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TMI Blog2013 (4) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of manufacturing of plain particle boards and pre-laminated particle boards popularly known as 'Bagasse boards' which are goods falling under Chapter 44 of the First Schedule to the Central Excise Tariffs Act, 1985, has prayed for a writ upon the respondents, quashing and setting aside the order dated 21st December 2011 passed by the Commissioner of Central Excise, Customs and Service Tax, Surat-II and has also prayed for a further relief to declare that the goods manufactured by the petitioner, namely, Bagasse boards were chargeable to nil rate of duty under Serial No. 82(vi) of Table to Notification No. 6/2006-C.E. Introductory facts of SCA No. 2997 of 2012 4. By way of this petition, the petitioner, a private limited company engaged in the business of manufacturing of plain particle boards and pre-laminated particle boards popularly known as 'Bagasse boards' which are goods falling under Chapter 44 of the First Schedule to the Central Excise Tariffs Act, 1985, has prayed for a writ upon the respondents, quashing and setting aside the order dated 28th December 2011 passed by the Commissioner of Central Excise, Customs and Service Tax, Surat-II and has also prayed for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of duty. Petitioner wrote a letter dated 1st June 2006 requesting the Assistant Commissioner for clarification whether Bagasse boards manufactured by the petitioner were chargeable to nil rate of duty or not. 9. The petitioner did not receive any response from the excise authorities and, therefore, one more letter dated 26th June 2006 was addressed to the Assistant Commissioner showing therein names and details of five manufacturers of similar goods who were not paying any excise duty and clarification was once again sought by the petitioner from the Assistant Commissioner. 10. As there was no reply at the end of the Assistant Commissioner or from any other excise authorities, the petitioner started clearing their goods, namely, Bagasse boards at nil rate of duty. 11. It is the case of the petitioner that, however, they have been issuing central excise invoices for each of the clearances and the petitioner has also been submitting monthly reports as prescribed under the Central Excise Rules, 2002 showing therein the details of all the quantities of Bagasse boards cleared by the petitioner. 12. In response to the letters dated 1st June 2006 and 26th June 2006 as referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8% under another Notification No. 4/2006-C.E. A detailed representation was submitted by the petitioner dated 20th September 2007 to the Range Superintendent explaining as to how the goods in question being Bagasse boards were chargeable to nil rate of duty. The petitioner also submitted that the directions to pay duty @ 8% ad valorem was not legal and the petitioner also requested for a copy of the complete report of the Chemical Examiner. 20. On 7th/8th February 2008, the Preventive Officers of the Central Excise Department, all of a sudden, came down at the factory premises of the petitioner and seized not only the books and registers maintained by the petitioner but also the goods valued at Rs. 25,94,000=00 on the ground that they were liable for confiscation. The goods were handed over to the petitioner for safe custody with a direction not to dispose of or deal with the same without an order in writing from the Central Excise Officer. 21. Due to such action on the part of the authorities, the petitioner submitted a representation dated 8th February 2008 to the Commissioner, Surat-II and also requested the Assistant Commissioner, Ankleshwar vide order dated 12th February 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Ambica Meta Yarn Mfg. Co. v. Superintendent, Central Excise & others, reported in 1982 (2) GLR 155; and J.D. Patel v. Union of India, reported in 1978 (2) E.L.T. (J540) (Guj.)., we direct the respondents to release the goods seized under panchnama dated 7/8-2-2008, subject to the condition that the petitioner Company furnishes the bond for the amount of duty which may be leviable as per the Department's case at the rate of 8%, meaning thereby, the petitioners will be required to furnish the bond for the amount of duty (which may be leviable according to the Department) on the stock being cleared from time to time till the matter is decided pursuant to the show cause notice dated 20-6-2007 at Annexure-J to the petition. It is clarified that there is no interim stay against proceeding with the show cause notice and the adjudication thereon." 