2008 (5) TMI 290 - HC - Central Excise

Maintainability of Appeal - whether the goods if any-manufactured by the respondent are excisable goods or not - Held that - In cases where the dispute relates to the question whether the noticee is the manufacturer of the excisable goods or not, an appeal against such an order passed by the CESTAT would lie only to the apex Court but not to this Court in view of Section 35L of the Act. Thus the appeals are not maintainable in this Court and do not wish either to discuss or to give any finding on the other contentions raised before us by the learned Assistant Solicitor General and the learned counsel for the respondents.

Issues Involved:
1. Maintainability of appeals in the High Court.
2. Determination of whether the respondent is manufacturing excisable goods.
3. Interpretation of agreements between the respondent and job workers.
4. Application of relevant case law and statutory provisions.

Detailed Analysis:

1. Maintainability of Appeals in the High Court:
The primary issue was whether the appeals against the orders of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) could be entertained by the High Court. The respondent's counsel argued that under Section 35G(1) and Section 35L of the Central Excise Act, 1944, such appeals should lie only to the Supreme Court, not the High Court. The counsel cited several precedents, including *Navin Chemicals Manufacturing & Trading Co. Ltd. v. Commissioner of Customs* and *Commissioner of Central Excise, Bangalore v. M/s. Aquamall Water Solutions Ltd.*, to support this contention. The court agreed, noting that the issue pertained to the "determination of the rate of duty of excise or the value of the goods for purposes of assessment of duty," which falls under the jurisdiction of the Supreme Court as per Section 35L of the Act.

2. Determination of Whether the Respondent is Manufacturing Excisable Goods:
The core dispute was whether the activities carried out by the respondent in its service center amounted to the manufacture of stators, making them liable for excise duty. The Central Excise officials had issued multiple show cause notices to the respondent, alleging that the processes of shaping, varnishing, and baking of stators constituted manufacturing. However, the respondent contended that these activities were performed by job workers under various agreements, and thus, the excise duty, if any, was payable by the job workers, not the respondent. The CESTAT had accepted the respondent's contention and set aside the demands made by the Excise officials.

3. Interpretation of Agreements Between the Respondent and Job Workers:
The agreements between the respondent and the job workers were crucial in determining whether the respondent was liable for excise duty. The purchase orders and annexures indicated that the job workers were responsible for the complete manufacturing process, including winding, varnishing, and baking of stators. The agreements explicitly stated that the job workers operated on a principal-to-principal basis, with no financial relationship or control by the respondent over their manufacturing activities. This supported the respondent's argument that the job workers, not the respondent, were the manufacturers of the stators.

4. Application of Relevant Case Law and Statutory Provisions:
The court examined various precedents and statutory provisions to determine the maintainability of the appeals and the liability for excise duty. The respondent's counsel cited cases such as *O.R.G. Systems v. Collector of Central Excise, Vadodara* and *Rallis India Ltd. v. State of Tamil Nadu*, arguing that the High Court could not interfere with the factual findings of the Tribunal. The court also referred to the explanation in Section 35E of the Act and the decision in *Navin Chemicals Mfg. and Trading Co. Ltd.*, which clarified that questions relating to the excisability of goods fall under the jurisdiction of the Supreme Court. Consequently, the court concluded that the appeals were not maintainable in the High Court.

Conclusion:
The High Court dismissed the appeals as not maintainable, holding that the issues raised pertained to the determination of the rate of duty of excise or the value of the goods for purposes of assessment of duty, which should be adjudicated by the Supreme Court. The court did not delve into the merits of the other contentions raised, focusing solely on the jurisdictional aspect.

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