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TMI Blog2010 (9) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal relating to the determination of any question having relation to the rate of duty of excise or to the value of goods for the purposes assessment lies to the Supreme Court under Section 35L(b) the Act and not to the High Court under Section 35(G). Captive consumpion of LSHS - All these questions relate to determination of rate of duty payable, the value of goods manufactured and entitlement of exemption under notification. They have to be decided by the Apex Court in an appeal preferred under Section 35L(b) of the Act and not by the High Court in an appeal preferred under Section 35(G) of the Act. The learned counsel for the assessee is justified in contending that this appeal preferred by the Revenue challenging the order passed by the Appellate Tribunal holding that the impugned goods are not excisable and accordingly, setting aside the levy of duty and the demand notice issued by the department is not maintainable before the High Court. - Appeal dismissed. - 6 of 2007 - - - Dated:- 1-9-2010 - N. Kumar and H.S. Kempanna, JJ. REPRESENTED BY : Smt. Veena Jadhav, Advocate, for the Appellant. Shri Rajesh Chander Kumar and Ms. Yovini Rajesh, Advocates, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid order, the assessee appealed to CEGAT. The Tribunal by its Final Order No. 423 to 425/02, dated 14-3-2002 remanded the matter for de nova adjudication. After such remand while adjudicating the de nova order, apart from three show cause notices which was subject matter earlier, three more show cause notices for subsequent period were also taken up for consideration. The Commissioner of Central Excise, Mangalore, vide order-in-original No. 4/03, dated 26-2-2004 confirming the demand and duty, imposed penalty under Rule 173Q of the Rules r/w. Section 11AC of the Act. Interest under Section 11AB of the Act was also demanded. Aggrieved by the said orders, the assessee preferred an appeal to CESAT. In a similar case in respect of the order-in-original No. 11/2001, dated 27-4-2001 duty of Rs. 52,21,049/- was confirmed and penalty of Rs. 5,00,000 was imposed on the assessee by the Assessing Authority against which the assessee filed an appeal before the Commissioner of Appeals. The appeal was dismissed upholding the demand. Therefore, the assessee preferred appeal to the CESTAT both against the appellate order as well as the original order. 5. The specific case pleaded by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as well as the demands were set aside by allowing the appeal. Aggrieved by the said order, the Revenue is in appeal. 8. The learned counsel for the Revenue assailing the order of the Tribunal contended that, it is not in dispute that the impugned product satisfies the requirement of LSHS which is excisable. Therefore, the finding of the Tribunal that it is not excisable on the ground that it is not marketable is erroneous and requires to be set aside. Secondly, it was contended that the material on record clearly establishes a portion of the final product was utilised for construction activity, lighting a residential layout and also sold to M/s. Hindustan Gas Industries Ltd., a Public Ltd. Co. and therefore, it was not used for captive generation. The demand raised is only to that extent and the exemption notification is not attracted to the said portion of the demand and therefore, she contends the impugned order requires to be set aside. 9. Per contra, the learned counsel appearing for the assessee raised a preliminary objection regarding the maintainability of the appeal before this Court. He contended that this appeal is filed under Section 35G of the Act. It is clear fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid contention, firstly it is necessary to see the statutory provisions as contained in Sections 35G and 35L which reads as under : 35G. Appeal to High Court - (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. 35L. Appeal to the Supreme Court - An appeal shall lie to the Supreme Court from - (a) any judgment of the High Court delivered - (i) in an appeal made under Section 35G; or (ii) on a reference made under Section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under section 35H, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or (b) any order passed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the determination of any question having a relation to the rate of duty of excise or to the value of goods, cannot be the subject matter of appeal before the High Court. By the use of the word among other things it is made clear, even order which may not be directly related to the rate of duty or the value of goods, however which are intermingled with those matters are also excluded. In other words those are not the only orders contemplated by the legislation. In order to understand the width and depth of the orders covered under these words, it is necessaiy to know the meaning of assessment . What is Assessment? 15. The word assessment is used as meaning sometimes the computation of rate of duty, sometimes the assessable value of goods and sometimes the whole procedure laid down under the Act for imposing duty liability upon the manufacturer or importer. The word assessment is, thus, capable of bearing a very comprehensive meaning; in the context, it can comprehend the whole procedure for ascertaining and imposing duty liability. 16. The Privy Council in the case of Commissioner of Income Tax v. Khemchand Ramdas has observed as under :- One of the peculiarities o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such amount . The process of re-assessment is to the same purpose and is included in the connotation of the term assessment . The reasons which led us to give a comprehensive meaning to the word assessment in section 13(1) of the Finance Act 1950, operate equally with regard to the saving provisions under present consideration. 