Gujarat High Court
Commissioner Of Ce And Cgst Bhavnagar vs Krishna Constructions on 27 September, 2023
Author: Biren Vaishnav
Bench: Biren Vaishnav, Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 129 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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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 or any order made thereunder ?
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COMMISSIONER OF CE AND CGST BHAVNAGAR
Versus
KRISHNA CONSTRUCTIONS
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Appearance:
MS HETVI H SANCHETI(5618) for the Appellant(s) No. 1
MR DHAVAL SHAH(2354) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 27/09/2023
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV)
1. This Tax Appeal filed under Section 359 of the Page 1 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Central Excise Act, 1944, challenges the order dated 12.08.2022 passed by the Customs, Excise and Service Tax Appellate Tribunal West Zone Bench, Ahmedabad.
2. The following substantial questions of law have been raised in the appeal:
"(a) Whether in the facts and circumstances of the case, the Ld. Tribunal erred in concluding that shared data of noticee by the Income tax department cannot be used against the applicant without carrying out Independent inquiry / investigation by the Applicant Department?
(b) Whether in the facts and circumstances of the case, the Ld. Tribunal erred in concluding that demand cannot be confirmed on the applicant, if Revenue did not specified the service under which the activity of the applicant is covered especially in view of the fact that activity of the Respondent is liable for payment of service tax, since the activity of the respondent is not eligible for the exemption under Notification No.25/2012-ST [Sr.No.12(A)] in as Page 2 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined much as the conditions framed under the said Notification by virtue of amendment vide Notification No. 9/2016-ST dated 01/03/2016 ?
(c) Whether in the facts and circumstances of the case, the Ld. Tribunal erred in holding the amount received against WR P Way maintenance labour service by the Respondent is towards maintenance of Railway Tracks and exempted under the serial No.12 of the Notification No.25/2012-ST dated 20.06.2012 especially in view of the exemption provided against Sr. No.12 (a) or Sr. No. 12A of Notification ibid is towards maintenance of a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession and Railway Tracks is neither a civil structure nor it can be classified as any other original works ?
(d) Whether in the facts and circumstances of the case, the Ld. Tribunal erred in holding that the Cleaning of Station services is covered under Maintenance of Railway Station and the same is eligible for exemption under the Sr.No.12 of Notification No. 25/2012-ST.?
(e) Whether in the facts and
circumstances of the case, the Ld.
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NEUTRAL CITATION
C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023
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Tribunal erred in holding that W R Grinding FB Welding services falls under the category of Repairs and Maintenance of Railway Tracks as a original work and eligible for exemption under Sr. No. 12 of Notification No. 25/2012-ST especially in view of the fact that the said activity is neither carried out for a civil structure or any other original works ?
(f) Whether in the facts and circumstances of the case, the Ld. Tribunal erred in holding in adjudicating upon fresh and new argument of the Respondent claiming exemption under Sr. No. 12 (a) of Notification No. 25/2012-ST dated 20.06.2012., which was never pleaded before in the original proceedings in view of the fact that the Respondent before the adjudicating authority in original proceedings had claimed exemption for their activities under Sr. No. 14 of Notification No. 25/2012-ST dated 20.06.2012?
(g) Whether in the facts and circumstances of the case, the Ld. Tribunal erred in holding that the income of the Respondent earned from Western Railway could not have been considered as manpower recruitment agency/ supply services ?"
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3. Mr.Dhaval Shah learned counsel appearing for the respondent has raised a preliminary objection and submitted that the appeal preferred by the appellant is not maintainable.
He submitted that the issue involved in the present Tax Appeal is as to whether the order-in-
original under challenge involves a question relating to "determination of rate of duty of excise or the value of goods for the purposes of assessment of duty" as appearing in Section 35G(1) and 35L(b) and therefore for the issue involved in the present appeal, the appeal would only be maintainable before the Hon'ble Supreme Court.
3.1 For such issue, Mr.Dhaval Shah would rely on the following decisions:
(i) Commissioner of Central Excise Vs. Page 5 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Processors Ltd; 2016 (331) ELT 234 (Guj)
(ii) Commissioner of C. Ex. & Customs Vs. Swiss Glass Coat Equipments Ltd; 2011 (273) ELT 364 (Guj.)
(iii) Principal Commissioner Vs. Reliance Industries Ltd; 2023 (383) ELT 396 (Guj.)
