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TMI Blog2017 (4) TMI 695X X X X Extracts X X X X X X X X Extracts X X X X ..... estion would arise as to whether the duty payable was completely exempted by way of a notification. By virtue of sub-section (2) to Section 35L, the courts are obliged to proceed on the basis that a decision relating to “taxability” or “excisability” is to be treated as a question which has a relation with the rate of duty. This is virtually a deeming provision and, therefore, we need not actually explore the question even as to whether it really has a relation with the rate of duty. The appeals are not maintainable for the reason that the appeals are maintainable only before the Supreme Court under Section 35L of the Excise Act in the context of the interpretation we have placed on the words “taxability” and “excisability”. We need not, therefore, further explore the question whether de hors sub-section (2), the case would fall under sub-section (1) of Section 35G or Section 35L, as the case may be. Appeal dismissed being not maintainable. X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption benefits under Notification No. 50/2003-CE dated 10.06.2003 as a new industrial unit. The SSI Registration showing the product ACSR Conductor being endorsed w.e.f. 01.04.2003 was made available (photocopy). The Company addressed another letter dated 27.11.2003 giving description of the goods and giving the date on which the option under Notification No. 76/2003 dated 05.11.2003 was exercised, which was 20.07.2003. It was stated that the unit was a new one. A clarification was sought by the Superintendent of Central Excise vide letter dated 06.08.2004 in regard to the discrepancy noted in letters dated 11.07.2003 and 27.11.2003, as, while on the one hand, in letter dated 11.07.2003, 01.04.2003 was intimated as the date of production of the Conductors, on the other hand, in letter dated 27.11.2003, 20.07.2003 was shown as the date on which the option under the Notification was exercised. Response from the Company came in the form of communication dated 17.08.2004, wherein it inter alia stated that the Company had commissioned the plant and machinery for the manufacture of ACSR Conductors in the month of April, 2003 and also commenced production of the same; and that there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are interlinked) but are segregated by a public road, canal, railway line, etc. It was found that, if the intention of the Company was to create a new unit in separate premises, they would have applied for separate registration. It was found that there was no new unit. In the balance-sheet for the years 2002-2003 and 2003- 2004, both the units were shown simultaneously, wherein, apart from mentioning their depreciation on investment, they are shown together. The balance-sheet is referred to in order to find that they do not show separate units, but a common balance-sheet. It is, further, found that the Conductor unit is not separate from the Cylinder unit in legal terms. The following finding may be seen: "22.3 The noticee in his defence put forth a plea that no commercial production of ACSR conductor was commenced before 01.04.2003 and officers of DIC, Dehradun after visiting their unit in March, 2003, added ACSR conductor in their certificate having started commercial production w.e.f. 01.04.2003. On perusal of the certificate, it came to notice that apart from entry for LPG cylinder, there is another entry for AACR/ACSR conductor as additional product (01.04.2003). In this r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the exemption under this notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year; (ii) The manufacturer shall, while exercising the option under condition (i), inform in writing to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise giving the following particulars, namely:- (a) name and address of the manufacturer; (b) location / locations of factory / factories; (c) description of inputs used in manufacture of specified goods; (d) description of the specified goods produced; (e) date on which option under this notification has been exercised; (iii) The manufacturer may, for the current financial year, submit his option in writing on or before the 30th day of November, 2003. 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) new industrial units which have commenced their commercial production on or afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, the entry "Village Selakui, Central Hope Town and Camp Road" 9. Lastly, by Notification issued in the year 2006, the words "not later than the 31st day of March, 2007", occurring in both clauses (a) & (b) of paragraph 2, stand substituted by the words "not later than the 31st day of March, 2010". 