2018 (8) TMI 1899 - HC - Central Excise

Maintainability of appeal - valuation of goods - Whether the CESTAT was justified in law in refusing to admit the appeal ignoring that the issue related to valuation of goods and therefore, discretion to refuse to admit the appeal under sub-section (1) of Section 35B of the Central Excise Act, 1944 was not available under the law? HELD THAT - Right to appeal, as is well-settled legal position, is a statutory right and once it is conferred on a party, exceptions to exercise such a right, incorporated in the provision, have to be read strictly and not liberal, in favour of beneficiary of the right. Though Learned Counsel for Revenue sought to convince us by submitting that the matter involving the issue with regard to valuation of goods, the statutory remedy under Section 35G of the Act, in any case, will not be available to the assessee, on plain reading of the provision contained in sub-section (1) of Section 35G, we are inclined to reject the submission - The exclusion of the class of orders against which the remedy of appeal under Section 35G would not be available are exhaustively enumerated as being order relating, among other things, to the determination of any question having a relation to the rate of duty of excise to the value of goods for the purposes of assessment. The jurisdiction of this Court is not taken away to examine the correctness and validity of the order of the Tribunal, when it involves a substantial question of law - the question of law is answered in favour of assessee and against the Revenue that the Tribunal was legally not justified in law and committed an error in invoking its discretion to refuse to admit the appeal. Impugned order passed by the Tribunal is set aside and remitted back to the Tribunal for consideration of the issue involved in the appeal on its own merits - Appeal allowed.

Summary

Issues:
1. Interpretation of Section 35B of the Central Excise Act regarding the discretion to refuse to admit an appeal based on the value of goods involved.
2. Analysis of the statutory scheme under Section 35B and Section 35G of the Act in relation to appeals involving valuation of goods for assessment purposes.

Issue 1: Interpretation of Section 35B of the Central Excise Act:
The High Court addressed the issue of whether the CESTAT was justified in refusing to admit an appeal based on the value of goods involved. The appellant argued that the discretion to refuse the appeal was not available as the dispute related to the valuation of goods for assessment purposes. The Court referred to the statutory scheme of Section 35B and emphasized that the discretion to refuse to admit an appeal is not available in cases where the determination of the value of goods for assessment is an issue. The Court highlighted that the right to appeal is a statutory right and exceptions to exercising such a right must be strictly construed in favor of the party seeking appeal.

Issue 2: Analysis of the statutory scheme under Section 35B and Section 35G:
The Court further analyzed the provisions of Section 35B and Section 35G of the Act in light of appeals involving the valuation of goods. The Court noted that the second proviso to Section 35B allows the Tribunal to refuse to admit an appeal based on the amount of duty or penalty involved, but exceptions exist for cases related to the valuation of goods for assessment purposes. The Court also examined Section 35G, which outlines the appeal process to the High Court, and concluded that the Tribunal's refusal to admit the appeal based on the tax effect involved did not preclude the High Court from examining the issue if it involved a substantial question of law. The Court held in favor of the appellant, stating that the Tribunal was not justified in invoking its discretion to refuse to admit the appeal, and remitted the case back to the Tribunal for consideration on its merits.

In conclusion, the High Court's judgment clarified the statutory provisions under the Central Excise Act regarding the admission of appeals based on the value of goods for assessment purposes. The Court emphasized the importance of interpreting these provisions strictly in favor of the party seeking appeal and ruled in favor of the appellant, setting aside the Tribunal's order and remitting the case for further consideration.