24. Despite the fact that vide order dated 28th February 2008 passed by the Division Bench of this Court the goods seized were ordered to be released, the authorities did not deem fit to adjudicate the issue and decided once and for all as to whether the petitioner was liable to pay the excise duty @ 8% ad valorem or not but, instead, kep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the case of the petitioner that all the orders referred to above passed by the Commissioner, Lucknow in case of Bajaj Eco-Tech Private Limited, Commissioner of Central Excise, Pune-III in case of Eco Board Industries Limited, and the order passed by the Joint Commissioner of Central Excise, Kolhapur in case of Vilson Particle Boards Industries Limited have been accepted by the Central Excise department and all these manufacturers are allowed to clear similar goods at nil rate of duty under Notification No. 6/2006-C.E. even as on today. 30. It is the case of the petitioner that the above referred orders were brought to the notice of respondent no. 2 herein but still respondent no. 2, vide order dated 21st December 2011, confirmed the demand of duty raised under all the eight show-cause notices with interest and penalty for each of the show-cause notices. The respondent no. 2 held that the goods in question were particle board, though made of sugarcane Bagasse and classifiable under S.H. 44103210 and 44109090 of the Tariff, but were not chargeable to nil rate of duty because the petitioner had not discharged the burden to prove that the exemption of Notification No. 6/2006-C.E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner deliberately cleared their finished goods such as plain and pre-laminated particle boards without payment of central excise duty and upon claiming exemption under Notification No. 6/2006-C.E., dated 1st March 2006 after crossing the SSI exemption limit of Rs. 1 crore. According to the respondents, the petitioner cleared the final product without payment of central excise duty by way of wrong availment of Notification No. 6/2006-C.E., dated 1st March 2006 (Serial No. 82) instead of making payment of duty as per Notification No. 4/2006-C.E., dated 1st March 2006 (Serial No. 87), which is in contravention to Rule 11 and Rule 4 of the Central Excise Rules, 1944. 35. It is also the case of the respondents that as the petitioners were clearing the final product without payment of central excise duty by wrongly availing Notification No. 6/2006-C.E., dated 1st March 2006 (Serial No. 82) instead of Notification No. 4/2006-C.E., dated 1st March 2006 (Serial No. 87), which is in contravention to Rule 11 and Rule 4 of the Central Excise Rules, 1944, separate show-cause notices for different period were issued. The said show-cause notices were adjudicated by the adjudicating Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable to nil rate of duty. 39. According to the respondents, the say of the petitioner that the adjudicating Commissioner (respondent No. 2 herein) had no jurisdiction to take a different view than the one taken by the Commissioners at Sholapur, Pune, Lucknow, is devoid of any merit. Respondent No. 2, while passing the impugned order, has in detail discussed the procedure of manufacturing the final product by the petitioner. A specific reference to the dictionary meaning to the product as well as prescription of Law and precedent is made in the impugned order. All these elements are absent in the cases decided by the adjudicating Commissioners which are relied upon by the petitioners. According to the respondents, the decision rendered by a Commissioner has no precedent value. The adjudicating Commissioner is bound by a decision of the Tribunal or Hon'ble High Court or Hon'ble Supreme Court but, in any case, not bound by a decision rendered by a Commissioner of any other state. It is also not correct to contend that except in the State of Gujarat in all other regions of the country Bagasse boards are permitted to be cleared at nil rate of duty by applying exemption Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sse boards then they are specifically covered under Serial No. 82(vi) of Notification No. 6/2006-C.E. and hence are chargeable to nil rate of duty. If the goods of the petitioner are similar to the goods of other manufacturers of different States to whom benefit of Notification No. 6/2006-C.E. is allowed and decisions allowing such benefits are accepted by the C.B.E. & C. as well as by the committees of Chief Commissioner and Commissioners, then under such circumstances the Commissioner in charge of one particular area i.e. Surat Commissionerate could not have taken a different view in the matter. According to Mr. Dave, the goods are admittedly manufactured using sugarcane Bagasse and this fact is confirmed by the Chemical Examiner