(iv) Commissioner of Service Tax Vs. Saumya Construction Pvt. Ltd; 2015 (38) STR 17 (Guj.)
(v) Commissioner Vs. Glare Cutlery Pvt.
Ltd; 2015 (321) ELT A160 (Guj)
(vi) Commr. of C. Ex. & S.T., Ahmedabad - II Vs. Pravinbhai Narshibhai Patel; 2017 (346) ELT 533 (Guj.)
(vii) Commissioner of Service Tx Vs. Ernst & Page 6 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Young Pvt. Ltd & Ors; 2014 (2) TMI 1133 -
Delhi High Court
(viii)Commr. Of S.T., Bhavnagar Vs. Scott Wilson Kirkpatrick (I) Pvt. Ltd; 2011 (23) S.T.R. 321 (Kar.)
(ix) The Comm. of C. Ex & S.T. Vs. Sikkim Manipal University of Health, Medical & Technological Science, Tadong, Gangtok, Sikkim; 2019 (12) TMI 560 (Sikkim High Court)
(x) The Pr. Commissioner of CGST & C.E. Mumbai East Vs. DHL Lemuir Logistics Pvt.
Ltd; 2019 (4) TMI 811 - Bombay High Court
(xi) The Pr. Commissioner of Service Tax Pune Vs. Symbiosis Society; 2019 (6) TMI 1141 - Bombay High Court Page 7 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined
(xii) Navin Chemicals MFG. & Trading Co.
Ltd. Vs. Collector of Customs; 1993 (68) ELT 3 (S.C.) 3.2 Mr.Shah would therefore submit that the Exemption Notification, if denied, consequently, the duty liability under a different head of the services would arise, and the assessee would be subjected to the tax assessment at the rate prescribed under the law. Therefore, the Appeals fall under the caption "not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment".
3.3 Mr.Shah would further submit that the arguments raised by the appellant that Section 66D of the Finance Act, 1994 was inserted from the year 2012, whereby a negative list of services Page 8 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined was prescribed, and therefore, there is no classification of services left open, post-2012. It was also contended that there was a uniform rate of tax post-2012, and therefore, there is no question of issue pertaining to the rate of duty.
3.4 Mr.Shah would submit that the interpretation advanced by the appellant is far-
fetched and contrary to the settled law laid down by our High Court in a number of judgments, which are referred to herein above. The respondent drew the attention of the Hon'ble Court about the question of law framed by the appellant, and the same pertains to the classification of services, and therefore, it is not correct that post-2012, there cannot be any classification of services. Further, it was argued by the respondent that after 2012, the provision of Section 35G remained the same, and Page 9 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined therefore, the arguments that the interpretation made by our Court in all these case laws does not apply, is not correct.
3.5 Lastly, he would submit that the present appeal raises questions of law, which has a direct bearing on the rate of duty and proximate relationship to the rate of duty and value of the services for the purpose of the assessment, and therefore, the present appeal is not maintainable under Section 35G of the Central Excise Act, 1944 before this Hon'ble High Court.
4. In response, learned advocate Ms.Hetvi Sancheti for the appellant - revenue would submit:
4.1 That, the service tax was introduced by way of Finance Act, 1994. At the relevant point of time, only those services that were Page 10 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined found in section 65(105) of the Finance Act, 1994 was considered taxable. More popularly known as Positive List. The List of taxable services increased from 3 to 117 till year 2011. Many disputes arose about the taxability of a particular activity and also its classification in a particular taxable head. To get over the difficulties in defining service, a new concept of negative list services was introduced w.e.f from 1/7/2012.
4.2 That, Section 66D of Finance Act, 1994 specifies the Negative list of services i.e the Services on which Service Tax is not leviable, pursuant to which a Mega Exemption Notification 25/2012 mentions the list of service is exempt from service tax.Page 11 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined It is submitted that Negative list basically means that all services, excluding those specified in negative list of service will be subject to service tax. Thus, one only had to see whether the service a person is providing is in the negative list or not.
4.3 That, if not, such person/entity is liable to pay service tax. Post the introduction of Negative list, the accounting code for purpose of classification of services was clarified by way of the circular of the No. 161/12/2012-ST, dated 06.07.2012, from F. No. 341/21/2012-TRU issued by the Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, Government of India, on the above subject matter. For all taxable services, there was only one accounting code, as opposed to Page 12 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined various accounting codes for different services in the positive list regime.
