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TMI Blog1991 (1) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties in dispute had submitted before the East Regional Bench, Calcutta, that the questions involved in these appeals were about the leviability of cess and rate of cess was not in dispute and both parties had submitted to the East Regional Bench that the matters were vested within the jurisdiction of Regional Benches to decide the appeals but, however, in view of few matters decided by the Special Bench, New Delhi, pertaining to these matters as reported in 1988 (38) E.L.T. 306 (Tri.) = 1988 (18) ECR 649 (CEGAT) and 1984 (16) E.L.T. 477 (Tri.) = 1984 ECR 306, the matter is required to be settled as to the question of jurisdiction between these Benches by a constitution of a larger bench comprising of five members. However, the East Regional Bench, Calcutta, while handing over their files to the President, CEGAT, New Delhi, for placing before the larger bench of 5 members, by their Order No. 116/Cal/1989 have opined that the Regional Benches have jurisdiction to deal with the matters of the like nature. This Bench has been constituted by Hon'ble Sr. Vice-President (as he then was) by his Office Order dated 18-08-1989 to decide the question of jurisdiction between Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of realisation of duty on goods exported under Bond did not arise. 4. They have further submitted that the real dispute has arisen with regard to the period 15-9-1984 onwards. They have submitted that Rule 3 of Jute Manufactures Cess Rules, 1984 undoubtedly provides for realisation of cess on goods exported. There is no distinction made between exports on payment of Central Excise duty and exports under Bond provided for vide Rule 13 of Central Excise Rules, 1944. They have submitted that even after issue of Rule 3 of Jute Manufactures Cess Rules, 1984, the provisions of Section 3 of Jute Manufactures Cess Act, 1983, have not been withdrawn. It is their case that in contingencies not specifically covered by Rule 3 of Jute Manufactures Cess Rules, 1984, the provisions of Central Excise Rules, 1944 would have to apply. Rule 13 of the Central Excise Rules, 1944, provides for export under Bond without payment of Central Excise duty. Therefore, Cess which is another duty of excise [vide subsection (2) of Section 3 of Jute Manufactures Cess Act, 1983] is not leviable. It is the appellants' case that when no duty is payable on export under Bond, Rule 4 of Jute Manufactures Ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence a Show Cause Notice-cum-demand notice was issued for payment of cess duty totalling Rs. 2,30,601.61. The reply of the appellants to the Show Cause Notice-cum-demand as detailed in the Order-in-Original has been detailed supra as urged in the Reference Application. The findings of the Assistant Collector had been as detailed below :- "From the facts of the case it appears that M/s. India Jute produced and removed for export Jute manufactures and Jute yarn after packing with pack sheets of jute manufactures during the period from May '84 to Sept. '84 and they have not paid the cess duty on these goods as payable thereon. In this connection, party's contention for non-payment of cess duty becomes untenable. In view of the sub-section (1) of Sec. 3 of Jute Manufactures Cess Act, 1983 read with Rule 9(1) of the Central Excise Rules, 1944, cess is leviable and payable on the jute goods, during the material period". The facts and findings in Order-in-Original are similar in the other appeals also. The Collector of Central Excise (Appeals), Calcutta while considering the appeal of the appellant in Appeal No. 16/87-ERB has observed as under (Para 4) :- "I have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that different rates of cess have been prescribed in the table annexed to the said Notifications. Accordingly, the cess duty has been paid since the inception i.e. from 1-3-1976 on delivery of jute goods from Mill premises. They submit that a dispute was raised by the Central Excise Department for payment of cess on yarn and twine captively used for manufacture of jute manufactures at the specified rates in addition to payment of cess being made on respective fabrics at the time of clearance from Mill premises. Show Cause Notices cum demand notices demanding the produce cess on spinning production captively consumed for jute manufactures were served covering Rs. 6,68,997.86 for the period from 1-3-1976 to 14-12-1982. This has been confirmed by Assistant Collector of Central Excise and Collector (Appeals). They had paid Rs. 3 lakhs in cash under protest against