2022 (8) TMI 641 - HC - Central Excise

Classification of goods - Mis-rolls - Whether the Learned Tribunal without going into the merits of the case and without even seeing the documents was right in simply passing the order on the basis of the ratio laid down in the decision of the Tribunal in Jai Raj Ispat Limited Vs- Commissioner of Central Excise, Hyderabad-IV 2006 (7) TMI 210 - SUPREME COURT ? - misrolls arising during the process of manufacture of CTD bars would fall under tariff entry 72.04 or 72.07 or not? - recovery of CENVAT Credit - interest - penalty - HELD THAT - The Tribunal in the impugned orders has left open the classification issue. If such be the circumstances, the learned Tribunal ought to have made an endeavour to consider the facts of the case, specially when the allegation in the show cause notice issued by the adjudicating authority was that the assessee does not process furnace for melting such waste and scrap and it is practically impossible for the assessee to manufacture MS Flat/Bar, MS Angle, MS Channel, MS Round etc. from the said items which are various types of scraps. Assessee contended that, the demand notice has been issued without any enquiry and investigation in the factory of the assessee and the burden of proof is on the department to show that the goods purchased from SAIL and others have been disposed off without use in their factory. Further, it was contended that the department does not dispute payment of duty on goods purchased from SAIL and others, payment of duty on the final products manufactured by them, there was no revenue loss and therefore, proceedings could not have been initiated against the assessee. The substantial questions of law does arise for consideration in these appeals, more particularly, the question whether the Tribunal without going into the merits of the case and without noting the documents was right in simply passing the order on the basis of the decision in the case of Jai Raj Ispat Ltd. 2006 (7) TMI 210 - SUPREME COURT and whether the learned Tribunal failed to note that the judgment in the case of Jai Raj Ispat Ltd. was pertaining to a classification issue. The appeals are allowed and the substantial questions of law are answered in favour of the revenue - matters are remanded to the Tribunal to consider the cases afresh and after taking note of the factual position, as well as the legal and various decisions that may be relied upon. The learned Tribunal shall pass a speaking order on merits and in accordance with law.

Summary

Issues:
1. Maintainability of appeal under Central Excise Act, 1944 based on monetary limit.
2. Interpretation of circular regarding filing appeals in High Courts based on duty involved.
3. Substantial questions of law raised by the revenue for consideration.
4. Application of previous Tribunal decision in the current case.
5. Failure of Tribunal to consider classification issue and factual findings.

Issue 1: Maintainability of Appeal under Central Excise Act:
The High Court considered the maintainability of the appeal under the Central Excise Act, 1944, based on the duty amount involved. The respondent argued that the appeal was not maintainable as the duty involved was less than the specified limit of Rs. 1 crore. The revenue contended that when penalty was included, the amount exceeded the limit. The Court analyzed the circular issued by the CBEC and held that the appeal's maintainability depended on whether the duty component exceeded the threshold, regardless of penalty. However, the Court emphasized that it could consider appeals involving substantial questions of law, as supported by legal precedents.

Issue 2: Interpretation of Circular on Filing Appeals in High Courts:
The Court interpreted the circular regarding filing appeals in High Courts based on the duty involved. It noted that the decision to file an appeal should be based on the quantum of duty, as specified in the circular. The Court referred to relevant instructions issued by the CBEC and legal precedents to determine the correct application of the circular's monetary limit. It emphasized the importance of considering duty amounts without penalty when deciding on appeal maintainability.

Issue 3: Substantial Questions of Law Raised by Revenue:
The revenue raised substantial questions of law for consideration, including the Tribunal's approach in passing orders without examining documents and the applicability of previous judgments. The Court analyzed each question raised by the revenue, focusing on issues such as the Tribunal's reliance on specific decisions and the need for detailed examination of factual and legal aspects in each case.

Issue 4: Application of Previous Tribunal Decision:
The Court examined the application of a previous Tribunal decision in the current case. It highlighted the revenue's argument that the decision cited by the Tribunal was not applicable to the facts of the case. The Court emphasized the importance of considering the specific circumstances and factual findings of each case before applying previous judgments.

Issue 5: Failure to Consider Classification Issue and Factual Findings:
The Court noted the Tribunal's failure to consider the classification issue and factual findings in the case. It pointed out that the Tribunal did not address the classification issue raised by the revenue, which was crucial for determining the applicability of previous judgments. The Court emphasized the need for detailed examination of facts and proper consideration of classification issues in such cases.

In conclusion, the Court allowed the appeals, answered some substantial questions of law in favor of the revenue, and remanded the matters to the Tribunal for fresh adjudication. The Court instructed the Tribunal to consider the cases afresh, taking into account factual positions, legal aspects, and relevant decisions. The Court emphasized the importance of passing speaking orders on merits and in accordance with the law, ensuring a thorough examination of all relevant aspects in the cases.