Gujarat High Court
Commissioner vs Gandhi on 3 March, 2011
Author: Harsha Devani
Bench: Harsha Devani
Gujarat High Court Case Information System
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TAXAP/2408/2009 13/ 13 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2408 of 2009
For
Approval and Signature:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
HONOURABLE
MR.JUSTICE H.B.ANTANI
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1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
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COMMISSIONER
- CENTRAL EXCISE CUSTOMS & SERVICE TAX - DAMAN - Appellant(s)
Versus
GANDHI
FIBERS - Opponent(s)
=========================================
Appearance :
MR.VARUN
K.PATEL for
Appellant
MR KB TRIVEDI, SR. ADVOCATE with MR HARDIK P MODH for
Respondent
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CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE H.B.ANTANI
Date
: 09/12/2010
ORAL
JUDGMENT
(Per : HONOURABLE MS.JUSTICE HARSHA DEVANI) Leave to amend the proposed questions by adding the additional question as proposed question "(f)". Amendment to be carried out forthwith.
In this appeal under section 35G of the Central Excise Act, 1944 (the Act), the appellant, Commissioner, Central Excise, Customs & Service Tax, Daman, has challenged the order dated 11.6.2009 passed by the Customs, Excise & Service Tax Appellate Tribunal (the Tribunal), by proposing the following questions :
"[a] Whether, in the facts and circumstances of the case, the respondent assessee had violated conditions/provisions of para 6.8 (f) of EXIM Policy (2002-07) by selling finished products in Domestic Tariff Area (DTA) without taking prior permission of Development Commissioner and without achieving positive Net Foreign Exchange (NFE)?
[b] Whether, in the facts and circumstances of the case, the assessee had violated provisions of proviso to section 3 of the Central Excise Act, 1944 by not paying excise duty equal to aggregate duty of customs on entire sale of finished goods in DTA irrespective of the fact that the goods are manufactured from indigenous or imported raw materials?
[c] Whether, in the facts and circumstances of the case, the learned CESTAT has erred in law by allowing the appeal of the respondent assessee with consequential relief after holding that the issue is no longer res-integra in view of the decision of larger bench of the Tribunal in case of Juned Bilal Menon v. CCE, Surat II [2008 (221) ELT 45)?
[d] Whether, in the facts and circumstances of the case, the wrong concession on issue of law given by SDR before the CESTAT is binding on the department, particularly when the said SDR is not authorized to do so?
[e] Whether the learned CESTAT has erred in law by relying on the decision of Juned Bilal Menon v. CCE, Surat II [2008 (221) ELT 45) as the facts of the said case are different and the larger bench of the Tribunal has not decided at all the issues but it has sent the matter back to the original bench of the Tribunal for further orders?
[f] Whether, in the facts and circumstances of the case, the learned CESTAT was justified in law in allowing the appeal filed by the respondent without assigning any reason and without controverting the findings recorded in the order in original?"
At the outset, Mr. K.B. Trivedi, learned Senior Advocate appearing on behalf of the respondent assessee has raised a preliminary objection as regards the very maintainability of the appeal contending that the impugned order of the Tribunal relates to the determination of questions having a relation to the rate of duty of excise for the purpose of assessment, hence, in the light of the provisions of section 35G of the Act, this Court has no jurisdiction to entertain the appeal and that in view of the provisions of section 35L of the Act an appeal against the order of the Tribunal would lie before the Supreme Court.
Inviting attention to the questions proposed in the appeal memo, it is submitted that the controversy involved in the present appeal is in the nature of a classification dispute which relates directly and proximately to the rate of duty applicable to the goods in question. In support of his submission, the learned counsel has placed reliance upon a decision of the Supreme Court in the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs, 1993 [68] ELT 3 (SC), for the proposition that 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 the purposes of assessment. Reliance is also placed upon a decision of the Andhra Pradesh High Court in the case of Commissioner of Central Excise, Hyderabad-IV v. Shriram Refrigeration Industries, 2009 (240) ELT 201 (A.P.), wherein the court placing reliance upon the decision of the apex court in the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs, has dismissed the appeal. Strong reliance was placed upon a decision of the Bombay High Court in the case of Sterlite Optical Technologies Ltd. v. Commissioner of Central Excise, Aurangabad, 2007 (213) ELT 658 (Bombay), wherein an issue similar to the controversy involved in the present appeal was involved, viz., as to whether the applicable rate of duty would be under section 3 of the Act or under the proviso to section 3(1) of the Act. In the said case, such a preliminary objection as regards the maintainability of the appeal before the High Court had been raised by the revenue and the Court had accepted the said contention and upheld the preliminary objection raised by the revenue, by holding that the appeal was not tenable before the Court.