10. It is on the said basis that the duty was found to be recoverable along with interest and imposition of penalty on the Company including upon the Directors. This led to appeals being filed before the Tribunal. The Tribunal, by its order, has allowed the appeals. The following is the finding recorded by the Tribunal: "7.1 We do not agree with the contention of the Department. The notification NO.50/03-CE dated 10.06.03 exempts from duty the goods other than those mentioned in Annexure I of the notification which has been cleared from a unit located in the Industrial Growth Centres or Industrial Infrastructure Development Centres or Export Promotion Industrial Park, or Industrial Estates or Industrial areas or Commercial Estates or Scheme Areas as the case may be specified in Annexure II and Annexure III appended thereto. The Industrial areas, Industrial estates etc. are specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the conductor unit being eligible for exemption, the Tribunal held that the conductor unit was set up during October, 2002 to December, 2002 period. It is, further, held that there is no dispute that, during this period, a total of 3000 meters had been manufactured and only 300 meters were cleared on payment of duty. The production increased during January, 2003 to March, 2003 to 46137 meters. During April, 2003 to June, 2003, the production increased to 442100 meters. Adverting to the word "new", it was held as follows: "8.3 The word "new", as per Chambers' 21sth Century Dictionary means - "recently made, brought, built, ---- ,etc. recently discovered, never having existed, before, just invented, - recently arrived, installed" and as per Little Oxford Dictionary, 7th Edition, the word "new" means - "of recent origin or arrival; made, discovered or acquired or experienced for the first time, unfamiliar -" In our view, in the context of this notification, the work 'new' must be construed as not existing earlier. 8.4 Now, the new industrial unit cannot be the one commencing commercial production on or before after 10/6/03, the date of issue of exemption notification - as, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant can be treated as having commenced commercial production only after completion of trial run i.e. commissioning." 12. It was found that production during the period prior to April, 2003 was only trial production. Merit was found in the contention of the Company that commercial production started in April, 2003 and, therefore, it became eligible for exemption from July, 2003 when the necessary declaration was filed. Thereafter, the Tribunal proceeded to deal with the cylinder unit and found merit in the contention that capacity expansion need not be achieved in each section or part of the factory. A factory manufacturing more commodities in different sections has to be treated as consisting of more than one manufacturing unit. The capacity expansion of the entire factory is not required. 13. Before us, we heard Mr. H.M. Bhatia, learned counsel appearing on behalf of the appellant and Mr. V. Lakshmi Kumaran, learned counsel on behalf of the respondents. 14. Arguments were addressed on the merit of the matter by the learned counsel for both the sides. However, Mr. V. Lakshmi Kumaran, learned counsel for the respondents also raised objections regarding the maintainability of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounded and may award such cost as it deems fit. (6) The High Court may determine any issue which - (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges. (8) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it. (9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section." 16. We may also notice Section 35L of the Excise Act as it stoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the terms of the exemption notification. When the Tribunal decides that the goods are exempted under the notification, it would have a direct impact on the rate of duty. Therefore, the appeal would lie before the Apex Court. 19. The decision of the Apex Court in Navin Chemical's case (supra) has been the starting point of a line of decisions, which have dealt with the meaning of the words "any question having a relation with rate of duty". The matter arose under the Customs Act, wherein the words "determination of any question having a relation to the rate of duty for the purpose of assessment" are common to the provisions contained under Sections 35G and 35L. The court held as follows: "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 mast be heard by a Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder a particular heading or sub-heading of the First Schedule or the Second Schedule to the Customs Tariff Act, 1975 (51 of 1975), or that any goods are or not covered by a particular notification or order issued by the Central Government granting total or partial exemption from duty; or (d) whether the value of any goods for the purposes of assessment of duty shall be enhanced or reduced by the addition or reduction of the amounts in respect of such matters as are specifically provided in this Act." 21. Thereafter, the court held as follows: "11. It will be seen that Sub-section 5 uses the said expression 'determination of any question having a relation to the rate of duty or to the value of goods for the purposes of assessment' and the Explanation thereto provides a definition of it 'for the purposes of this sub-section'. The Explanation says that the expression includes the determination of a question relating to the rate of duty; to the valuation of goods for 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 purposes/of assessment shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods were exigible, the further question would arise as to whether the duty payable was completely exempted by way of a notification. The learned Judges proceeded to deal with, inter alia, the meaning of the words "rate of duty" and noted, to begin with, the explanation to Section 35E, which was identical to explanation added under the Customs Act, which was considered in Navin Chemical's case (supra). The