Karnataka High Court
The Commissioner Of Central Excise vs M/S L & T Komatsu Ltd., on 19 March, 2020
Bench: Aravind Kumar, Hemant Chandangoudar
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF MARCH, 2020
PRESENT
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
AND
THE HON'BLE MR. JUSTICE HEMANT CHANDANGOUDAR
CEA No. 67/2016
BETWEEN:
THE COMMISSIONER OF CENTRAL EXCISE
AND SERVICE TAX
BENGALURU - IV
59, HMT BHAVAN, BELLARY ROAD
BENGALURU - 560 032
...APPELLANT
(BY SRI.ARAVIND K.V, ADVOCATE)
AND:
M/S L & T KOMATSU LTD.,
BELLARY ROAD
BYATANAPURA
BENGALURU - 560 048.
...RESPONDENT
(BY SRI. B.S. BALACHANDRAN, ADVOCATE)
THIS CEA IS FILED UNDER SECTION 35G OF THE
CENTRAL EXCISE ACT, ARISING OUT OF ORDER DATED
02.02.2016 PASSED IN FINAL ORDER NO. 20340/2016 BY
THE CESTAT, SOUT ZONAL BENCH, BENGALURU.
THIS APPEAL COMING ON FOR HEARING THIS DAY,
ARAVIND KUMAR J. DELIVERED THE FOLLOWING:
2
JUDGMENT
Heard.
2. Sri.N.Venkataramana, learned Senior Counsel appearing on behalf of Sri. Balachandra for respondent has raised a preliminary objection with regard to maintainability of this appeal, contending interalia that Section 35G of Central Excise Act, 1944 (hereinafter referred to as 'Act' for short), bars an appeal to this Court where issue relating to exemption notification is involved. He would contend that in the instant case substantial question of law which has been raised by the revenue relates to the applicability of notification No.13/2008-CE dated 01.03.2008 amending the notification No.108/95-CE dated 28.05.1995 namely whether it is prospective in nature or retrospective and as such, an appeal under Section 35L of the Act lies to the Hon'ble Supreme Court and present appeal filed by the revenue under Section 35G before this Court is not maintainable.
3
3. Per contra, Sri. K.V.Aravind, learned panel counsel appearing for the revenue would contend that issue involved in the present appeal revolves around entitlement of respondent to claim exemption on the basis of notification and there being no dispute with regard to goods being covered by the exemption notification, question of revenue filing an appeal before the Apex Court does not arise. Hence, he prays for rejection of the said contention.
4. Learned Advocates appearing for parties have referred to various authorities of the Apex Court, this Court and Madras High Court.
5. Having heard the learned Advocates appearing for parties, we notice that issue with regard to appeal entertainable by the High Court under Section 35G of the Central Excise Act, which is analogous to Section 130 of the Customs Act, has been laid to rest by Hon'ble Apex Court in the matter of COMMISSIONER OF CUSTOMS, BANGALORE vs. MOTOROLA INDIA LTD. in Civil Appeal No.10083/2011 disposed of on 05.09.2019. 4
6. The expression found in sub-section (1) of Section 130 of Customs Act and Section 35G of Central Excise Act are in para material and they read:
130 of Customs Act Section 35G of Central Excise Act (1) "An appeal shall lie to the High "An appeal shall lie to the High Court from every order passed in Court from every order passed in appeal by the Appellate Tribunal appeal by the appellate tribunal on on or after the 1st day of July, or after the first day of July, 2003 2003 (not being an order relating, (not being an order relating, among among other things, to the other things, to the determination of determination of any question any question having a relation to having a relation to the rate of the rate of duty of excise or to the duty of customs or to the value of value of goods for purposes of goods for purposes of assessment), assessment), if the High Court is if the High Court is satisfied that satisfied that the case involves a the case involves a substantial substantial question of law."
question of law."
7. It would be apt and appropriate to note at this juncture that sub-section (2) of Section 35L came to be inserted by Finance (No.2) Act, 2015 with effect from 06.08.2014. A plain reading of sub-section (2) would indicate the expression used thereunder is "for the purposes of this Chapter" relates to Chapter VI-A, which comprises of Section 35 to 36, which includes Section 35A to 35R, and same provides for mechanism of filing appeals under the Act by an aggrieved person. 5 Further reading of sub-section (2) of Section 35L would indicate that determination of any question having a relation "to the rate of duty" would include the "determination of taxability or excisability to goods" for the purposes of assessment. Thus, in effect it would indicate that first there should be determination with regard to question of excisability of the goods itself namely, whether it is exigible to tax or not, then the question of determination of rate of duty would arise.