Whereas on the other hand, according to Mr. Varun Patel, learned standing counsel for the appellant has submitted appeal against the impugned order would lie before this Court under section 35G of the Act. Inviting attention to the proposed questions, it was submitted that question (d) which raises a question as to whether a wrong concession on an issue of law given by Senior Departmental Representative (SDR) before the Tribunal is binding on the Department, particularly when the said SDR was not authorized to do so; as well as question (f) which pertains to the issue as to whether the Tribunal was justified in allowing the appeal filed by the respondent without assigning any reasons and without controverting the findings recorded in the order in original, are questions which do not have any relation to the rate of duty applicable to the goods or the value thereof and as such would fall within the domain of this Court. It was urged that the said two questions have no relation with the question of classification or determination of rate of duty; and that it is possible for the Court to decide the appeal on these two questions itself; and as such, the present appeal is well within the bounds of the jurisdiction of this Court.
Inviting attention to the impugned order, it is submitted that the same is not a speaking order. That in the order in original, the adjudicating authority has decided several issues. However, the Tribunal has neither examined the said issues, nor has recorded any findings as to how the said findings recorded by the adjudicating authority are incorrect or unjustified. Referring to the impugned order, it is pointed out that the Tribunal has decided the appeal on the basis of a concession made by the SDR, to submit that a wrong concession of law would not be binding on the revenue and that the question as to whether or not the decision on which reliance has been placed by the Tribunal is applicable to the facts of the present case or not, can be gone into by this Court.
Strong reliance is placed upon a decision of this High Court in the case of Anil Products Limited v. Commissioner of Central Excise, Ahmedabad-II, 2010 (257) ELT 523 (Gujarat), wherein, in a similar set of facts questions with regard to classification of goods had been raised in the appeal. The Court held that it had jurisdiction to decide the appeal in the light of the fact that it was possible for the Court to decide the matter by dealing with the issue regarding the order of the Tribunal being a non-speaking and non-reasoned order. The Court had held that if it concentrates only on the said question, leaving aside the question of classification of the assessee's product, the tax appeal would be maintainable before this Court. The Court, accordingly, entertained the appeal on a limited aspect, to hold that the Tribunal had not considered all the submissions of the assessee that were made before it. It is submitted that in the light of the said decision of this Court, it is apparent that this Court has jurisdiction to decide this appeal at least to the limited aspect as regards the order of the Tribunal being a non-speaking order, and the matter having been disposed of on a concession. It was, accordingly, urged that the appeal be entertained and disposed of by deciding the aforesaid two issues without entering into the merits of the questions relating to classification of the goods.
In rejoinder, Mr. K.B. Trivedi, learned counsel has submitted that as a matter of propriety, the SDR having made a concession, if it is the case of the revenue that the concession made was a wrong concession, it was for the revenue to approach before the same forum to point out the said fact. It is submitted that a cumulative reading of sections 35G and 35L of the Act, rules out the jurisdiction of this Court to deal with an issue relating to the determination of the rate of duty. That questions involved in the present appeal, have a direct nexus to the determination of rate of duty, and as such, the appeal is not maintainable before this Court.
Dealing with the contention as regards the order of the Tribunal being a non-speaking order, it is submitted that the order of the Tribunal cannot in any manner be said to be a non-speaking order inasmuch as, in the light of the fact that both the sides had agreed that the issue stands concluded by the decision of the Larger Bench of the Tribunal, it was not necessary for the Tribunal to deal with the issue raised in the appeal in detail.
This Court has considered the submissions advanced on behalf of the respective parties and has also perused the authorities cited at the bar.
In the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs, (supra), the Supreme Court has held that thus:
"9. The importance of the present appeal lies not so much in deciding which appeals can be heard by a member of CEGAT sitting singly and which by a Special Bench thereof as in determining where a reference can be made by CEGAT to the High Court and in which cases an appeal against an order of CEGAT can be filed directly before the Supreme Court.
Where an appeal lies to the Supreme Court, the necessity of a reference on a question of law to the High Court is obviated. An appeal to this Court is provided where, as aforementioned, the questions in issue, relating to the rates of duty or the value of goods for the purposes of assessment, have relevance not only for the parties there concerned but for other importers as well.
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 should be enhanced or reduced having regard to certain matters that the said Act provides for. Although this Explanation expressly confines the definition of the said expression to sub-section (5) of Section 129D, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly. The statutory definition accords with the meaning we have given to the said expression above. Questions relating to the rate of duty and 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 and proximately to the value of goods for purposes of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to cases where, for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods. (Emphasis supplied) Examining the facts of the present case in the light of the aforesaid decision of the Supreme Court, a bare reading of the proposed questions clearly indicates that the main controversy which arises for determination is in the nature of a classification dispute, which relates directly and proximately to the rate of duty applicable for the purposes of assessment. Section 35G of the Act lays down that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, not being 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.
In the circumstances, in the light of the decision of the apex court in the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs (supra), the classification dispute having a direct nexus to the determination of the rate of duty, the present appeal which relates to a classification dispute would not be maintainable under section 35G of the Act to the High Court.