learned Judges also referred to a judgment of the Apex Court in paragraph 27, which reads as follows: "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 expression "rate" has been used in Section 34(1) as meaning a fraction of total income is, in our judgment, not warranted. By the use of the expression "rate" in the context in which it occurs, undoubtedly a 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 expression "rate" is often used in the sense of a standard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption 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 an 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 an proximately to the value of goods for purposes of assessment. Determination of rate of duty in relation to any goods include determination of a question whether any goods or not, whether the process if any undertaken in the service centre amounts to manufacture or not, and if the goods produced during that process are excisable goods or not would fall within the meaning of the expression 'determination of the rate of duty of excise or the value of the goods for the purposes of assessment of duty' us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furcation 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." 25. The said reasoning has been followed by the Allahabad High Court in Commissioner of Customs and Central Excise vs. Eco Products (I) P. Ltd., reported in 2015 (315) ELT 561 (All.). We may also notice that the judgment of the Punjab & Haryana High Court in Commissioner of Central Excise, Panchkula vs. Special Machine, reported in 2009 (242) ELT 330 (P&H), which was also relied upon by the Allahabad High Court, has taken a similar view. In fact, in the decision of the Punjab & Haryana High Court, the appeal was filed under Section 35G before the High Court. The question of law related to the availability of the exemption notification in a case, where it was the department's case that there was a clubbing of clearances by various units and in the facts other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, which was inserted by the amendment in the year 1988. But Section 35E has undergone drastic changes. The Court pointed out to the learned counsel that sub-section (5) of Section 35E has been repealed by Act 25 of 2004 and the omission became effective w.e.f. 21.12.2004. Section 35E, itself, has undergone other changes with which we are not concerned. It was brought to the notice of the learned counsel for the respondents that Section 35L, itself, has undergone another amendment, which was inserted by Act 25 of 2014, with the inclusion of the following sub-section (2): "(2) For the purposes of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment." 28. We pointed it out to the learned counsel that the line of decisions of the High Courts, which have purported to follow the decision in Navin Chemical's case (supra) and taken the view that the question whether the assessee is entitled to exemption notification, if it is decided by the Tribunal, it will bar the jurisdiction of the High Court as an appeal would be maintainable befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout the aid of the explanation, when the Tribunal decides that a person is not entitled to or is entitled to the benefit of an exemption notification, a decision is necessarily rendered, which has a relation with the rate of duty. He reminds the Court that, what the statute requires to oust the jurisdiction of the High Court, is a decision not on the rate of duty, but a decision which has a relation with the rate of duty, no doubt, arising out of assessment proceedings. He would submit that the said test would be satisfied in every case, where an exemption notification is put in issue and a decision is rendered by the Tribunal either way as it would impact the rate of duty. In other words, denial of exemption means the rate of duty, in the case of an outright exemption, becomes what is provided in law. Depending on the terms of the partial exemption, the rate of duty would stand adjudicated upon. Therefore, he would submit that, even without the aid of the explanation, the principle decided by the High Courts is correct. 31. Turning to sub-section (2) of Section 35L, we may notice that these appeals have been filed after the amendment in Section 35L. This is inserted w.e.f. 06.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Act 2 of 2014, learned counsel relied on the judgment of the Delhi High Court in Commissioner of Central Excise, Delhi-II vs. Pawan Kumar Bansal, reported in 2015 (315) ELT 529. There, the question of law was as to whether the activity involved amounted to manufacture under Section 2(f). The court took the view that, having regard to sub-section (2) of Section 35L, the question having relation to rate of duty includes determination of taxability or excisability and the appeals were filed after the said provision was inserted and the appeals were found to be not maintainable. 