4.4 That, as per Section 66B of the Finance Act, 1994, with effect from 1/7/2012, the rate of the tax was uniform. Rate changed from year to year, but uniformly applicable for all services.
4.5 Hence, what transpires is that there was a uniformity in rate of tax, and all the services were to be classified as taxable or not. Services which came under negative list were not taxable, all the other services were taxable at uniform rate.
4.6 That, by virtue of section 83 of the Finance Act, 1994 all the appeal to the High Court from order of CESTAT were to Page 13 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined be filed under Section 35G of the Central Excise Act, 1944. Section 35G of the Central Excise Act, 1944, provides that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 ( not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.
4.7 That the Central Excise duty (CENVAT) is chargeable at the rates specified in the schedule to the Central Excise Tariff Act, 1985. The said schedule is divided into 20 sections and 96 Chapters. Each Chapter is Page 14 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined further divided into headings and sub-
headings. In order to determine the applicable rate of duty in respect of a particular item, the positioning of that item under a particular head or sub-head is essential. The positioning of an item in the appropriate heading/sub-heading is called classification.
4.8 Thus, under the Central Excise Act, any question relating to rate of duty of excise or to the value of goods, or its classification, the appeal regarding same was only maintainable before the Hon'ble Supreme Court under section 35 L of the Central Excise Act. The rationale behind same is to maintain uniformity in the rate of duty as well as classification of the items across the country.
Page 15 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined 4.9 However, for the purposes of the Service Tax Act, same rationale is not applicable as the rate of duty is uniform and further there is no classification of services. The only classification of service is whether they fall under the negative list or not. In the present case there is no question concerning determination of any question having a relation to the rate of duty or to the value of goods. Rate of duty is fixed, there is also no dispute as to the value.
4.10 The judgements cited by the respondents in the support of their case, pertain to the demand of service during the Positive list regime. Hence, it is submitted that same may be distinguished on the aforesaid reasoning.
Page 16 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined 4.11 Therefore, the present appeals are maintainable before this Hon'ble Court.
5. Facts in brief would indicate that M/s. Krishna Construction Co. is engaged in providing various services to Indian Railways. Notice was issued to them to show cause as to why service tax of the amounts not be payable. The defense of the assessee was that they provided services to the Indian Railways. That the services provided by them were exempted as per Serial No.14 of the Notification No.25/2012 -St dated 20.06.2012.
6. Holding that Serial No.14 of the Notification No.25/2021 dated 20.06.2012 was only available for "original work", a term defined under Explanation 1 to Rule 2A of the Service Tax (Determination of Value) Rules, 2006, the stand of the assessee was negated.
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7. On appeal to CESTAT, the Tribunal apart from merits, on the question of exemption held as under:
"5.4 We also find that impugned O-I-O dated 02-03-2022 has not appreciated facts that Appellant has provided services only to Government i.e. to Railways, which has exemption under Mega Exemption Notification No. 25/2012-ST dt. 20-12-2012 [Sr.No.12]. The adjudicating authority has confirmed the demand of Service Tax for FY 2014-15 to 2016-17 as shown in above para. The O-I-O dated 02-03-2022 has confirmed the demand only on finding that the above services were not related to "Original Works". Appellant has given detailed clarification for the said services in Appeal and submitted that they are eligible for exemption under Sr. No. 12 of the said Exemption Notification No. 25/2012-ST. Therefore the relevant Sr. No. 12 of the said Notification No. 25/2012-ST dated 20-6- 2012, which has provided such exemption has been reproduced as under :-
"12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) a civil structure or any other original works meant predominantly for use Page 18 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined other than for commerce, industry, or any other business or profession;"
5.5 Now, we examine the activities on which Service Tax has been confirmed by adjudicating authority vis-à-vis availability of exemption :-
(i) "W R Contract income" :- The adjudicating authority has confirmed Service Tax demand of Rs. 4,02,217/- @ 15 % on the total amount of Rs. 26,94,777/-, shown as "Gate Mitra Income" in Profit & Loss account against Western Railway Contract Income for the year 2016-17.