However, on behalf of the revenue, reliance has been placed upon a decision of this High Court in the case of Anil Products Limited v. Commissioner of Central Excise, Ahmedabad-II (supra), wherein the Court, in the facts of the said case, despite the fact that the appeal involved determination of a classification dispute, held that in the light of the fact that the Court had concentrated only on the question as regards the Tribunal's order being a non-speaking and non-reasoned order, the Court had the jurisdiction to entertain the appeal.
In this regard, a perusal of the impugned order indicates that the Tribunal has in the first paragraph recorded the facts very briefly. The Tribunal has thereafter recorded that both the sides agreed that the issue is no longer res-integra and stood concluded by the decision of the Larger Bench in the case of Juned Bilal Memon, 2008 (221) ELT 45 (Tri-LB). The Tribunal has also recorded that the learned advocate had submitted that the Supreme Court had also considered this issue in M/s Virlon Textile Mills, as reported in 2007 (211) ELT 353 (SC) and that, there were several other decisions of the Tribunal subsequent to the decision of the Larger Bench on the same issue in favour of other 100% EOUs. Considering the fact that the issue was no longer res-integra and stood decided in favour of the assessee, the Tribunal allowed the appeal in favour of the assessee.
On a plain reading of the impugned order of the Tribunal, it cannot be said that the order is a non-speaking order. When both the sides had agreed that the issue involved in the appeal before the Tribunal stood concluded by the decision of the Larger Bench, it was not necessary for the Tribunal to go into facts and contentions in detail. In the circumstances, the submission that the order of the Tribunal is a non-speaking one does not merit acceptance.
Another contention raised on behalf of the revenue is that the Tribunal has wrongly placed reliance upon the decision of the Larger Bench of the Tribunal in the case of Juned Bilal Menon v. CCE, Surat II (supra) inasmuch as, the same would not be applicable to the facts of the present case. It has also been submitted that the decision of the apex court in the case of M/s Virlon Textile Mills (supra) would also not be applicable in the facts of the present case. As to whether the aforesaid decisions would be applicable to the facts of the present case can be examined only by entering into the merits of the case, which has a direct bearing on the question of classification and as such relates to the determination of the rate of duty of the goods in question. In the circumstances, any discussion on the said issue would pertain to determination of a question which relates to the rate of duty of excise for the purposes of assessment and as such, would be beyond the scope of the jurisdiction of this Court.
Insofar as the decision of this Court in the case of Anil Products Limited v. Commissioner of Central Excise, Ahmedabad-II (supra), on which strong reliance has been placed on behalf of the revenue is concerned, a perusal of the judgement indicates that though the issue regarding classification had been raised in the said appeal, the Court held that the objection regarding the maintainability of the appeal would be good if the court were to decide the issue of classification in the said tax appeal. The Court upon perusal of the questions framed by the assessee was of the view that the main grievance of the assessee was as regards the non-speaking and non-reasoned order passed by the Tribunal. The Court noted that the assessee's grievance was that despite various submissions having been made and several judgments having been relied upon by the assessee, the same were not considered in their true perspective and that the Tribunal had placed reliance upon decision of Shanpur Industries which was an ex parte decision. The Court, accordingly, was of the view that the Court had jurisdiction to entertain the appeal if the Court only concentrated on the said question leaving aside the question of classification of the assessee's product. The Court, therefore, held that the appeal was maintainable and accordingly, heard the appeal on the aforesaid question only.
The aforesaid decision of this High Court would not be applicable to the facts of the present case inasmuch as, in the facts of the present case, it is not the case of the revenue that any contention raised by it has not been considered and dealt with by the Tribunal. The case of the revenue is that the order of the Tribunal is a non-speaking order. However, as already discussed hereinabove, in the facts and circumstances of the present case it cannot be said that the impugned order of the Tribunal is a non-speaking one.
Insofar as the question as to whether the concession made by the counsel on a question of law is binding when such concession was without authority is concerned, as has been rightly submitted on behalf of the assessee, the fact that the concession was made by the learned SDR without authority is required to be brought to the notice of the Tribunal by filing appropriate application and cannot be raised for the first time before this Court by way of a substantial question of law.
In the light of the aforesaid discussion, it is not possible for the Court to entertain the appeal by following the decision of this Court in the case of Anil Products Limited v. Commissioner of Central Excise, Ahmedabad-II (supra) inasmuch as, the said decision was rendered in a different set of facts and would not be applicable to the facts of the present case.
For the foregoing reasons, the present appeal which raises a classification dispute and therefore, has a direct nexus to the determination of the rate of duty of goods for the purposes of assessment is not maintainable before this Court. In the circumstances, without entering into the merits of the case, the appeal is dismissed as not maintainable before this Court.
[HARSHA DEVANI, J.] [H.B.ANTANI, J.] parmar* Top