35. He further drew our attention to a judgment of the Apex Court in Commissioner of Central Excise, Jaipur vs. M/s Mewar Bartan Nirmal Udyog, reported in 2010 (13) SCC 753, for the proposition that the notification providing for exemption must be construed as it is and it does not involve any question relating to rate of duty. In the said case, the question arose as to whether the assessee was entitled to the benefit of exemption notification 3/2001-CE. The assessee claimed benefit under Serial No. 200 of the said notification, as it was found that the trimmed or untrimmed circles of brass would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich no excise duty was payable. The notifications provided for final product exemption being exempted if they were produced from material 'on which appropriate amount of duty had already been paid'. In the notification, it was inter alia provided that iron and steel products were exempted, if they were made from certain materials or a combination thereof on which appropriate duty of excise had already been paid. We may notice paragraph 6 of the said judgment, which reads as follows: "6. There is no doubt that as per the above notification if any amount of duty has been paid on the raw material, the output product would escape from excise duty. The doubt arose was regarding the expression in the notification i.e. "on which the appropriate amount of duty of excise has already been paid" as to whether it is capable of two interpretations, one as claimed by the assessee and the other as putforth by the revenue"." 38. It is further relevant to notice paragraphs 9 and 17 of the said judgment, which read as follows: "9. Even a glance through the said notification would show that the exemption envisaged therein was not total but only partial. What it clearly meant was deduction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced in the judgment in the case of Usha Martin. The stress on the word "appropriate" has been mislaid. All that the word "appropriate" in the context means is the correct or the specified rate of excise duty. 8. An exemption notification that uses the said phrase applies to goods which have been made from duty paid material. In the said phrase, due emphasis must be given to the words "has already been paid". For the purposes of getting the benefit of the exemption under the notification, the goods must be made from raw material on which excise duty has, as a matter of fact, been paid, and has been paid at the "appropriate" or correct rate. Unless the manufacturer has paid, the correct amount of excise duty, he is not entitled to the benefit of the exemption notification. 9. Where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it. To goods made out of such material the notification will not apply." 41. We may address one argument raised on behalf of the Revenue that these appeals have been admitted and, therefore, the court may decide. May be, the argument is being rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the respondents that, going by clause (c) in the explanation, the issue relating to availability of benefit of exemption notification would also be a question having a relation to the rate of duty, deal with the same. Clause (c) reads as follows: "(c) whether any goods fall under a particular heading or sub-heading of the First Schedule or the Second Schedule to the Customs Tariff Act, 1975 (51 of 1975), or that any goods are or not covered by a particular notification or order issued by the Central Government granting total or partial exemption from duty." 44. There are two parts to it. The first limb dealt with a situation, where a question is determined whether any goods fall under a particular heading or sub-heading of the First Schedule or the Second Schedule to the Customs Tariff Act. The second limb of clause (c) dealt with the determination of a question that any goods are or are not covered by a particular notification or order issued by the Central Government granting total or partial exemption from duty. The first limb of clause (c) is not attracted; but, we would think that, since it provided company to the second limb of clause (c), it may detain us fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cylinders and conductors, are covered by the notification being goods mentioned in Schedule I to the Act. They are also not goods figuring in the negative list. Therefore, no decision is involved in regard to whether the goods are or are not covered by the particular notification. 45. Learned counsel for the respondents would submit that such disputes are indeed covered by clause (c). According to him, clause (c) must be interpreted as embracing within its scope all questions arising out of the notification and it is not limited to the question whether the goods are or are not covered by the notification or order providing for exemption. 46. In our view, the provision, itself, being in the form of an explanation, we would be straining the words and giving it a meaning, which is not warranted having regard to the scope, which we have also culled out from the words used in its close neighbourhood, namely, the first limb of clause (c). In this context, we have already noticed the substantial questions of law, which have been raised on which notice had been issued. 