Adjudicating authority has noted that scope of work done by Appellant for this contract is of posting of Gate Mitra on vulnerable unmanned level crossing on SUNR-LMO section of SSE(PW) WC & DLJ and LMOPPVS&RLA-MHV sections for 12 months. Adjudicating authority has treated this activity as 'Manpower Recruitment supply/Agency service'. Therefore, O-I-O has held that Appellant is liable to pay service tax on this activity and denied exemption under Notification No. 25/2012-ST. Appellant has submitted that they are not engaged into providing any manpower only as a "Manpower Recruitment Agency/supply service" and that their contracts were to maintain unmanned railway crossings. We find this activity is services of Maintenance of unmanned crossing of Indian Railways. Activities performed by Appellant under contract was to maintain unmanned Railway crossings primarily for safety. Therefore, Page 19 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined activity by Appellant is not supply of manpower as such, but, it is maintenance of unmanned railway crossings, which is covered under the ambit of Maintenance of the unmanned Railway crossings. We also find that Maintenance Service is defined to mean any service provided by any person under contract or agreement in relation to maintenance of properties, whether immovable or not, excluding a motor vehicle. Appellant is neither supplying manpower nor appellant is 'engaged' in rendering services of supply of manpower as such. Therefore, Service Tax could not have been confirmed as maintenance service is exempted as per serial No.12 of Notification NO.25/2012-ST dated 20/06/2012. Hence, for activity of maintenance of unmanned Railway crossings, Service Tax @ 15 % equal to Rs. 4,02,217/- on the Taxable value of Rs. 26,94,777/- is not recoverable from Appellant.
(ii) "WR P Way maintenance Labour" :- The adjudicating authority has confirmed Service Tax demand for Rs. 1,53,00,790/- on total amount of Rs. 10,68,63,588/-, which has been shown in their Profit & Loss A/c. The adjudicating authority has given findings in O-I-O dt. 02-03-2022 with reference to work orders that the activity of Appellant is permanent way maintenance, under which they have to inspect railway tracks and have to perform normal routine maintenance of Railway Tracks. Amounts received for service are shown in Profit & Page 20 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Loss account. O-I-O dt. 02-03- 2022 has noted that work orders are for yearly maintenance of Railway Tracks. The scope of work is to inspect Railway track and to perform normal routine maintenance work on existing rails/tracks viz removing, fastening, lubrication of ERC, Cleaning of grass, over hauling of LCs, carting of rails. Adjudicating Authority has denied exemption as it is not related to "Original work" of construction, erection, commissioning, or installation pertaining to the Railways. Appellant has submitted that they are eligible for exemption under the Sr. No. 12 of the said Notification No. 25/2012- ST which provided such exemption for such Maintenance. We find this activity is services of Maintenance of the Railway Tracks, beyond doubt. Therefore, activity by Appellant is maintenance of railway tracks, which is covered under the ambit of Maintenance of Railway tracks. Therefore, Service Tax could not have been confirmed as this service is Maintenance of Railway Tracks only and it is undoubtedly exempted under the serial No. 12 of the Notification NO.25/2012-ST dated 20/06/2012.
(iii) "Cleaning of Station" :- The adjudicating authority has confirmed Service Tax of Rs. 30,530/- @ 12.36 % on amount of Rs. 2,47,171/-, which is shown as "Cleaning of Station Income" in Profit & Loss accounts for FY 2014-15, carried out against contract dt. 01-07-2011. The has held that Appellant has provided service of cleaning of station during F.Y. 2014-15 which is liable to Page 21 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Service Tax and O-I-O has confirmed Service Tax demand. Appellant submitted that they have provided service to Railways for Maintenance of Station by way of picking rags etc which is Maintenance by cleaning of Railway Station. Cleaning of Station is included in the activity of Maintenance of station. We also note that Services of maintenance including maintenance or repair of properties, whether immovable or not were introduced w.e.f. 01-07- 2003 by the Notification No. 7/2003-ST dated 20-06-2003 and "Cleaning Services" of commercial or industrial buildings and premises thereof were introduced w.e.f. 16-06-2005 by Notification No. 15/2005- ST dated 07-06-2005. Services of "maintenance or repair" is covered u/s 65(105)(zzg) of Finance Act 1994 w.e.f. 01- 07-2003 whereas the activity of "cleaning Service" is covered under Section 65(105) (zzzd) of the Finance Act 1994 w.e.f. 16-06- 2005. However, "Cleaning Service" covers commercial or industrial buildings and premises thereof or factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof. But, Railway stations are also not commercial or industrial buildings, covered under the ambit of "Cleaning Service". Accordingly, activity of Appellant of picking rags etc is not cleaning service but it is covered under Maintenance of Railway Station. Therefore, the said activity will merit classification under maintenance of the Railway Station service, in terms of Section 65A of Finance Act 1994 and Page 22 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Budget Circular No.334/4/06-TRU dt. 28-02- 2006 which is eligible for exemption under the Sr. No. 12 of Notification No. 25/2012- ST. Accordingly, demand of Service Tax on amount of Rs.2,47,171/-, attracting total amount of Service Tax Rs. 30,530/- deserves to be set aside and we do so.
