2013 (4) TMI 326 - HC - Central Excise

Whether the Bagasse based plain and pre-laminated particle boards falling under chapter Heading No. 4410 of the Central Excise Tariffs Act, 1985 are liable for payment of excise duty @ 8% ad valorem as provided under Notification No. 4/2006-C.E., dated 1st March 2006 (Serial No. 87) or eligible for full exemption under Notification No. 6/2006-C.E., dated 1st March 2006 (Serial No. 82). - Seizure of documents by revenue. - Maintainability of writ petition - Held that - In Harbanslal Sahnia and Another v. Indian Oil Corporation Limited and Others, reported in 2002 (12) TMI 564 - SUPREME COURT , Supreme court observed the contingencies in which the High Court could exercise its writ jurisdiction in spite of availability of the alternative remedy. - in this country of stiff competition it would be virtually very difficult for the petitioner to survive in the business. Companies manufacturing pre-laminated plain particle board made of Bagasse in other States of the country have not to pay any duty, whereas for the same product the petitioner in this particular State is being asked to pay duty of 8% ad valorem. It is for this reason that we are of the view that this writ petition seeks enforcement of fundamental right to carry on trade or business without any discrimination of any nature. The present petition is not the one in which the controversy centres around the issues which are primarily questions of fact. - here are good grounds in the present case so as to entertain this petition despite the fact that there is a remedy of appeal available under Section 35G of the Act. Any clarification issued by the Board is binding to the Central Excise Officers who are duty-bound to observe and follow such circulars. Whether Section 37B is referred to in such circular or not is not relevant. - Decision in the case of Ranadey Micronutrients v. Collector of Central Excise 1996 (9) TMI 124 - SUPREME COURT OF INDIA followed. The submission that the letters issued by the Board in the present case were communications answering queries raised by the Commissioners of particular areas and hence such letters were not binding because they were not issued under Section 37B is not the correct proposition. When other Central Excise authorities of equal and higher rank have followed and acted as per the clarifications, the Commissioner, Surat, could not have taken a contrary view on the assumption that the clarifications were only letters and not orders under Section 37B. It is declared that the goods manufactured by the petitioner, namely, Bagasse Board, is chargeable to nil rate of duty under Serial No. 82(vi) of Table to Notification No. 6/2006-C.E. - Decided in favor of assessee.

Issues Involved:
1. Classification of Bagasse boards under Central Excise Tariff Act, 1985.
2. Applicability of Notification No. 4/2006-C.E. vs. Notification No. 6/2006-C.E.
3. Maintainability of the writ petition under Article 226 of the Constitution of India.
4. Binding nature of Central Board of Excise and Customs (CBEC) clarifications.
5. Alleged discrimination in excise duty imposition across different states.

Issue-wise Detailed Analysis:

1. Classification of Bagasse Boards:
The primary issue was whether Bagasse-based plain and pre-laminated particle boards fall under Chapter Heading No. 4410 of the Central Excise Tariff Act, 1985, and whether they are liable for excise duty at 8% ad valorem as per Notification No. 4/2006-C.E. or eligible for full exemption under Notification No. 6/2006-C.E. The court concluded that Bagasse boards are specifically covered under Serial No. 82(vi) of Notification No. 6/2006-C.E., which prescribes a nil rate of duty. It was held that the goods manufactured by the petitioner, being Bagasse boards, are chargeable to nil rate of duty under the said Notification.

2. Applicability of Notification No. 4/2006-C.E. vs. Notification No. 6/2006-C.E.:
Notification No. 4/2006-C.E. is a general notification for all goods under Heading 4410 or 4411, allowing a concessional rate of duty. In contrast, Notification No. 6/2006-C.E. specifically provides a nil rate of duty for Bagasse boards. The court noted that the petitioner has the right to choose the exemption notification that benefits them the most. Since Notification No. 6/2006-C.E. specifically covers Bagasse boards, the petitioner could not be compelled to pay duty under Notification No. 4/2006-C.E.

3. Maintainability of the Writ Petition:
The respondents argued that the petition should not be entertained due to the availability of an alternative remedy under Section 35G of the Central Excise Act. However, the court held that the writ petition was maintainable because it involved the enforcement of fundamental rights under Article 14 and Article 19(1)(g) of the Constitution. The court emphasized that the petitioner's right to carry on trade or business without discrimination justified the exercise of writ jurisdiction.

4. Binding Nature of CBEC Clarifications:
The court rejected the respondents' contention that CBEC's clarifications were not binding because they were not issued under Section 37B of the Act. The court referred to the Supreme Court's decision in Ranadey Micronutrients v. Collector of Central Excise, which held that such clarifications are binding on Central Excise Officers. The court noted that the clarifications issued by CBEC regarding the applicability of Notification No. 6/2006-C.E. to Bagasse boards were followed by various Commissionerates, and thus, the Commissioner, Surat, could not take a contrary view.

5. Alleged Discrimination in Excise Duty Imposition:
The petitioner argued that manufacturers in other states were allowed to clear similar goods at nil duty, while they were being charged 8% ad valorem in Gujarat, which was discriminatory and violated Articles 14 and 19(1)(g) of the Constitution. The court agreed, noting that Central Excise is a central levy and must be uniformly applied across the country. The court found that the differential treatment was unjustified and discriminatory.

Conclusion:
The court allowed the petitions, quashing the orders of the Commissioner of Central Excise, Customs and Service Tax, Surat-II, and declaring that the goods manufactured by the petitioner, namely Bagasse boards, are chargeable to nil rate of duty under Serial No. 82(vi) of Notification No. 6/2006-C.E. The court also directed the release of the goods and documents detained and seized.

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