of the department itself. In the show-cause notice as well as in the impugned order passed by the Commissioner, the goods are described as plain particle board and pre-laminated particle board made of sugarcane Bagasse. The raw-material is, thus, admittedly sugarcane Bagasse and other materials like synthetic resins and decorative paper are also used because sugarcane Bagasse being agro-waste could not be converted into Bagasse board without using any bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various materials in addition to sugarcane Bagasse were admittedly used by this manufacturer; and thus the goods as well as their description have been absolutely similar to the goods manufactured by the petitioners. 48. Mr. Dave further submitted that the goods manufactured by Vilson Particle Board Industries Ltd., District Kolhapur are described as "Bagasse based Plain and Pre-laminated Particle Boards" falling under Chapter Heading No. 4410 in the order passed by the Joint Commissioner of Central Excise, Kolhapur. It is recorded in the order that this manufacturer was also paying excise duty prior to 1st May 2006 under Notification No. 4/2006 (Serial No. 87) and thereafter the exemption of "Bagasse Board" under Serial No. 82 of Notification No. 6/2006 was claimed for the products "Plain or Pre-laminated Particle Board". At para 2.1 of the order also, the goods are described as Bagasse Boards commonly known as Particle Boards. Thus goods manufactured by this manufacturer of the State of Maharashtra have also been absolutely similar to the goods of the petitioners herein, and the goods were described also by this manufacturer of Maharashtra as Plain and Pre-laminated Particle Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of sugarcane Bagasse, and therefore the respondents' twin submission that the petitioners' goods were not Bagasse Board (because in addition to sugarcane Bagasse, the petitioners use resins and decorative paper) and that the goods of the petitioners were not similar to the goods manufactured by other manufacturers of Maharashtra, Uttar Pradesh, Hyderabad etc. is wholly illegal and incorrect. 52. Mr. Dave further submitted that the Central Excise is a central levy and therefore it has to be collected uniformly from all similarly situated manufacturers located all throughout the country. If excise authorities of a particular Commissionerate or State do not allow benefit of exemption to manufacturers located in that Commissionerate or State but other manufacturers located elsewhere are allowed such exemption, then there is a violation of Article 14 of the Constitution and also that of Article 19(1)(g) of the Constitution. Article 14 forbids discrimination among similarly situated citizens, and Article 19(1)(g) forbids unreasonable restriction on the fundamental right of doing business. Allowing exemption for Bagasse Board manufactured by citizens located in the States of Maharashtr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 22nd September 2009 by Chief Commissioner, Pune and also dated 7th January 2010 by the Chief Commissioner, Pune are referred to in the order of the Commissioner, Pune-III Commissionerate. The details of the decision of the committee of Commissioners and the Department taken after April 2010 when the Commissioner (Appeals), Pune passed orders allowing benefit of the notification for similar goods to Jolly Board and Eco Board Industries Ltd. are also recorded in the order of the Joint Commissioner of Central Excise, Kolhapur. Thus, all these developments have taken place after the Excise authorities of Bhopal Commissionerate denied exemption in January 2009 and May 2009 and, therefore, the respondent's contention that benefit of Notification No. 6/2006 is denied for similar goods in Bhopal Commissionerate is also incorrect and unjustified. The letters issued by various Chief Commissioners and the decisions taken by the committees of Chief Commissioners in allowing the exemption for similar goods and in not filing appeals against orders rendered in favour of manufacturers of Uttar Pradesh, Madhya Pradesh and Hyderabad are based on the clarification issued by the Government of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Chief Commissioners and Commissioners not having been followed; the order of the Commissioner, Surat is without jurisdiction and without any authority in law, and therefore a writ petition under Article 226 of the Constitution of India against such unauthorized action resulting in violation of the petitioner's fundamental rights is maintainable. 