(iv) "W R Grinding FB welding":- The adjudicating authority has confirmed Service Tax of Rs. 2,21,184/- @ 12.36 % on the amount of Rs. 17,89,512/-, which is shown as "Grinding FB Welding Income" in Profit & Loss accounts for FY 2014-15. As per impugned O-I-O, Appellant have only provided the service of Grinding of Flash Butt (Electric Resistance) Welding service to Western Railway under which Appellant carried out work of Grinding of rails on a flash butt welding, programmed welding sequence for welding of the rail joints during the F.Y. 2014-15 and the total amount of Rs.17,89,512/- has been received for it which is shown as "WR Grinding FB is welding". There is no detailed discussion in O-I-O regarding nature of process undertaken and nature of welding carried out on Rails/Railway Tracks. This Activity in our view is only Repairs & Maintenance. The work was carried out as per Tender floated on 25-04-2012 and it has to be treated as Repair and Maintenance of Railway Track only. Therefore, such Grinding Flash Butt (Electric Resistance) Welding activity on the Rail Tracks of Western Railway under which Appellant have carried out work during F.Y. 2014-15 Page 23 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined is nothing but Repairs and Maintenance of Railway Tracks. Thus, contract was for work for maintenance, repairs, which is exempted under Sr No. 12 of Notification No. 25/2012- ST from payment of Service Tax on value of amount paid by Railways to Appellant. Adjudicating Authority has denied exemption which is available under sr. No. 12 of Notification No. 25/2012-ST. Accordingly, Service Tax demand of Rs. 2,21,184/- on the amount of Rs. 17,89,512/-, deserves to be set aside.
5.6 The provisions of Section 65A of Finance Act 1994 provides for classification of taxable services. It is settled law that activity shall be classified of a service which gives a service essential character, as per section 65A ibid as it is applicable. The activity of maintenance, repairs are distinct and separate taxable services listed under Sr. No. 12 of Notification No. 25/2012-ST. Hence, O-I-O is not in accordance with provisions of Finance Act 1994. Sr. No 12 of Notification 25/2012-ST allows exemption in respect of repair and maintenance of a civil structure. Therefore, services of Appellant were to Railways (Western), for Repairs and Maintenance is eligible for the above exemption."
8. Section 35G(1) of the Central Excise Act, 1944 reads as under:
"Section 35G(1): An appeal shall lie to the Page 24 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law."
9. In the case of Shanti Processors Ltd (supra) a Division Bench of this Court held as under:
"3. Mr. Paresh Dave and Mr. Dhaval Shah, learned advocates for the respondents at the outset submitted that the controversy involved in the present case relates to the determination of a question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment, under the circumstances, in view of the provisions of Section 35G read with Section 35L of the Central Excise Act, 1944, the appeal would lie before the Supreme Court and not before this court. In support of such submission, the learned counsel placed reliance upon the decision of this Court in the case of Commissioner of Central Excise v. JBF Industries Limited - 2011 (264) E.L.T. 162 (Guj), wherein this court has held that the question as regards the applicability of a notification or a circular, which has a direct bearing on the rate of duty is a question which has a direct Page 25 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined and proximate relationship to the rate of duty and value of the goods for the purposes of assessment. It was submitted that the above decision would be squarely applicable to the facts of the present case, under the circumstances, these appeals are not maintainable before this Court.