8. A conjoint reading of Section 35G and 35L, it could be seen that an appeal would lie to this Court against every order passed in an appeal by the appellate tribunal, if the case involves a substantial question of law. However, exception to this general rule is that an appeal would lie before the Hon'ble Apex Court and not before this Court against an order relating, amongst 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. 6
9. Hon'ble Apex Court in MOTOROLA's case referred to supra while examining the provision of Section 130 and 130E of Customs Act has held that where an appeal involves determination of any question that has relation to customs duty for the purposes of assessment or where an appeal involves determination of any question that has relation to the value of the goods for the purposes of assessment, such cases will have to be treated separately and have to be given special treatment. It has been further held:
"14. It could thus be seen that, this Court has found that when an order of the Appellate Tribunal would go beyond inter se disputes between the parties and may affect a large number of cases, such an issue will be one of general public importance. It has further been found that certain questions raised or arising may require interpretation of the Constitution. It is held that only such questions of general public importance alone are required to be decided by this Court. It has further been held that, by the very nature of a question raised or arising, the same necessarily has to involve issue of law going beyond the inter partes rights and extending to a class or category of assessees as a whole.
"16. We are of the considered view that the Legislature has carved out only 7 following categories of cases to which it has intended to give a special treatment of providing an appeal directly to this court.
"(i) determination of a question relating to a rate of duty;
(ii) determination of a question relating to the valuation of goods for the purpose of assessment;
(iii) determination of a question relating to the classification of goods under the Tariff and whether or not they are covered by an exemption notification;
(iv) whether the value of goods for purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for."
17. Reverting to the present case, it could clearly be seen that the only question that is involved is whether the assessee had violated the conditions of the exemption notification by not utilizing the imported materials for manufacturing of the declared final product and was, therefore, liable for payment of duty, interest and penalty. Neither any question with regard to determination of rate of duty arises nor a question relating to valuation of goods for the purposes of assessment arises in the present case. The appeals also do not involve determination of any question relating to the 8 classification of goods, nor do they involve the question as to whether they are covered by the exemption notification or not. Undisputedly, the goods are covered by the said notification. The only question is as to whether the assessee has breached the conditions which are imposed by the notification for getting exemption from payment of the customs duty or not. The appeals do not involve any question of law of general public importance which would be applicable to a class or category of assessees as a whole.
The question is purely inter-se between the parties and is required to be adjudicated upon the facts available."
10. The aforesaid authoritative principles by the Hon'ble Apex Court in the MOTOROLA's case referred to supra extracted herein above would clearly indicate that if order of the Appellate Tribunal would go beyond inter- se disputes between the parties and may effect large number of cases, such an issue would partake the character of one of 'General public importance'. Comparative analysis of Section 35G and 35L of the Central Excise Act would indicate they are mutually exclusive. Therefore, dispute which would be in the 9 domain of Section 35L cannot be held or presumed that it would incidentally fail with domain under Section 35G also. Parliament would not have envisaged of vesting overlapping of the jurisdiction.
11. In the aforestated background when facts are examined it would clearly indicate that respondents herein had acquired total 196 hydraulic excavators valued at Rs.73,57,50,952/- without payment of excise duty relating to the period 2004-05 to 2008-09 on the strength of exemption notification 108/95-CE dated 28.08.1995. Based on intelligence input gathered that respondents herein had erroneously cleared the machineries claiming exemption on the strength of notification dated 28.08.1995 had recorded the statements of various contractors/ /construction companies and found on completion of project aided by international financial institution, said hydraulic excavators had been withdrawn and had been relocated at other project sites. Hence, revenue arrived at a conclusion that board's further notification bearing No.F- 10 101/07/2008CX-3 dated 12.06.2008 clarified the notification dated 28.08.1995 which indicated that exemption is meant only for the goods which becomes part of the project on permanent basis and not for the goods which are used by contractors for execution of a project and after completion of said project, goods could not have been withdrawn or in other words it could not have remained with the contractors as its owners of such goods and/or same could not have been deployed in other projects and as such there is misuse of exemption notification. As such, a show-cause notice came to be issued and order in original dated 01.01.2010 came to be passed which ultimately landed before the CESTAT in the final order No.20340/2016, which appeal filed by assessee came to be allowed in part on the ground that clarificatory notification dated 01.03.2008 cannot have retrospective effect. Thus, facts on hand would clearly indicate that dispute does not restrict itself to inter party rights, but extends to class or category of assessees like the respondent herein, inasmuch as, interpretation of the notification dated 01.03.2008 is the subject matter of 11 this appeal. Thus, issue as to whether the said notification would empower the revenue to deny the exemption provided under the notification dated 28.08.1995 is an issue which has to be determined by formulating substantial question of law framed in that regard and same has to be answered. In other words, the issue involved relates determination of excercisibility of the goods for the purposes of assessment by virtue of the clarificatory notification dated 01.03.2008. Hence, we are of the considered view that appeal under Section 35G before this Court would not be maintainable and appellant-revenue has to pursue its grievance by filing an appeal under Section 35L before the Hon'ble Apex Court.
For the reasons aforestated, we proceed to pass the following;
ORDER
(i) Appeal filed under Section 35G is held to be not maintainable and reserving liberty to the appellant to present this appeal before Hon'ble Apex Court under 12 Section 35L, we dismiss the present appeal.
(ii) Registry is directed to return the certified copy of the order of CESTAT dated 02.02.2016 passed in the Final order No.20340/2016, forthwith by substituting the same with photocopy of the order.
Sd/-
JUDGE Sd/-
JUDGE DR/HR/RU