58. In support of the aforesaid contentions, Mr. Dave relied upon the following case-law :- (i) Ralli Engine Limited v. Union of India and Others [2004 (62) RLT 607 (Gujarat)] (ii) Ralli Engine Limited v. Union of India and Others [2006 (72) RLT 721 (Gujarat)] (iii) Ambica Meta Yarn Manufacturing Company v. Superintendent, Central Excise and Others [1982 (2) GLR 155 = 1982 (10) E.L.T. 244 (Guj.)] (iv) J.D. Patel v. Union of India [1978 (2) E.L.T. 540 (Gujarat)] (v) Paper Products Limited v. Commissioner of Central Excise [1999 (112) E.L.T. 765 (S.C.)] (vi) Union of India v. Aravali Mining and Chem (India) Pvt. Ltd. [2000 (115) E.L.T. 279 (S.C.)] (vii) Whirlpool Corporation v. Registrar of Trade Marks [(1998) 8 SCC 1] IV. Legal Contentions on behalf of the Respondents 59. Mr. R.J. Oza, learned senior counsel appearing for the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial identity and are known as such in common trade parlance and, therefore, the petitioner's contention regarding the product known as "Bagasse board" is incorrect. Mr. Oza submitted that, therefore, their product is not entitled for exemption under Notification No. 6/2006-C.E., dated 1st March 2006 (Serial No. 82) at nil rate of duty, but it attracts 8% effective rate of duty under Notification No. 4/2006-C.E., dated 1st March 2006 (Serial No. 87) as it is more specific than Serial No. 82 of Notification No. 6/2006-C.E., dated 1st March 2006. Mr. Oza further submitted that clarification dated 25th June 2007 made by the Board could not be construed as an order under Section 37B of the Act and, therefore, it only being a letter written by the Board to the Chief Commissioner of Patna, the clarification made thereunder was not binding to the Central Excise officers. Mr. Oza, during the course of his submissions, relied upon specimen orders issued by the Board under Section 37B of the Act to substantiate that a reference to Section 37B of the Act is always made in the order passed by the Board if it was under that section and only such order passed under Section 37B of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the main issue, we propose to deal with the preliminary contention of Mr. Oza, learned senior counsel appearing for the Revenue as regards the maintainability of this petition on the ground of alternative efficacious remedy available to the petitioner in the form of an appeal under Section 35G of the Act before the Appellate Tribunal. 65. It is true that power of the High Court to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and cannot be curtailed by other provision of the Constitution of India or a Statute but the High Courts have imposed upon themselves certain restrictions on the exercise of such power. One of such restrictions is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction under Article 226 of the Constitution of India. But again, this rule of exclusion of writ jurisdiction on account of availability of an alternative remedy does not operate as an absolute bar to entertain a writ petition but is a rule of discretion to be exercised depending on the facts of each case. On this aspect, the following observations by the Constitution Bench of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner that the controversy in the instant case centres around the issue, that if the goods in question are chargeable to nil duty in other States of the country and if such a decision has been accepted by the department, then whether the petitioner who is a businessman carrying on business within the State of Gujarat could be asked to pay duty @ 8% ad valorem on the same goods. 68. We find substance and merit in the contention of Mr. Dave that in this country of stiff competition it would be virtually very difficult for the petitioner to survive in the business. Companies manufacturing pre-laminated plain particle board made of Bagasse in other States of the country have not to pay any duty, whereas for the same product the petitioner in this particular State is being asked to pay duty of 8% ad valorem. It is for this reason that we are of the view that this writ petition seeks enforcement of fundamental right to carry on trade or business without any discrimination of any nature. The present petition is not the one in which the controversy centres around the issues which are primarily questions of fact. 69. In Union of India v. T.R. Varma, reported in AIR 1957 SC 882, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellate or revisional authority), viz. : (1) Where the excise authorities of other States are accepting the interpretation canvassed by the assessee. In such cases the assessee will not be able to withstand the competition in the market and the industry in the State will suffer serious handicap and may even get mauled: (2) In a case where a product is for being assessed under one entry several years in the past and the department has accepted