2009 (10) TMI 356 - HC - Central Excise

Maintainability- Rate of duty- Whether exemption can be granted under Notification No. 202/88 when the party debits the credit availed on the inputs after the removal of the finished product? Held that- the phrase determination of a rate of duty has been deemed to include the question whether any goods are covered or not covered by a particular notification issued by the Central Government granting total or partial exemption from duty. The question sought to be referred falls within the ambit of sub-clause (d) of Section 35E(5). This definition would also have to be read into Section 35-G of the Act and, therefore, reference was not rightly made to this Court- The petition for making reference is accordingly rejected.

Summary

Issues:
1. Refusal by CEGAT to refer a question of law under Section 35-C of the Central Excise Act, 1944.

Analysis:
The High Court of Himachal Pradesh dealt with a petition under Section 35-G(1) of the Central Excise Act, 1944, challenging the order of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) that declined to refer a specific question of law for the opinion of the High Court. The question in contention was whether exemption could be granted under Notification No. 202/88 when the party debits the credit availed on the inputs after the removal of the finished product. The CEGAT refused to refer the matter citing that such a question could not be referred under Section 35-C of the Act. The provisions of the Excise Act at the relevant time allowed for the reference of a statement of case to the High Court under Section 35-C, which primarily dealt with questions related to the determination of the rate of duty of excise or the value of goods for assessment purposes.

The Tribunal's rationale for refusing the reference was based on the belief that since the matter involved the determination of the rate of duty, no reference could be made. However, the petitioner contended that the issue at hand was whether the assessee was entitled to benefit from Notification No. 202/86, which did not directly pertain to the rate of duty determination. The petitioner highlighted Section 35E(5) sub-clause (d) of the Central Excise Act, which clarified that the determination of a rate of duty also encompassed questions regarding whether goods were covered by a specific notification granting exemption from duty. Therefore, the question sought to be referred fell within the scope of sub-clause (d) of Section 35E(5), indicating that the reference should have been allowed.

Upon a careful examination of the relevant legal provisions, the High Court concluded that the phrase "determination of a rate of duty" included inquiries about goods covered by notifications granting exemption from duty. As such, the question raised by the petitioner was deemed to fall within this definition. Consequently, the Court rejected the petition for making a reference, affirming that the matter did not warrant a referral to the High Court under Section 35-G of the Act.