47. We notice that no substantial question of law is raised as to whether the goods in question are or are not covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court. The effect of sub-section (2) of Section 35L of the Act: 49. The Legislature must be treated as being aware of the judgment rendered by the Apex Court in Navin Chemical's case (supra) interpreting explanation to Section 129D of the Customs Act, as also the interpretation placed by various High Courts in decisions in question, which arose under the Central Excise Act. We must also be conscious of the fact that it had omitted the explanation in the year 2004. What then is the purport and object of including sub-section (2) to Section 35L? By virtue of sub-section (2), the Legislature has declared that the question relating to taxability or excisability shall be included within the meaning of the expression "question in relation to rate of duty". In regard to a clause in a section, which uses the word "include", it is intended to give an extended meaning to the main provision, which the definition clause intends to define. We cannot possibly proceed on the basis that, after the inclusion of sub-section (2), whatever else may be included within the expression "decision in relation to rate of duty" would not be embraced within its scope. 50. Coming to the expressions "tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an assessee to prove that even though the 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. 9. The duty of excise being on production and manufacture which means bringing out a new commodity, it is implicit that such goods must be usable, moveable, saleable and marketable. The duty is on manufacture or production but the production or manufacture is carried on for taking such goods to the market for sale. The obvious rationale for levying excise duty linking it with production or manufacture is that the goods so produced must be a distinct commodity known as such in common parlance or to the commercial community for purposes of buying and selling. Since the solution that was produced could not be used as such without any further processing or application of heat or pressure, it could not be considered as goods on which any excise duty could be levied. 11. Although the duty of excise is on manufacture or producti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t brought to the market for buying and selling they could not be subjected to duty. But when the Rules were amended a fiction was created that any article produced or manufactured if captively consumed was statutorily presumed to satisfy the test of marketability. But this presumption can be rebutted if it is established that the article produced and captively consumed was neither goods nor marketable nor capable of being marketed. The duty is attracted not by captive consumption of any article but it must be a good within the meaning of the Act which apart from having a distinctive name and known as such must be marketable or capable of being marketed…" 52. It is also necessary that before the goods are visited with a levy, there is a manufacture of goods. See Union of India vs. Ahmedabad Electricity Co. Ltd. & others, reported in (2003) 11 SCC 129, wherein also the court reiterated that the goods must be manufactured or produced and it is not sufficient that the goods are excisable goods and, in that, the goods figure in the Schedule. 53. The other aspect immediately flowing from this dimension is that disputes may arise as to the exact entry of the Tariff Act in which p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minates Pvt. Ltd. & others vs. Collector of Central Excise, Ahmedabad, reported in (1995) 3 SCC 23 has been followed in Commissioner of Central Excise-I, New Delhi vs. S.R. Tissues (P) Ltd. & another, reported in (2005) 6 SCC 310 and Escorts Limited vs. Commissioner of Central Excise, Faridabad, reported in (2015) 9 SCC 109. In Escorts Limited (supra), the Apex Court has inter alia held as follows: "For excise duty to be chargeable under the constitutional entry read with Section 3 of the Central Excise and Salt Act, two pre-requisites are necessary. First, there must be "manufacture" which is understood to mean the bringing into existence of a new substance. And secondly, the word "goods" necessarily means that such manufacture must bring into existence a new substance known to the market as such which brings in the concept of marketability in addition to manufacture. Marketability is thus essentially a question of fact to be decided in the facts of each case. There can be no generalization. The fact that the goods are not, in fact, marketed is of no relevance. So long the goods arc marketable, they are goods for the purpose of Section 3 of the Central Excise Act. It is not nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty, meaning thereby the imposition of excise duty under the Act, becomes available against the manufacturer or producer of the goods. If the word "excisability" is understood in this sense, then, virtually, excisability would be a question, which would be far more comprehensive. If all these questions are answered against the assessee in a given case or, in other words, if the goods are found to be excisable goods, the exact entry under the Tariff Act is located, if the goods are also found to be movable, marketable, manufactured or produced in India; then, on the event of manufacture, excise duty, which is a tax on the manufacture or production of goods, becomes payable. If this is the sense in which the word "excisability" is used, a question may arise what was the need to also use the word "taxability". Is it a case of mere surplusage? Ordinarily, the Legislature is not presumed to waste words. One thing is certain that the Legislature has, in one sense, widened the scope of the expression "question having a relation with the rate of duty". Therefore, now the Apex Court is, after the amendment, the exclusive appellate forum created against the order passed by the Tribunal