the position for all these years but abruptly changes its stance without there being any legislative change." "Only in such rare cases the Court might possibly entertain a petition made without recourse to the machinery provided by the Act." VI. We shall now look into the case-law relied upon by the Revenue on the point of alternative remedy 74. In Union of India v. Guwahati Carbon Limited (supra), the Supreme Court, in the facts of the case, made the following observations : "We reiterate that the High Court, under Article 226 of the Constitution of India, has vast powers as this Court has under Article 32 of the Constitution of India, but such powers can only be exercised in those cases where the statutory authority has not acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of the record, much less of an error of law. In exercising the supervisory power under Article 227 of the Constitution, the High Court does not act as an Appellate Court or the Tribunal. It is also not permissible to a High Court on a petition filed under Article 227 of the Constitution to review or re-weigh the evidence upon which the inferior Court or Tribunal purports to have passed the order or to correct errors of law in the decision. 8. For the aforesaid reasons, we are of the view that since the insurer has a remedy by filing an appeal before the High Court, the High Court ought not to have entertained the petition under Article 226/227 of the Constitution and for that reason, the judgment and order under challenge deserves to be set aside. We, accordingly, set aside the judgment and order under appeal. The appeal is allowed. There shall be no order as to costs. However, it would be open to the insurer to file an appeal if it is permissible under the law." 78. In the aforesaid decision of the Supreme Court, the contention before the Bench was that under Section 173 of the Motor Vehicles Act, 1988 a remedy by way of appeal to the High Court was available to the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is filed against the judgment of the Delhi High Court dismissing the writ petition. The writ petition was filed against the show cause notice issued by the Central Excise department to the petitioner. The High Court has dismissed the writ petition mainly on the ground that it does not wish to entertain the writ petition against the show cause notice. We cannot say that the High Court was not right in doing so. The High Court took note of the fact that the adjudication order has already been passed in the matter, against which the petitioner had a right of appeal which he did, in fact, avail of. The petitioner shall pursue the remedy of appeal before the Tribunal. The special leave petition is accordingly dismissed. No costs." 83. This judgment would also not help the Revenue as in the facts of the case the Supreme Court took the view that petitioner should pursue the remedy of appeal before the Tribunal. As a matter of fact, no facts have been discussed in the judgment, more particularly, as to what was the actual issue involved. 84. In Union of India v. Zalcon Electronics (supra), the Supreme Court in a very short order made the following observations : "In our view, writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations 89. When Notification No. 4/2006 (relied upon by the Revenue) and Notification No. 6/2006 (claimed by the petitioners) are considered, it becomes clear on plain reading of these Notifications that Notification No. 6/2006 is specific for Bagasse Board because these goods are specifically covered at Serial No. 82(vi) of table to this Notification. Therefore, Bagasse Board is most specifically covered under this Notification and is chargeable to nil rate of duty. 90. Notification No. 4/2006 is a general Notification for "all goods" covered under Heading 4410 or 4411. Since various types of boards are covered under these two headings, all goods covered under these two headings are allowed concessional/reduced rate of duty at Serial No. 87 of table to this Notification No. 4/2006. Bagasse Board are also goods covered under Heading No. 4410 and therefore they may also qualify for concessional rate of duty under this Notification, but a manufacturer manufacturing Bagasse Board cannot be denied nil rate of duty specifically provided by the Central Government for Bagasse Board under another Notification i.e. 6/2006. 91. It is a matter of choice of the manufacturer to opt for a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner, Surat has no jurisdiction to deny this exemption by holding that these goods were covered under the other Notification No. 4/2006 and hence excise duty at reduced rate was available. 