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TMI Blog2016 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Whether the clearances made by the respondent for the period under consideration, in fact, exceeded the limit stipulated under the exemption notification or were within such limit - Held that:- the question of applicability of the exemption notification does not arise, inasmuch as, it is not the case of the revenue that the assessee is not entitled to the benefit of the exemption notification. At the cost of repetition, it is reiterated that the only question that arises for consideration in these appeals is as to whether the clearances made by the assessee for the period under consideration have exceeded the limit specified for being entitled to the exemption notification. The controversy involved in the present cases does not relate to the determination of any question having a relation to the rate of duty or value of goods for the purposes of assessment, and as such, the appeals have rightly been filed before this court under section 35G of the Act. - Decided against the revenue - TAX APPEAL NO.548 of 2015, TAX APPEAL NO.516 of 2015, TAX APPEAL NO.549 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... removals have been made and that if the clearances are clubbed together, the respondent is not entitled to exemption. It was contended that any issue with regard to rate of duty can be one of fact or law. Any issue which leads to the levy of additional duty or which renders clearances dutiable is necessarily a question having relation to the rate of duty and it might not be necessary to restrict the interpretation of a notification or tariff. It was submitted that various High Courts have taken a view in the context of factual aspects and even if a view is taken that it is a case of clandestine removal, if the issue is one of availment of an exemption notification, it is a question relating to the rate of duty. 5.1 In support of his submissions, the learned counsel placed reliance upon the decision of the Andhra Pradesh High Court in the case of Sridhar Paints Co. Pvt. Ltd. v. Commr. of Cus. C. Ex., Hyderabad-III, 2009 (246) E.L.T. 29 (A.P.), wherein the court had considered the contents of the show-cause notice issued in that case and had found that the second show-cause notice also related to the question as to whether the company was entitled to claim the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing common financial status and when the capital goods were purchased in the name of the old unit who had also availed credit of duty paid thereon, can be treated as an independent factory for allowing the benefit of the exemption notifications referred to therein. An objection was raised to the maintainability of the appeal before the High Court under section 35G of the Act as the issue raised was that the assessee was not entitled to the benefit of the exemption notification. The court, after referring to the decision of the Supreme Court in the case of Navin Chemicals Manufacturing and Trading Co. Ltd. (supra), observed that it has been categorically held in that decision that the expression determination of any question having relation to the rate of duty or to the value of goods for the purposes of assessment used in the other part should be interpreted similarly. It was further observed that a dispute as to whether or not the assessee is covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for the purpose of assessment. The court observed that in view of the above legal position, the substantial question raised in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 35L of the Act and the High Court under section 35G of the Act cannot go into the said question. 5.5 Reference was made to the decision of the Karnataka High Court in the case of Commissioner of Central Excise, Bangalore-II v. Bremels Rubber Industries Pvt. Ltd., 2011 (269) E.L.T. 45, wherein the order passed by the Tribunal holding that the confirmation of demand on clandestine removal of goods from the factory premises of the assessee does not hold any merit as there was no evidence before it to show that the goods which were alleged to have been clandestinely removed were in fact manufactured by the assessee in the absence of any flow of raw materials from the so called units from whom the purchases were recorded by the assessee. The court was of the view that the substantial question was as to whether these goods were manufactured by the assessee and were excisable. According to the court, the said questions fall within the phrase among other grounds, for determination of rate of duty for value of goods which the apex court alone is exclusively entitled to decide. 5.6 Reference was also made to the decision of the Karnataka High Court in the case of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies an answer with regard to rate of duty and excisability of the goods, in effect and substance, the entire case relates to rate of duty if one of the questions relates to the rate of duty. It was submitted that as to whether clearances from Jambusar and Vadu units can be clubbed is a question relating to rate of duty. It was, accordingly, urged that the appeals deserve to be dismissed on the ground of maintainability alone and the appellant is required to be relegated to avail of the remedy before the Supreme Court under section 35L of the Act. 6. On the other hand, Mr. R.J. Oza, learned senior standing counsel for the appellant, submitted that these are appeals under section 35G of the Act. If the substantial question of law raised in the appeals does not relate to the rate of duty or value of goods, the High Court has the jurisdiction to entertain and decide the appeals. Reference was made to the common question proposed in all the appeals to point out that the said question does not in any manner relate to the determination of any question having relation to the rate of duty or value of goods. Referring to the show-cause notice issued to the respondent, it was pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. 7. For the purpose of appreciating the nature of the controversy in issue in the appeals, it would be necessary to refer to the question as proposed by the appellant, which is common in each of the appeals and reads thus:- [a] Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law to set aside demand of duty, interest and imposition of penalty imposed on the respondent assessee on the ground that charges leveled against him are not proved, in ignorance of relevant material and evidence placed on record in the adjudication while confirming demand and proposal made in the show cause notice by the adjudicating authority? The question raised, therefore, is whether the demand of duty, interest and penalty, have been rightly set aside on the ground that the charges levelled against the respondent assessee are not proved. A perusal of the show-cause notice dated 17th November, 2004 issued to the respondent reveals that the charge levelled against the respondent is that the respondent is engaged in illicit manufacture and clandestine removal of Ceramic Glaze Fritz on which central excise duties were not paid by it. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and these appeals arise out of the impugned order of the Tribunal. As can be seen from the impugned order, the Tribunal, upon appreciation of the evidence on record, has found that the charges of clandestine removal against the respondent do not stand proved and consequently, the clearances do not exceed the limit provided for availing of the benefit under the exemption notification and the respondent is, therefore, entitled to the benefit of SSI exemption for the year under consideration. 9. Section 35G of the Central Excise Act, 1944 makes provision for appeal to the High Court. Sub-section (1) of section 35G which is relevant for the present purpose reads thus: 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. Section 35L of the Act provides for appeal to Supreme Court. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber and one technical member, subject to the provisions of sub-section (4). Sub-section (4) carves out an exception to the general provisions of sub-section (2) and provides that a member of CEGAT sitting singly can hear appeals in the matters enumerated therein provided that they are not cases where the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment is in question. 7. 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 goods for purposes of assessment . It seems to us that the key lies in the words for purposes 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 heard 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 purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of assessment. Under the relevant exemption notification, an SSI unit is not entitled to the benefit thereof for the clearances exceeding rupees one crore. The respondent being an SSI unit, its entitlement to the benefit of the exemption notification is not otherwise in dispute. The only question involved in this case is a pure question of fact as to whether the clearances made by the respondent for the period under consideration, in fact, exceeded the limit stipulated under the exemption notification or were within such limit. 14. The Central Excise Act is an Act relating to central duties of excise on goods manufactured or produced in certain parts of India. By its very nature, therefore, in any matter relating to central excise, it is but natural that the same would in some manner or other touch the question of central excise duty. However, what is taken out of the ambit of the jurisdiction of the High Court are orders relating, among other things, to the determination of any question having relation to the rate of duty of excise or to the value of goods for the purposes of assessment. In the facts of the present cases, the question involved does not relate to any iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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