2010 (6) TMI 615 - HC - Central Excise

Duty and penalty - respondent s eligibility for exemption under the notifications - Held that - Sections 35G and 35L make it very clear that High Court has no jurisdiction to entertain an appeal against the order of the Tribunal where at least one of the issues raised pertains to rate of duty of goods or classification or valuation of goods, Tribunal has not considered exemption claim based on condition in the notifications, that is whether manufacture of final product through contract units entitles assessees for exemption under the notifications, appeals are not maintainable and appeals rejected.

Summary

Issues involved:
Appeal against cancellation of duty and penalty orders for inputs cleared to contract units for hawai chappals manufacturing; Eligibility for duty exemption under Notifications No. 67/95 and 10/1996; Maintainability of appeals under Section 35G of the Central Excise Act; Jurisdiction of High Court in cases involving rate of duty, classification, or valuation of goods.

Analysis of the Judgment:

1. The Appeals were filed by the department challenging the orders of the Customs, Excise & Service Tax Appellate Tribunal that had canceled adjudication orders demanding duty and penalty for the inputs manufactured and cleared by related respondent-industries to contract units for manufacturing hawai chappals. The department argued that the respondents were not entitled to claim duty exemption under Notifications No. 67/95 and 10/1996 as the final product should be manufactured within the factory premises, a condition not met by the respondents. Despite re-imposition of duty and penalty in fresh adjudication proceedings, the Tribunal canceled the same, holding that the respondents were entitled to exemption, leading to the filing of these appeals.

2. The counsel for the respondents contended during the hearing that the appeals were not maintainable under Section 35G of the Central Excise Act as the issue involved not only duty exemption eligibility but also classification and rate of duty on inputs. While the appellant's counsel argued that the main question was the respondent's eligibility for exemption, the High Court noted that classification and rate of duty were equally significant. Sections 35G and 35L specify that the High Court lacks jurisdiction to entertain appeals where issues pertain to rate of duty, classification, or valuation of goods. Despite the Tribunal not considering the exemption claim based on the notifications' conditions, the High Court rejected the appeals as not maintainable due to classification being one of the issues decided by the Tribunal.

3. The High Court concluded that the appeals were not maintainable and were thus rejected. The Court directed the Registry to return the original orders impugned in the appeals to the appellants for filing an appeal or Special Leave Petition (SLP) before the Supreme Court. The decision was based on the jurisdictional limitations of the High Court regarding appeals involving issues related to rate of duty, classification, or valuation of goods, as outlined in the relevant sections of the Central Excise Act.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the High Court's decision regarding the maintainability of the appeals in light of the legal provisions and arguments presented by both parties.