4. Mr R.J. Oza, learned senior standing counsel for the appellant is not able to dispute the above position of law.
5. A perusal of the impugned order of the Tribunal clearly shows that the dispute involved in the present case relates to the applicability of Notification No. 14/2002- C.E., dated 1-3-2002 which has a direct bearing on the determination of the rate of duty for the purposes of assessment. Under the circumstances, in the light of the provisions of Section 35G read with Section 35L of the Central Excise Act, 1944 these appeals are not maintainable before this Court."
10. In the case of Swiss Glass Coat Equipments Ltd (supra) the Court held as under:
"4. We have heard Ms. Naynaben Gadhvi, learned Standing Counsel appearing on behalf of the appellant and Mr.Dhaval Shah, learned advocate appearing on behalf of the respondent, at length and in great detail. We have also considered the reasons assigned by the Tribunal. The appellant is a Page 26 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined manufacturer of glasslined vessels. It also re-glasslines old glasslined equipments by following the procedure under Rule 173H of the Central Excise Rules, 1944 as it existed at the material point of time. Such glasslined vessels were cleared by it on payment of duty on the value of components used and rectified vessels on job charges. Proceedings were initiated against the respondent on the ground that activities undertaken by it amounted to 'manufacture' and it was required to pay duty on the entire value of re-glasslined vessels. It was the contention of the appellant that it is not liable to pay duty as the activities of re- glasslining of old vessels did not amount to 'manufacture' within the meaning of Section 2(f) of the Act. The aforesaid stand of the assessee was not accepted by the Deputy Commissioner, Central Excise & Customs, Anand Division, Anand as well as Commissioner (Appeals). Being aggrieved, the assessee approached the Tribunal against the order of the Commissioner (Appeals). After hearing the arguments at length and considering the judgment cited by both the sides, the Tribunal held that re- lining of old and used cylinders does not amount to manufacture. Therefore, the orders passed by the authorities below were quashed and set aside and the appeal was allowed with consequential relief to the respondent. The Revenue being aggrieved by the aforesaid order passed by the Tribunal, has challenged the same in the present appeal.Page 27 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
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5. The Andhra Pradesh High Court in the case of Commissioner of Central Excise, Hyderabad v. Shriram Refrigeration Industries (supra) has held that the question as to whether any process undertaken by a manufacturer amounts to manufacture or not, and if the goods produced during that process are excisable or not would fall within the meaning of the expression determination of rate of duty of excise or the value of the goods for the purposes of assessment of duty' used in Section 35G(1) and Section 35L(b) of the Act. We are in agreement with the view taken by the Andhra Pradesh High Court. In the circumstances, the present appeal which raises a question as to whether re-glass lining of old vessels amounts to manufacture or not, involves determination of a question relating to the rate of duty of excise or value of goods for the purposes of assessment, would lie before the Supreme Court and not before this Court."
11. The Division Bench of this Court in the case of Reliance Industries Ltd. (supra) held as under:
"6. We have heard learned Counsel appearing for the respective parties. We have noticed that in the decision rendered by Hon'ble Supreme Court in the case of Navin Chemicals MFG & Trading Co. Ltd. (supra), the Hon'ble Supreme Court while deciding the appeal in relation to classification of goods and as to whether or Page 28 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined not they are covered by exemption notification directly and proximately to the rate of duty, held as under:
"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.Page 29 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined 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."
7. This Court in the case Swiss Glass Coat Equipments Ltd. (supra), while deciding the issue in relation to maintainability of the appeal, has held as under:
"3. Mr. Dhaval Shah, learned advocate, appearing on behalf of the respondent, at the outset, submitted that the appeal preferred by the appellant is not maintainable. Learned advocate placed reliance upon a decision of the Andhra Pradesh High Court in the case of Commissioner of Central Excise, Hyderabad v. Shriram Refrigeration Industries [2009 (240) E.L.T. 201 (A.P.), wherein it has been held that the question whether the process, if any, undertaken in the service centre of the assessee amounts to manufacture of stators by assessee or not, and if the goods produced in that process are excisable goods or not would fall within the meaning of expression 'determination of rate of duty of excise or the value of the goods for the purposes of assessment of duty' used in section 35G[1] and section 35L[b] of the Central Excise Act. Learned advocate Page 30 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined submitted that in view of the ratio laid down by the Andhra Pradesh High Court in the above judgment, the appeal is not maintainable.