to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Sundaram Textiles Ltd. v. Asstt. Collector of Central Excise, [1983] ELT 909, decision of the Allahabad High Court in Union of India v. Delhi Cloth & General Mills, [1973] ELT 177. On the other hand, the revenue contended that the goods forming the prebudget stocks were very much excisable goods and that for the purpose of collecting duty, date of manufacture was not material under the scheme of the Act even though the taxable event is the manufacture. It was, therefore, contended that at the time of manufacture of the goods in question, the goods were excisable goods and in view of rule 9A of the Central Excise Rules, 1944, though the taxable event is the manufacture and production, the payment of duty is related to and postponed to the date of removal of articles from the manufactury. The Tribunal accepted the said contention." 57. It is in the said context that the court held as follows: "Excise is a duty on manufacture or production. But the realisation of the duty may be postponed for administrative convenience to the date of removal of goods from the factory. Rule 9A of the said rules merely does that. That is the scheme of the Act. It does not, in our opinion, make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods is not the taxable event. Taxable event is the manufacture or production of goods." 59. Referring to the judgment in Wallace Flour Mills Co. Ltd. (supra), the court also inter alia held as follows: "13. In our opinion, the decision in Wallace Flour Mills does not lay down a contrary proposition - neither does it support the contention of Shri Vellapally. That was a case where the goods were excisable goods prior to 1.3.1987, though by virtue of an exemption notification, the rate of duty was nil. This does not mean that they were not excisable goods. They were excisable goods. Nil rate of duty is also a rate of duty. With effect from 1.3.1987, the said goods became excisable to duty at the rate of fifteen per cent and valorem. It is in the above circumstances that the Court held, on the basis of Section 3 and Rule 9-A, that though the goods were produced or manufactured prior to 1.3.1987, still they attracted duty at the rate prevailing on the date of their removal, i.e. fifteen per cent. Para 4 clearly brings out the ratio of the said decision." 60. Section 5A is the provision under which exemption is granted. It may be granted by a notification or it may be granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive jurisdiction on the Supreme Court. First, let us see what is the meaning to be attributed to the word "excisability". One way of looking at the word "excisability" is whether the goods in question are excisable goods. The starting point of an inquiry as to whether excise duty is payable is whether the goods are excisable goods, as the charge of excise duty under Section 3 is on excisable goods. "Excisable goods" are clearly defined in Section 2(d) of the Central Excise Act, which reads as follows: "2(d) "excisable goods" means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; Explanation. - For the purposes of this clause, "goods" includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable." 63. Therefore, we would have to necessarily go to the Central Excise Tariff Act, 1985 (hereinafter referred to as the "Tariff Act"). 64. Clauses (a) & (b) of Section 3(1) of the Excise Act read as follows: "3. Duties specified in the Schedule and the Second Schedule to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the Central Government shall not issue any notification under this sub-section for substituting the rate of duty in respect of any goods as specified by an earlier notification issued under this sub-section by that Government before such earlier notification has been approved with or without modifications under sub-section (2). Explanation:- "Form or method", in relation to a rate of duty of excise means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty may be levied. (2) Every notification under sub-section (1) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and if it is not sitting, within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty is also provided for in the exemption notification. Apparently, the exemption notification, which was the subject matter of the decision of the Apex Court in Wallace Flour Mills Co. Ltd. vs. Collector of Central Excise, Bombay (supra), was one such notification. This is clear from a reference to the decision of the Apex Court in Collector of Central Excise, Hyderabad & others vs. Vazir Sultan Tobacco Company Limited & others, reported in 1996 (3) SCC 434, wherein express reference was made to the notification being as such. Thus, there are goods in the Tariff Act, which are visited with nil rate of duty. An exemption notification can also provide for a nil rate of duty. On the other hand, an exemption notification can provide for an absolute exemption. General exemptions are of many types. Notification No. 8/03 dated 01.03.2003 was essentially issued for small scale units and it was limited in point of the quantum of clearance. The Annexure containing the list of exempted goods, we may notice, includes all goods falling under Chapters 2, 3 & 4 of Section (i), inter alia, even though the rate of duty of excise therein is shown as nil. No doubt, the notification gives an optio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be. (3) An exemption under sub-section (1) or sub-section (2) in respect of any excisable goods from any part of the duty of excise leviable thereon (the duty of excise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any excisable goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of excise chargeable on such goods shall in no case exceed the statutory duty. Explanation. - "Form or method", in relation to a rate of duty of excise means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, 2012 is availed." 