2021 (12) TMI 478 - HC - Central Excise

Levy of penalty u/r 26 on the Appellant/Managing Director of the assessee - Whether the Tribunal is correct in holding that Fatty Acid, Waxes, Soap Stock, Spent Earth and Gum generated during the processing of Refined Oil are waste and cannot be subjected to Central Excise Duty? - HELD THAT - The Tribunal referred to the decision of the Lager Bench of the Tribunal in the case of M/S RICELA HEALTH FOODS LTD., M/S J.V.L. AGRO INDUSTRIAL LTD., M/S KISSAN FATS LIMITED VERSUS CCE, CHANDIGARH, ALLAHABAD 2018 (2) TMI 1395 - CESTAT NEW DELHI where it was held the removal of unwanted materials resulting in products like gums, waxes and fatty acid with odour cannot be called as a process of manufacture of these gums, waxes and fatty acid with odour. The process of manufacture is for refined rice bran oil. and allowed the appeals filed by the assessees. Correctness of the order passed by the Tribunal setting aside the penalty on the company and the Directors - HELD THAT - These appeals have been preferred under Section 35G of the Central Excise Act, 1944. In terms of sub-section (1) of Section 35G, an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment, if the High Court is satisfied that the case involves a substantial question of law. The appeals are dismissed as not maintainable giving liberty to the appellant/Revenue to file an appeal before the Hon'ble Supreme Court.

Summary

Issues:
1. Whether the Tribunal is correct in setting aside the penalty levied under Rule 26 on the Appellant/Managing Director of the assessee.
2. Whether the Tribunal is correct in holding that Fatty Acid, Waxes, Soap Stock, Spent Earth, and Gum generated during the processing of Refined Oil are waste and cannot be subjected to Central Excise Duty.
3. Whether the Tribunal is correct in setting aside the penalty levied under Section 11AC.

Analysis:
1. The first substantial question of law involves the Tribunal's decision on the classification of fatty acid waxes, soap stocks, spent earth, and gum generated during the processing of refined oil as waste exempt from central excise duty. The Tribunal relied on a previous decision and ruled in favor of the assessee, setting aside the penalty. This issue raises the interpretation of excise duty liability on specific by-products of the refining process.

2. The second substantial question pertains to the correctness of the Tribunal's order in setting aside the penalty imposed on the company and its Directors. This issue focuses on the penalty under Section 11AC and whether the Tribunal's decision was justified in this regard. The Tribunal's ruling on penalties is crucial for determining the consequences of non-compliance with excise regulations.

3. The appeals were filed under Section 35G of the Central Excise Act, 1944, challenging the Tribunal's orders. However, the High Court found that the issues raised in the appeals relate to the rate of duty of excise on the goods in question. Due to statutory limitations, the High Court determined that it lacked jurisdiction to decide on these issues. Consequently, the appeals were dismissed as not maintainable, with the appellant granted the liberty to appeal to the Supreme Court if desired. This decision underscores the importance of jurisdictional constraints in appellate proceedings.

In conclusion, the judgment addresses significant legal issues concerning excise duty liability, penalties, and appellate jurisdiction. The decision emphasizes the need for precise interpretation of excise laws and the appropriate forum for challenging legal determinations to ensure fair and consistent application of tax regulations.