94. The only finding recorded by the Commissioner in the impugned order is that Entry 82 of Notification No. 6/2006 is specific and covers only "Bagasse Board", and Entry No. 87 of Notification No. 4/2006-C.E., dated 1-3-2006 covers "Plain or Pre-laminated Particle or Fiber Board made from sugarcane Bagasse or other agro-waste". On this basis, the Commissioner has held that the goods in question were covered under the above long description against Entry No. 87 of Notification No. 4/2006, but this finding is perverse because the above description has been deleted by the Central Government by substituting an expression "all goods", and therefore the Commissioner had no jurisdiction to still decide the case against the petitioners relying on an expression in the Notification which has already been deleted and substituted by the Central Government, more so when the deletion and substitution were for making it abundantly clear that Notification No. 4/2006 was for "all goods" of Heading 441 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, to manufacturers within their jurisdiction. 97. On the other hand, Mr. Oza, learned senior counsel vehemently submitted that the clarification dated 25th June 2007 was only a letter and was not binding to the Excise authorities because the same was not issued under Section 37B of the Act. To demonstrate that format of orders issued under Section 37B of the Act was altogether different, Mr. Oza made available for perusal of this Court two documents being Circular No. 965/8/2012-CX., dated 17th April 2012 and F.No. 390/Misc/100/2010-JC, dated 22nd September 2011. It was contended that letters issued for the purpose of clarifying admissibility of benefit of Notification No. 6/2006 could not be termed or construed as an order issued under Section 37B and, therefore, such letters were not binding to the Commissioner, Surat who was within his jurisdiction to take an independent view of the matter. 98. We are afraid, we are unable to accept the submission of Mr. Oza on this count. First, any clarification issued by the Board, in our view, is binding to the Central Excise Officers who are duty-bound to observe and follow such circulars. Whether Section 37B is referred to in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how a particular issue was required to be dealt with. 103. We have also noticed that the clarifications in the present case were followed by the Central Excise Officers in charge of the Commissionerate in Uttar Pradesh, Maharashtra, Andhra Pradesh, etc. The communications were issued by the Board to the Chief Commissioner of Patna, Chief Commissioner of Hyderabad and Chief Commissioner of Pune. 104. Under such circumstances, when other Central Excise authorities of equal and higher rank have followed and acted as per the clarifications, the Commissioner, Surat, could not have taken a contrary view on the assumption that the clarifications were only letters and not orders under Section 37B. Therefore, in our view, the action on the part of the respondents in denying the benefit of Notification No. 6/2006 being contrary to the Board's Circulars can be termed as without jurisdiction. 105. Mr. Dave is quite justified in submitting that the Central Excise is a central levy and, therefore, such a levy has to be collected uniformly from all similarly situated manufacturers located all throughout the country. If Excise authority of a particular Commissionerate or State refuses to allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gasse Board, is chargeable to nil rate of duty under Serial No. 82(vi) of Table to Notification No. 6/2006-C.E. The bond which was furnished at the time of release of the goods vide interim order passed by this Court dated 28th February 2008 for the amount of duty which may be leviable as per the department's case @ 8% on the stock being cleared from time to time till the matter is decided finally stands discharged. (B) Special Civil Application No. 2997 of 2012 is allowed. The order passed by respondent No. 2, the Commissioner of Central Excise, Customs and Service Tax, Surat-II, dated 28th December 2011 bearing OIO No. 10-12/Dem/Surat/2011 is hereby quashed and set-aside. It is declared that the goods manufactured by the petitioner, namely, Bagasse Board, is chargeable to nil rate of duty under Serial No. 82(vi) of Table to Notification No. 6/2006-C.E. (C) Special Civil Application No. 1667 of 2012 is hereby allowed. The panchnama and detention memo dated 25th January 2012 under which the goods in question was seized is hereby quashed and set-aside. (D) Respondents are hereby directed to release the goods and documents detained and seized respectively vide the detention memo d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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