claim a refund of ₹5.42 crore towards Special Additional Duty (SAD).
The High Court had closed an appeal filed by the Commissioner of Customs against a CESTAT order allowing PepsiCo India Holdings Pvt Ltd to claim a refund of ₹5.42 crore towards Special Additional Duty, holding that the challenge could be pursued only before the Supreme Court under Section 130E of the Customs Act, 1962.
A Bench of Justices J.B. Pardiwala and Manmohan observed that the High Court had committed no error in passing the impugned order and left it open to the Revenue to pursue a statutory appeal before the Supreme Court. The Bench observed:
“We are of the view that no error, not to speak of any error of law, could be said to have been committed by the High Court in passing the impugned order.”
Appearing for the Commissioner of Customs, Additional Solicitor General S. Dwarakanath submitted that the High Court had closed the appeal on the ground that it was not maintainable under Section 130E of the Customs Act.
He sought to challenge this position, relying on the Supreme Court's decision in Motorola, arguing that where the dispute concerns violation of conditions of an exemption notification, an appeal would lie before the High Court.
The ASG submitted:
“It is contrary to the judgment of Motorola, where this Hon'ble Court held that where there is violation of conditions in the notification, an appeal lies to the High Court.”
The Bench questioned the ASG's insistence on pursuing the matter before the High Court instead of approaching the Supreme Court. During the exchange, the ASG indicated that the Revenue could come back before the Court by way of a civil appeal.
The Bench then referred to paragraph 12 of the High Court's order, which clarified that PepsiCo was seeking exemption from payment of Special Additional Duty by relying upon the relevant notification. It observed that the applicability of the notification had a direct bearing on the rate of customs duty.
The Court ultimately dismissed the Revenue's petition while leaving it open to the Department to prefer a statutory appeal before the Supreme Court under Section 130E of the Customs Act.
The dispute arose after PepsiCo filed 34 refund claims between September 2013 and February 2017, covering 209 Bills of Entry, under Customs Notification No. 102/2007. The Department rejected the claims on the ground that imported oats had undergone further processing through job workers before being sold, and therefore did not satisfy the notification's conditions.
The Assistant Commissioner had rejected the refund claim of ₹5,42,34,576 and imposed a penalty of ₹25 lakh under Section 114AA of the Customs Act. The Commissioner (Appeals) upheld the decision, but CESTAT subsequently set it aside and allowed PepsiCo's refund claim.
The High Court held that the dispute concerning applicability of the exemption notification had a direct and proximate bearing on the rate of customs duty and, therefore, fell within Section 130E.