threatened action by way of confiscation of goods. They submit that they have appealed against these orders before Special Bench in E/A. No. 1706/85-D, dated 19-7-1985 and E/1713/85-D, dated 18-7-1985. This appeal in 69/87-ERB is against the Order-in-Appeal dated 19-1-1987 and Order-in-Original, dated 9-10-1986 rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The said yarn is twisted/blended to jute twine falling under item 5 or woven to hessian item 2 or sacking item 3 of the said order. Twine is used in sewing hessian or sacking fabrics/bags. They have further submitted that cess at the appropriate rate has been paid on the end product, jute yarn, twine hessian or sacking at the point of removal from the factory. Cess has been demanded on the jute yarn and twine used as captive consumption in the manufacture of twine, hessian or sacking fabrics/bags. They have further contended that the dispute is as to whether cess levied under the Industries (Development and Regulation) Act, 1951, the rules and the orders made thereunder is payable on jute yarn and twine used in captive consumption in the manufacture of jute products and have submitted that there is no dispute in relation to the rate of duty or value of goods for the purpose of assessment. Therefore, it is their submission that matter has to be decided by the Regional Bench as provided under Section 35D of the Act. 12. Shri L.C. Chakraborty appearing for the Revenue, argued the matter with his usual exuberance and submitted that the issue to be decided in these appeals is as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have been proper for the Regional Bench to refer the matter to High Court for clarification as was done in respect of Baggage matter under Section 35(B)(i) of the Act. He further submitted that the President has no power under the Central Excises and Salt Act, 1944 to constitute a larger Bench to decide any matter on reference by Regional Bench. He submitted that the Regional Bench can refer its matter to a third Member to resolve any contrary view by a majority decision and that there can be no constitution of Three Member or Five Member Bench at Regional level. The Statute does not provide for the same. This Bench cannot sit outside the territorial jurisdiction of the Regional Bench (ERB) to settle the reference matter. He submitted that the Central Excises and Salt Act, 1944 provides for reference and review to High Court and Supreme Court and there is no scheme or provision for constitution of Five Member Bench to settle any controversy. In support of this argument, he relied upon Rule 3 of CEGAT Procedure Rules which states that the Bench shall hold its sitting at its Headquarters or such other place within its jurisdiction. He emphasised the words "within its jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Manufacturing Trading Co. Ltd. v. CC, Bombay - 1987 (31) E.L.T. 304 (Tribunal) 6. M/s. Hindustan Aluminium Corporation Ltd. v. Supdt.. Central Excise, Mirzapur and Others - 1981 (8) E.L.T. 642 (Del.) 7. M/s. Bharat Petroleum Corpn. Ltd. v. CCE, Bombay-I - 1984 (18) E.L.T. 462 (Tribunal) 8. M/s. Arson Industries, Agra and Others v. CC, Calcutta - 1986 (24) E.L.T. 86 (Tribunal) 9. M/s. Anil Starch Products Ltd., Ahmedabad v. CCE, Ahmedabad - 1985 (21) E.L.T. 306 (Tribunal) 10.M/s. Indian Oil Corporation Ltd., Madras v. CCE, Madras - 1987 (28) E.L.T. 361 (Del.) 11. M/s. Krishna Fabrics Pvt. Ltd. v. Collector of Customs - 1988 (36) E.L.T. 633 (Tribunal) 16A. In Hindustan Aluminium Corpn. Ltd. v. Supdt., Central Excise, Mirzapur Others, as reported in 1981 (8) E.L.T. 642 (Del.), the Delhi High Court answered the question as to whether the goods which are exported under bond are liable to payment of excise duty as demanded by the respondents/Central Govt. or are totally exempt as maintained by the Petitioner. The Court examined the various provisions of the Act and Rules and held in that the facility (by bond) of removing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould necessarily affect the rate and therefore, the question would be in relation to the rate of duty and would be dealt with by a Special Bench as contemplated by sub-section (2) of Section 35D of the Central Excises and Salt Act, 1944". Further, it has been held by the Bench that "Clauses (a) and (b) of sub-section (3) of Section 35D contemplate situations where the point in issue is not in relation to the rate of duty. The provisions of sub-section (3) have a specific purpose inasmuch as in a given case a duty may have been paid and a claim of refund is made on the ground that the payment was wrongly made or in excess of what was done. There