2008 (12) TMI 224 - HC - Central Excise

Writ jurisdiction - Territorial jurisdiction - Whether applicability of the first proviso to Section 11A of the Central Excise Act, 1944 was not considered? -Held that - On a perusal of the records available, it is clear that the preliminary objection raised on behalf of the second respondent is devoid of merits. When the order impugned has been passed by the first respondent-Tribunal, which is located at Chennai, it cannot be said that this court would not have the jurisdiction to decide the writ petition pending on the file of this Court, as held by the Supreme Court in Kusum Ingots and Alloy Limited v. Union of India 2004 (4) TMI 342 - SUPREME COURT OF INDIA . In view of the fact that it has been stated that the first respondent-Tribunal had not considered all the issues arising for its decision, especially, the applicability of the first proviso to Section 11A of the Central Excise Act, 1944, to the petitioner, in the light of the decision of Collector of Central Excise, Baroda v. Cotspun Ltd. 1999 1999 (9) TMI 87 - SUPREME COURT OF INDIA and the effect of the amendments brought about by the Finance Act, 2000, which was in the form of a Bill in the Finance Bill, 2000, at the time when the final order was passed by the first respondent-Tribunal, and in view of the limited prayer of the learned counsel appearing on behalf of the petitioner and considering the fact that certain aspects, as noted above, had not been considered, when the first respondent-Tribunal had passed the impugned order, dated 18-4-2000, the final order of the first respondent-Tribunal, dated 18-4-2000, made in Appeal No. E/441/98, is set aside and the first respondent-Tribunal is directed to pass appropriate orders, on merits, and in accordance with law, considering all the relevant issues, in particular, the applicability of the first proviso to Section 11A of the Central Excise Act, 1944, to the petitioner, uninfluenced by its findings in its earlier decision, dated 18-4-2000.

Issues Involved:
1. Jurisdiction of the Court
2. Classification of goods and approval of classification lists
3. Invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944
4. Levy of penalty under the Central Excise Rules, 1944
5. Validity of the Tribunal's order and rectification of mistakes
6. Applicability of the Finance Act, 2000 amendments

Issue-wise Detailed Analysis:

1. Jurisdiction of the Court:
The second respondent contended that the writ petition should be dismissed for lack of jurisdiction as no cause of action arose within the jurisdiction of the High Court of Madras. The petitioner argued that the impugned order was passed by the Tribunal located in Chennai, thus giving the High Court territorial jurisdiction. The court upheld this view, citing precedents that orders by appellate authorities located within its jurisdiction confer jurisdiction to the High Court.

2. Classification of Goods and Approval of Classification Lists:
The petitioner classified Alkyd Resins under sub-heading 3907.50, which was approved by the Assistant Commissioner. Later, the department reclassified the goods under heading 3208.40 after a detailed investigation. The petitioner paid the differential duty under protest. The Tribunal upheld the department's reclassification and confirmed the duty demand and penalty, but the petitioner argued that the classification lists were approved, and thus, there could be no short-levy as per the Supreme Court's decision in Collector of Central Excise, Baroda v. Cotspun Ltd.

3. Invocation of Extended Period of Limitation under Section 11A of the Central Excise Act, 1944:
The department invoked the extended period of five years under Section 11A, citing wilful misstatement or suppression of facts by the petitioner. The petitioner contended that the demand was time-barred and that there was no intent to evade duty. The Tribunal upheld the extended period, but the petitioner argued that the approved classification lists and regular declarations negated any wilful suppression.

4. Levy of Penalty under the Central Excise Rules, 1944:
The department imposed a penalty under Rules 9(2), 173Q, and 226 of the Central Excise Rules, 1944. The petitioner argued that the penalty was unsustainable as the duty was paid under protest and no fraud or suppression was involved. The Tribunal upheld the penalty, but the petitioner contended that the Finance Act, 2000, barred the imposition of penalties in cases of approved classification lists.

5. Validity of the Tribunal's Order and Rectification of Mistakes:
The petitioner filed a miscellaneous application for rectification of the Tribunal's order, arguing that it did not consider the Supreme Court's decision in Cotspun Ltd. and other relevant submissions. The Tribunal dismissed the application, stating that the grounds were not raised during the final order. The petitioner argued that the order was per incuriam and without jurisdiction.

6. Applicability of the Finance Act, 2000 Amendments:
The petitioner contended that the amendments to Section 11A by the Finance Act, 2000, which were introduced after the Tribunal's final order, validated actions taken under Section 11A but barred penalties in cases of approved classification lists. The Tribunal's order did not consider these amendments, which the petitioner argued should apply retrospectively.

Conclusion:
The High Court set aside the Tribunal's final order and remitted the matter back to the Tribunal for reconsideration. The Tribunal was directed to pass a fresh order on merits, considering all relevant issues, including the applicability of the first proviso to Section 11A of the Central Excise Act, 1944, and the amendments by the Finance Act, 2000. The court held that the Tribunal must address the issues uninfluenced by its earlier findings and ensure compliance with the principles of natural justice.

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