2010 (8) TMI 113 - HC - Central Excise

Exemption Notification- Assessee engaged in manufacture of processed fabric took benefit of exemption notification No.14/2002-CE dated 1.3.2002. Revenue declined the benefit on the ground that the processed fabric was manufactured from grey fabric which was exempted from payment of duty. High Court held that the question whether the assessee is covered by the Exemption Notification or not, relates to the rate of duty and, for determination of such question, appeal would not lie to the High Court under Section 35G of the Act and the only remedy with the assessee was to file appeal before the Supreme Court under Section 35L of the Act

Summary

Issues:
- Challenge to the order denying benefit under notification No.14/2002-CE
- Interpretation of Exemption Notification No.14/2002-CE
- Maintainability of the appeal under Section 35G of the Central Excise Act

Analysis:
The appellant, a manufacturer of 'Man-made Processed Knitted Fabrics,' contested an order by the Customs Excise and Service Tax Appellate Tribunal, upholding the denial of benefits under notification No.14/2002-CE. The appellant's manufacturing process attracted duty payments under the Central Excise Act. The Government had initially exempted processed fabric from duty exceeding 16% and later reduced the duty rate to 12% through notification No. 14/2002-CE. However, a demand was raised against the appellant, claiming that the processed fabric, manufactured from exempted grey fabric, was not eligible for the benefits of the said notification.

The appellant's appeal was partly accepted by the Tribunal. During the proceedings, the appellant's counsel referred to a similar case where it was deemed that appeals challenging the entitlement to exemption notifications were not maintainable in the High Court under Section 35G of the Act. Citing precedents, it was argued that such matters fell under the purview of the Supreme Court for appeal under Section 35L. Relying on judgments in Commissioner of Central Excise Ludhiana vs. A.S.T. Paper Mills Ltd. and Commissioner of Central Excise, Panchkula vs. Special Machine, the Court concluded that the current appeal was not maintainable in the High Court and should be presented before the Supreme Court for adjudication.

In light of the above, considering the precedent set in C.E.A. No.10 of 2010, the High Court found the instant appeal to be not maintainable under Section 35G of the Act. Consequently, the appeal was ordered to be returned to the appellant for presentation before the appropriate jurisdiction, emphasizing that the only remedy available was to file an appeal before the Supreme Court under Clause (b) of Section 35L of the Act.