4. We have heard Ms. Naynaben Gadhvi, learned Standing Counsel appearing on behalf of the appellant and Mr. Dhaval Shah, learned advocate appearing on behalf of the respondent, at length and in great detail. We have also considered the reasons assigned by the Tribunal. The appellant is a manufacturer of glasslined vessels. It also reglasslines old glasslined equipments by following the procedure under Rule 173H of the Central Excise Rules, 1944 as it existed at the material point of time. Such glasslined vessels were cleared by it on payment of duty on the value of components used and rectified vessels on job charges.
Proceedings were initiated against the respondent on the ground that activities undertaken by it amounted to 'manufacture' and it was required to pay duty on the entire value of re-glassined vessels. It was the contention of the appellant that it is not liable to pay duty as the activities of re- glasslining of old vessels did not amount to 'manufacture' within the meaning of section 2[f] of the Act. The aforesaid stand of the assessee was not accepted by the Deputy Commissioner, Central Excise & Customs, Anand Division, Anand as well as Commissioner [Appeals]. Being aggrieved, the assessee approached the Tribunal against the order of the Commissioner [Appeals]. After hearing the arguments at length and considering the judgment cited Page 31 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined by both the sides, the Tribunal held that re- lining old and used cylinders does not amount to manufacture. Therefore, the orders passed by the authorities below were quashed and set aside and the appeal was allowed with consequential relief to the respondent. The Revenue being aggrieved by the aforesaid order passed by the Tribunal, has challenged the same in the present appeal.
5. The Andhra Pradesh High Court in the case of Commissioner of Central Excise, Hyderabad v. Shriram Refrigeration Industries [supra] has held that the question as to whether any process undertaken by a manufacturer amounts to manufacture or not, and if the goods produced during that process are excisable or not would fall within the meaning of the expression `determination of rate of duty of excise or the value of the goods for the purposes of assessment of duty' used in section 35G[1] and section 35L[b] of the Act. We are in agreement with the view taken by the Andhra Pradesh High Court. In the circumstances, the present appeal which raises a question as to whether re-glass lining of old vessels amounts to manufacture or not, involves determination of a question relating to the rate of duty of excise or value of goods for the purposes of assessment, would lie before the Supreme Court and not before this Court.
6. The appeal is, therefore, dismissed as not maintainable."
Page 32 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined
8. Further, this Court in the case of Kich Industries (supra), while deciding the issue in relation to maintainability of appeal, has held as under:
"2. Having noted the proposed substantial questions of law and the issue involved, we called upon the learned Counsel appearing on behalf of the appellant to satisfy how the present Tax Appeals before this Court would be maintainable. To the aforesaid, the learned Counsel appearing on behalf of the appellant is not in a position to dispute that the identical questions came to be considered by the Division Bench of this Court in Tax Appeal No.973/2011, more particularly, with respect to maintainability of the appeal before this Court involving the similar issues raised in the present Tax Appeals and the Division Bench has dismissed the appeal as not maintainable, as for the issues involved in the Tax Appeals, appeal before Hon'ble the Supreme Court under section 35L of the Central Excise Act would be maintainable.
3. Having heard Shri R.J.Oza, learned Counsel appearing on behalf of the appellant and the proposed substantial questions of law referred to hereinabove and the controversy and the issues involved in the present Tax Appeals, we are of the view that the present Tax Appeals before this Court filed under section 35G of the Central Excise Act would not be maintainable and the questions involved can only be decided by Hon'ble the Supreme Court under section 35L of the Central Page 33 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Excise Act, 1944.
4. We are fortified by the aforesaid view of the decision of the Division Bench of this Court dated 03/07/2012 passed in Tax Appeal No. 973/2011 involving the similar issues holding that the Tax Appeal would not be maintainable under section 35G of the Central Excise Act, 1944.
5. Identical question also came to be considered by the Punjab and Haryana High Court in the case of Commissioner of Central Excise, Panchkula v. Special Machine reported in 2009(242) E.L.T. 330 where the Punjab and Haryana High Court held that the dispute as to whether the assessee was covered by the exemption notification, was related directly and proximately to rate of duty applicable and, therefore, the appeal on question of law before the High Court would not be maintainable and an appeal under section 35L of the Central Excise Act,1944 would be maintainable before Hon'ble the Supreme Court.