may be more than one reason for such a claim without contesting the rate. Similar would be the case with regard to penalty. But the case in hand stands on a different footing. It is not one of those situations where duty is paid and/or levy is being contested or exemption is being claimed which does not a affect the rate. The effect of the claim of exemption under the Notification No. 23/72-C.E. is to change the rate itself. To further elaborate the point, those cases where duties are paid - it may be excise duty or import tariff or export l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85 (21) E.L.T. 306 (Tribunal) - M/s. Anil Starch Products Ltd., Ahmedabad v. C.C.E., Ahmedabad, the Special Bench while hearing the Reference Application under Section 35G of the Act, the Special Bench observed that the question of excisability also should be held as one bearing relation to a rate of duty and calling for decision by a Special Bench. It further observed that "nil" duty is a rate of duty coming within the scope of Special Bench. The Bench also held as Paras 30 and 31 of the order that "nil" rate of duty under an exemption notification would attract the provisions relating to a Special Bench. (v) In the case of M/s. Arson Industries, Agra and Others v. Collector of Customs, Calcutta, as reported in 1986 (24) E.L.T. 86 (Tribunal), the Bench observed that the Special Bench will take up those matters which touch upon or determine any issue having a relation to the rate of duty or value for the purpose of assessment of duty or any question having a relation thereto. (vi) In Mysore Prefabs and Prefabs India v. C.C.E., Bangalore, as reported in 1987 (27) E.L.T. 487 (Tribunal), the South Regional Bench held that even though the appeals relate to issues which a Special Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came up for consideration before the Special Bench in the case of M/s. Mahabir Jute Mills Ltd. v. C. C.E., Allahabad as reported in 1984 (16) E.L.T. 477 = 1984 ECR 306. 21. The question of levy of cess on the jute yarn captively consumed for the manufacture of the other jute products, namely, Hessian sacking etc. after suffering cess under the Jute Manufactures Cess Rules, 1976, read with Section 9 of the Industries (Development Regulation) Act, 1951, also came up before the Special Bench in the case of M/s. Mahabir Jute Mills Ltd. v. Collector of Central Excise as reported in 1984 (16) E.L.T. 477. The Bench examined various provisions of the Excise rules vis-a-vis Jute Manufactures Cess Rules and also examined in detail a large number of citations. It held in para 25 that under Rule 3 of the Jute Manufactures Cess Rules, 1976, only the Central Excise rules as in force on 18-2-1976 would be applicable for the purpose of levy of cess. Subsequent amendment of these rules, even if given retrospective effect by legislation, could not have the effect of amending the aforesaid Jute Manufactures Cess Rules in so far as they were applicable to the levy of cess in the absence of another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consumption of goods within a factory amounts to removal within the meaning of unamended Rules 9 and 49 too. 23. Again the Bench held in para 41 that the contention that cess is leviable only if there is both manufacture, removal and sale is not tenable inasmuch as expression 'capable of being sold' occurring in Explanation thereto makes it clear that sale is not a necessary ingredient. Further, the argument based on reference to 'time of their removal' does not also survive because the word 'removal' in explanation has been interpreted to include captive consumption within even the unamended Rules 9 and 49 of the Central Excise Rules, 1944. Moreover, explanation to Section 9(1) ibid has reference only to the manner of collection of duty and deals with the 'value' to be adopted for the purpose. 24. Further, in para 43 of the order, the Bench has held that, since cess is leviable on all goods manufactured and produced in any scheduled industry as also 'removal' occurring in explanation to Section 9(1) of the Industries (Development Regulation) Act, 1951 includes captive consumption within even the unamended Rules 9 and 49 of Central Excise Rules, 1944, jute yarn used for cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter should export to the satisfaction of the Collector, in the manner laid down in any notification issued under Rule 12. 