19. The Supreme court in the case of C.A. Abraham v. Income-Tax Officer, Kottayam and Another explaining the meaning of the word assessment in the context of the Income Tax Act held as under :- A review of the provisions of Chapter IV of the Act sufficiently discloses that the word assessment has been used in its widest connotation in that chapter. The title of the chapter is Deductions and Assessment . The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18A deals with advance payment of tax and imposition of penalties for failure to carry out the provisions therein. Section 23A deals with power to assess individual members of certain companies on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or order sought to be appealed from must have the character of a judicial adjudication. Goods : 21. Yet another word which also assumes importance is the meaning of the word Goods . In the case of Union of India and Another v. Delhi Cloth and General Mills Co. Ltd. and Others reported in AIR 1963 SC 791 = 1977 (1) E.L.T. (J199) (S.C.), the Constitution Bench of the Supreme Court while construing the word goods held as under :- Moreover, the definitions of goods make it clear that to become goods an articles must be something which can ordinarily come to the market to be bought and sold. 22. In South Bihar Sugar Mills Ltd. and Another v. Union of India and Another reported in AIR 1968 SC 922 = 1978 (2) E.L.T. (J336) (S.C.) has held as under :- The Act charges duty on the manufacture of goods. The word manufacture implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. As the Act does not define goods, the legislature must be taken to have used that word, in its ordinary dictionary meaning. The dictionary meaning is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods so produced must satisfy the test of marketability. Consequently, it is always open to the assessee to prove that even though goods in which he was carrying on business were excisable goods being mentioned in the schedule, but they could not be subjected to duty as they were not goods either because they were not produced or manufactured by it or if they had been produced or manufactured, they were not marketed or capable of being marketed. Meaning of Rate of Duty 26. It is in this background we have to interpret the word rate of duty. The question is, what is the meaning attached to the rate of duty as mentioned under these provisions. In order to understand the word rate of duty and the dispute relating to that, it is useful to refer to the meaning assigned to the said word by the Parliament by way of an explanation to sub-section (5) by amendment Act 29/1988. The said amendment was intended to be brought into force from the date to be notified. However, it was not brought into force at all. Notwithstanding the same, in order to understand the meaning assigned to the word rate of duty by the Parliament as per the aforesaid intended amendment, the same could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of this section only. It is because the said explanation is added to Section 35E which deals with the power of revision of Board or Commissioner of Central Excise in certain case. In other words what is sought to be conveyed by the explanation is that the authorities while exercising the revisional jurisdiction shall not go into those questions. That in no way comes in the way of understanding the meaning of the phrases rate of duty . On the contrary it clearly sets out the intention of the legislature in so far as the meaning to be attributed to the said phrase. Therefore, the said meaning could be read into the phrase whereever it is used in the other parts of the statute, as held by the Apex Court in Navin Chemicals case [1993 (68) E.L.T. 3 (S.C.)]. It also would be in conformity with the interpretation placed on the said phrase by the Apex Court as well as the High Court, as is clear from the following decisions. 27. The Supreme Court had an occasion to consider the meaning of the word rate in Sundaram and Company (Private) Limited v. Commissioner of Income Tax, Madras [1967 VOL. 66 ITR 604] where it was held as under :- The assumption that the expressi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by the Appellate Tribunal would lie to the High Court except an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Section 35L(b) provides that an appeal against an order passed by the Appellate Tribunal relating among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment would lie to the Supreme Court. It is, thus, clear from the aforesaid proviso that an appeal against an order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment would lie to the Supreme Court and not the High Court. 31. The Apex Court In the case of I.T.C. Ltd. v. Collector of Central Excise, Patna reported in 1997 (94) E.L.T. 456 (S.C.) dealing with Section 35L(b) of the Central Excise Act, 1944 has held as under :- A perusal of the said clause shows that an appeal lies to this Court against an order passed by the Tribunal rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections in the case of Navin Chemicals Mfg. Trading Co. Ltd. v. Collector of Customs reported in 1993 (68) E.L.T. 3 (S.C.) under the Customs Act. The Apex Court held as under : The controversy, therefore, relates to the meaning to be given to the expression determination of any question having a relation to the rate of duty of customs or to the value of the goods for purposes of assessment . It seems to us that the key lies in the words for the purpose of assessment therein. Where the appeal involves the determination of any question that has a relation to the rate of customs duty for the purposes of assessment that appeal must be head by a Special Bench. Similarly, where the appeal involves the determination of any question that has a relation to the value of goods for the purposes of assessment, that appeal must be heard by a Special Bench. Cases that relate to the rate of customs duty for the purposes of assessment and which relate to the value of goods for the purposes of assessment are advisedly treated separately and placed before Special Benches for decision because they, more often than not, are of importance not only to the importers who are parties thereto but al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods. 2. At para 12 they concluded as under : This, then, is the test for the purposes of determining whether or not an appeal should be heard by a Special Bench of CEGAT, whether or not a reference by CEGAT lies to the High Court and whether or not an appeal lies directly to the Supreme Court from a decision of CEGAT : does the question requires determination have a direct and proximate relation, for the purposes of assessment, to the rate of duty applicable to the goods or to the value of the goods. 