1997 (11) TMI 223 - AT - Central Excise

Summary

Issues:
1. Whether the goods in question fall under the definition of manufacture under Section 2(f) of the Act.
2. Whether the activity undertaken by the appellants amounts to manufacture of snuff on which duty is payable.
3. Whether the appellants are liable to pay duty on the resultant snuff.
4. Whether the matter should be referred to the High Court for its opinion.

Analysis:

1. The Reference Application sought to refer questions to the High Court regarding the application of Re-Chapter Note to T.I. No. 24, contending that the goods do not meet the definition of manufacture under Section 2(f) and, therefore, Section 3 as the charging Section is not attracted. The consultant for the appellant argued that the issue is whether the goods are excisable, not the rate of duty. The goods were snuff purchased in bulk, mixed, and sold in various packages without paying duty. The Tribunal found that the activity did not amount to manufacture under Section 2(f) and that the resultant products would not be liable to duty, reducing the penalty imposed.

2. The appellants were accused of manufacturing snuff without paying duty, leading to a show cause notice and subsequent adjudication confirming duty payment and imposing a penalty. The Tribunal considered Note 2 of Chapter 24 and arguments from both sides, ultimately ruling that the activity did not constitute manufacture. While the duty amount was confirmed, the penalty was reduced. The Tribunal's decision was based on the interpretation of the excisability of the product and the applicability of duty.

3. Section 35G of the Act provides for the reference of questions of law arising from orders, excluding those related to duty rates or goods' value for assessment purposes. The Tribunal clarified that if the matter relates to duty rates or goods' value, no reference lies, as it would impact the rate of duty. The Tribunal cited precedent to support the broad interpretation of the words 'relating to or in relation to,' emphasizing that these terms are comprehensive and not restrictive. Consequently, the application to refer the matter to the High Court was rejected, and the party was advised to appeal to the Supreme Court if needed.

In conclusion, the Tribunal's judgment clarified the excisability of the product, the definition of manufacture under Section 2(f), and the limitations on referring questions to the High Court. The decision highlighted the importance of interpreting statutory provisions in a comprehensive manner and provided guidance on the appropriate course of action for parties dissatisfied with Tribunal rulings.