28. After having examined the various contentions of the parties and the rulings cited before us, let us see the provision of the Jute Manufactures Cess Act, 1983. The preamble of the Act reads "an Act to provide for the levy and collection, by way of cess, of a duty of excise on jute manufactures for the purpose of carrying out measures for the development of production of jute manufactures and for matters connected therewith. Section 2 deals with definition. Section 2(a) defines 'jute manufacture' means any article specified in the schedule which contains more than fifty per cent of jute (including Bimlipatam jute or mesta fibre of any sort) by weight of the total fibre content and in the production of which any process is ordinarily carried on with the aid of power. Explanation - 'Power' means electrical energy or any other form of energy which is mechanically transmitted and is not generated by any human or animal energy. Section 3 reads levy and collection of cess on jute manufactures produced in India. "There shall be levied and collected by way of ces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being made in accordance with the procedure set out in the relevant provisions of Chapter IX of the Central Excise Rules, 1944. 31. We have also noted in the preceding paragraphs several rulings on these rules and we have also observed that matters pertaining to rebate of duty on export under Bond or without Bond as per Rules 12 and 13 and relevant notification issued under relevant rules has a bearing on rate of duty and hence such matters arising therefrom come within the ambit of a Special Bench. 32. From the reading of the facts of the case in Appeals No. 15/87 and 16/87, it follows that the matter pertains to demand of duty for clearance by export of jute falling under erstwhile Tariff Item 22A without payment of cess duty as payable in terms of subsection (1) of Section 3 of the Cess Act read with Rule 9(1) of the Central Excise Rules. The appellants have contended that removal for export of jute goods without payment of Central Excise duty under Section B-1, duty is provided for under Rules 12 and 13 of Central Excise Rules, 1944 and the notification issued thereunder. The lower authorities have held in the impugned order that the contention of the assessee that the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m against their payment of cess on jute yarn captively consumed for manufacture of jute goods under TI 22-A and TI 18-D of erstwhile CET. The assessees have taken a ground that they have paid such duty against confirmation of demanded cess by way of cash payment or covered by way of bank guarantee with a presumption, that the said amount is refundable to them in view of Board's letter under TRM No. 1079 to 1081 dated 30-1-1986 as received by the Superintendent, Central Excise, Range VI, Calcutta. Similar questions as involved in these appeals have been dealt with by Special Bench as in the case of Mahabir Jute Mills Ltd. as reported in 1984 (16) E.L.T. 477. As contended by the learned Departmental Representative Shri L.C. Chakraborty, the question of leviability, excisability, marketability and rate of duty will also come up while interpreting captive consumption of jute products in the manufacture of finished jute good. Even interpretation of notification and results flowing therefrom will have an effect on the cess and rate of duty. The valuation of goods captively consumed may also be raised while determining the questions of captive consumption in the manufacture of finished go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother v. Paras Laminates (P) Ltd. [1990 (30) ECR 305] wherein the powers of the President have been elaborately discussed and it has been laid down that the power under sub-section 5 of Section 129C of Customs Act, 1962 (Tribunal is constituted by the Central Government under Section 129) has to be construed to be wide enough to enable the President to make a reference where members of a Bench find themselves unable to decide a case according what they perceive to be correct law and fact because of an impediment arising from earlier decisions with which they cannot honestly agree. In such cases, it is necessary for the healthy functioning of the Tribunal that the President should have the requisite authority to refer (the case to a larger bench. Therefore, in view of the above, there is no force in the submission of Shri R.K. Jain that this Bench is not duly constituted to decide this issue. FINAL ORDER 36. In view of the decision of the Bench, Appeals No. E/15 and 16/87-ERB shall be returned to the appellants for presentation to Proper authority under first proviso to Section 35B of the Central Excises and Salt Act, 1944. 37. Appeal No. E/69/87-ERB and 77/84-ERB shall stand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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