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2017 (12) TMI 333 - HC - Central ExciseMaintainability of appeal - Section 35-G of the CEA, 1944 - It is contended that, this Court does not have jurisdiction to entertain these appeals, and notwithstanding the fact that the appeals have been admitted, jurisdiction cannot vest in this Court when such jurisdiction is not specifically prescribed by the Statute - Held that - the issue which we are called upon to adjudicate, would lead to a decision (if the appellant succeeds) determining the question of the rate of duty of excise, on the goods, which the respondent sells to the consumers, and the assertion of the appellant that the exemption granted cannot be made applicable. This would lead to permitting the appellant to impose higher rate of duty of excise on the value of the goods, in relation to which the impugned order has been passed - as the subject matter of both these appeals are squarely covered by the prohibition flowing from Section 35-G. Both these appeals would not be maintainable before this Court. Appeal dismissed on the ground of maintainability.
Issues Involved:
1. Maintainability of appeals under Section 35-G of the Central Excise Act, 1944. 2. Jurisdiction of the High Court to entertain appeals involving determination of the rate of duty of excise or the value of goods for assessment purposes. 3. Alleged fraudulent claim of tax exemption by the respondent. 4. Impact of impugned orders by the Tribunal on the rate of duty of excise. Issue-wise Detailed Analysis: 1. Maintainability of Appeals under Section 35-G of the Central Excise Act, 1944: The primary contention raised by the respondent's counsel was that the appeals were not maintainable under Section 35-G of the Central Excise Act, 1944. The Court noted that Section 35-G permits filing an appeal to the High Court from every order passed in appeal by the Appellate Tribunal, except for orders relating to the determination of any question having a relation to the rate of duty of excise or to the value of goods for assessment purposes. The Court emphasized that this exclusionary clause must be construed strictly. 2. Jurisdiction of the High Court: The Court examined whether it had jurisdiction to entertain the appeals by considering the nature of the issues involved. It was argued by the appellant’s counsel that the case involved determining whether the respondent had fraudulently claimed an exemption, which would affect the rate of duty. The Court found that deciding on the merits of the appeals would lead to determining a question related to the rate of duty of excise, thereby falling under the exclusionary clause of Section 35-G. 3. Alleged Fraudulent Claim of Tax Exemption: The respondent, a pharmaceutical company, claimed an exemption from paying tax on Lidocaine Tropical Aerosol (USP) under specific notifications. However, it was alleged that the respondent fraudulently claimed this exemption as the product was used in sprays branded for sexual stimulation rather than for surgical purposes. The Assistant Commissioner of Central Excise & Customs initially confirmed the demand for duty and imposed penalties, which were later overturned by the Commissioner of Appeals and upheld by the CESTAT. 4. Impact of Impugned Orders by the Tribunal: The Court examined the impact of the Tribunal’s orders, which had set aside the demands and penalties imposed by the Assistant Commissioner. The appellant contended that if the respondent’s exemption was found to be obtained by misrepresentation, it would lead to higher taxes and penalties. The Court concluded that such a determination would indeed relate to the rate of duty of excise, thus falling outside the High Court’s jurisdiction under Section 35-G. Conclusion: The Court concluded that both appeals were not maintainable as they involved determining the rate of duty of excise, which is explicitly excluded from the High Court’s jurisdiction under Section 35-G. Consequently, both appeals were dismissed on the ground of maintainability. The Court granted liberty to the appellants to approach the Hon’ble Apex Court, recognizing their statutory right under Section 35-L and considering the time spent in the High Court for the purpose of condonation of delay.
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