34. In the case of Commissioner of Customs, Chennai v. Jayathi Krishna and Company reported in 2000 (119) E.L.T. 4 (S.C.), the question involved was whether the assessee is liable to pay interest under Section 61(2) of the Customs Act. When the imposition of interest under the aforesaid provision was challenged before the Tribunal, the Tribunal held that DEEC Scheme having been made applicable to the goods in question, the question of payment of interest would not arise at all. Against the said order, the revenue preferred an appeal to the Supreme Court under Section 130E of the Act, which came to be dismissed. 35. In the case of Commissioner of Customs (Ex.), Mumbai v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay duty of customs at 50% + CVD at 15% ad valorem and the assessee was not entitled to concessional rate of duty under Notification No. 45/94-Cus., dated 1-3-1994 and the department was right in invoking Rule 8 of the Customs Valuation Rules. 39. In Commissioner of Customs, Tuticorn v. Edhayam Frozen Foods, reported in 2008 (230) E.L.T. 225 (Mad.), objection was taken regarding the maintainability of the appeal before the High Court under Section 130 of the Customs Act. It was held that the determination of question involved in this case does not have a relation to the rate of duty or the value of the goods for the purpose of assessment and therefore, the appeal was maintainable. The question involved therein was whether Prawn/Shrimp is also fish and liable to export cess under Agricultural Produce Cess Act, 1940. In coming to the conclusion they relied on the judgment of the apex Court in Navin Chemicals case wherein an observation was made that the case did not have a direct or proximate relation for the purpose of assessment either to the rate of duty applicable to the said goods or to the value thereof. All that the Additional Collector s order did was to confisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation between the taxable income and the tax charged is intended, but the relation need not be of the nature of proportion of fraction. The Explanation to sub-section (5) of Section 35E of the Central Excise Act, the expression includes the determination of a question relating to the rate of duty, to the value of goods for the purposes of assessment; to the classification of goods under the Tariff and whether or not they are covered by an exemption notification; and whether the value of goods for the purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, any decision on these aforesaid aspects not only affects the interest of the manufacturers who are parties thereto, but also to the manufacturers of those products throughout the country. In a country governed by Parliamentary legislation because of the territorial bifurcation in forming states and because of the divergent opinion which is possible, the excise duty payable would vary from place to place. In order to, bring uniformity in the levy of excise duty throughout the country and consequently to see that the country s finance is not affected, the Parliament has vested the jurisdiction to decide the disputes with the Apex Court. Therefore, we see a duty policy underlining this bifurcation of the jurisdiction between the Apex Court and the High Courts. All other matters other than what is set out above, which relates to the individual manufacturers and all disputes based on assessment orders which have attained finality, such as the benefits to which they are entitled to, refunds, duty drawbacks, rebates, etc., which relate to a particular manufacturer falls within the jurisdiction of the High Courts. 45. In so far as the contention that once the law is declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter was taken up for hearing the learned counsel for the respondent has raised a preliminary objection with regard to the maintainability of the appeal by stating that even if the question as to whether the activity of the respondent-assessee is held to be a manufacturing activity even then the rate of duty applicable for such a manufacturing activity has to be decided only by the Supreme Court in view of the express provisions in Section 35G r/w. Section 35L of the Central Excise Act. 47. It is not disputed by the learned counsel for the Revenue that, though such a contention raised by the assessee was recorded, as set out above, the learned Judge did not decide the question of maintainability at all. Without deciding the jurisdictional aspect the case was decided on merits as if they have got jurisdiction. Therefore, the learned counsel for the Revenue submits that the said judgment is an authority for the proposition that such an appeal is maintainable as by implication this Court in the said judgment has held the said issue against the assessee. We are afraid that such an inference is not possible. When a jurisdictional question is raised before a court or any authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty payable by the assessee for the period August 1998 to January 1999. Relying on the said judgment it was contended, to the extent the final product is used for construction activity and not a residential layout and sold to another public sector undertaking, the duty payable cannot be disputed and that question can be gone into by the High Court. 50. It was also contended that the Apex Court in the case of Commissioner, C.Ex. v. Gujarat Narmada Fertilizers Co. Ltd. reported in 2009 (240) E.L.T. 661 (S.C.) held where they were dealing with Low Sulphur Heavy Stock (LSHS) which is the impugned goods in this appeal also. That was a case where the CENVAT credit by the assessee was assailed. Aggrieved by the same, the assessee preferred an appeal before the CESTAT. The said appeals were referred to a larger Bench which by the impugned decision held that credit was admissible on LSHS used as fuel. Aggrieved by the said order, the Revenue preferred an appeal to the Apex Court under Section 35L(b) of the Act in which the Apex Court held that the CENVAT for duty paid on individual cases in the manufacture of exempted final products is not liable. Sub-rule (1) was applied in respect of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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