70. Thus, it tends to indicate that a distinction may exist between a case, where there is a complete exemption from the whole of the duty and a case, where the goods are chargeable to nil rate of duty. An instance of its application can be found with reference to Rule 6(2), which provides for circumstances in which a manufacturer could take benefit of CENVAT credit and the word "exempted goods" figures which would obviously take-in, in view of the definition, cases of complete exemption and cases where the goods are chargeable at nil rate. But we need not explore this aspect in view of our finding on the scope of the word "taxability". 71. Parliament has chosen to use the words "taxability" and "excisability". We hold that the word "excisability" is better understood in the context as meaning not only a situation, where the goods in question are excisable goods as defined in Section 2(d) of the Excise Act, but also they answer the description of the goods as understood in law and a long line of decisions. This means that the products in question must be goods as understood in law being movable and marketable. It must have an identity in the market as a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment to go to the market and collect proper evidence of marketability. In most of the matters, we find lethargy and reluctance on the part of the Department to collect evidence on marketability and even in cases where market enquiry is made, it is made in a perfunctory manner. Consequently, despite the Department having a good case on classification, we are constrained to allow the appeal of the assessee on marketability for want of evidence." 73. Thus, in this judgment, the court has used the word "excisability" and this tends to show that it was used in the sense that the question was not whether it figured in the excise tariff alone or in which entry it fell, but it went beyond the same and it essentially went to the issue of leviability and dutiability. 74. Therefore, we would proceed on the basis that when the Tribunal answers a question relating to excisability, it is equivalent to saying that it finds that the goods are dutiable and can be visited with the levy of excise duty. 75. What then are we to make out of the employment of the word "taxability" separated by the word "or"? Was it intended to convey that taxability is something different from excisability? Is it cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the word 'subscribe' and mere signature is not sufficient. The court held as follows: "18. The above observations of this Court cannot be accepted as a ratio laid down. In our opinion, it is only an observation without laying down the principle which the petitioner is trying to deduce in his arguments. This view of ours is clear from the following further discussion of this Court in the said case: "Now if "subscribe" can mean both signing, properly so called, and the placing of a mark (and it is clear that the word can be used in both senses), then we feel that we must give effect to the general policy of the Act by drawing the same distinction between signing and the making of a mark as the Act itself does in the definition of "sign". It is true the word "subscribe" is not defined but it is equally clear, when the Act is read as a whole along with the form in the second schedule, that "subscribe" can only be used in the sense of making a signature and as the Act tells us quite clearly how the different types of "signature" are to be made, we are bound to give effect to it. Xxx (Emphasis supplied). 19. For this reason also we agree with the finding of the High Court tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a case, where the Assessing Officer presses for payment, the assessee responds by pointing out that, though the goods are excisable, there is an exemption notification available, which protects him from actual taxation. If we understand the expression "taxability" in the said context, we would be acting in terms of the normal presumption, which is available when two different words are employed in the same statute and we would give life to both the words. Thus, the word "taxability" would cover a situation, where, though the goods are found dutiable otherwise, they are found to be non-taxable by virtue of the availability of an exemption notification. If a question arises as to the availability of the notification, then it goes to taxability. 80. In this context, we may notice one argument of Mr. H.M. Bhatia. His contention is that there is no dispute that there is an exemption notification regarding the rate of tax. If the exemption is not available, the full rate of tax will become applicable. Therefore, it is a question, which has no relationship with the rate of duty. 81. We may point out that if this argument is accepted, even under the head "excisability", if for instan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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