6. As a sequel to the above discussion, we are of the view that the present Tax Appeals are not maintainable and the only remedy available to the revenue is to file appeal before Hon'ble the Supreme Court under section 35L of the Central Excise Act, 1944. Hence, Registry is directed to return all the Tax Appeals to the appellant to present it before the competent Court having jurisdiction. Accordingly, all the Tax Appeals stand disposed of so far as this Court is Page 34 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined concerned."
9. Further, Madras High Court in the case of The Glovis India Private Limited (supra), while deciding the issue in relation to 'manufacture', has held as under:
"12. Be that as it may, since we are dealing only with the preliminary objection raised by the Assessee before us, we should naturally not express any opinion on the questions of law sought to be raised by the Revenue in the present appeals and that should be left to be raised at the appropriate forum, which, in our opinion, will be an appeal under section 35L of the Act before the Hon'ble Supreme Court of India.
13. Therefore, as indicated above, since the question of excitability under Central Excise Act and dutiability under the Customs Act are the basic questions at the root of the matter, before deciding the questions of rate of duty and valuation of goods, which as per expanded scope of 35L of the Act, should naturally now lie before the Hon'ble Supreme Court of India. Even before the said amendment in law took place, the Division Bench of Karnataka High Court in two decisions dealing with both the enactments viz., Excise Law and Customs Law made such observations and held that such appeals are maintainable before the Hon'ble Supreme Court of India. "
10. As against that, in the decisions relied upon by learned Standing Counsel Mr.Nikunt Raval in the case of Honda Siel Page 35 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Power Products Ltd. (supra), Hon'ble Madras High Court has held as under:
"10. ... Thus Section 35G of the Act does not exclude the power of the High Court to entertain an appeal against an order passed by the Appellate Tribunal on the question of manufacture. The basic question involved in the present appeal as also contested by the parties from the initial stage is whether the activity of the assessee with respect to the goods in question cleared by them is manufacture? Thus, we do not find any substance in the first preliminary objection raised by the respondent assessee as the maintainability of the appeal before the High Court under section 35G of the Act and accordingly, the said preliminary objection is rejected. We hold that the appeal is maintainable under section 35G of the Act."
11. In the decision of Motorola India Ltd. (supra), relied upon by Mr.Raval, it has been held as under:
"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 Page 36 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined involve determination of any question relating to the 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."
In our opinion, the issue in above referred two decisions, relied by appellant, was in relation to whether the goods are covered under the Notification or not and is there breach of conditions by the assessee, which have been imposed by the Notification for getting exemption? In our opinion, the said are not the facts in the present case.
12. In our opinion, the dispute in the present appeal, is in relation to whether the assessee was covered by the exemption notification, where the exemption notification was related directly and proximately to rate of duty applicable and, therefore as held by the Hon'ble Supreme Court in case of Navin Chemicals MFG & Trading Co. Ltd. (supra) and this court in case of Swiss Glass Coat Equipments Ltd. (supra) and Kich Industries (supra), appeal on the question of law before the High Page 37 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Court would not be maintainable and an appeal under section 35 L of the Central Excise Act, 1944, would be maintainable before the Hon'ble Supreme Court."
12. The Delhi High Court in the case of Ernst & Young Pvt. Ltd. & Ors. (supra) held as under:
"8. We have given due consideration to the contention raised but, after due deliberation do not think that the Delhi Gymkhana Club Ltd. (supra) requires reconsideration and reference to a Larger Bench. At this stage, we would notice and reject the contention of the appellant Revenue that the issue raised in Delhi Gymkhana Club Ltd. (supra) was relating to rate of tax and not chargeability or very levy of tax. The contesting respondents have produced before us, the appeal paper book and pointed out that the issue raised was whether the said club when offering services to members etc. would fall under the definition of "Mandap Keeper"
under Section 65(90) of the F. Act. The contention of the club was that on the principle of mutuality of interest between the club and the members, the activities were not chargeable or exigible to tax as a mandap keeper. In the said case, the issue or contention whether there were two or more provisions under which the said service would be taxable did not arise for consideration and issue of rate of tax or valuation of taxable service was not a subject matter of the original adjudication Page 38 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined order.
9. Before we examine other judgments, it is important to examine the language of Section 35G in the bracketed portion which relates to matters in which appeal is to be filed before the Supreme Court. Section 35L of the F. Act is specific. The words/expression used is "determination of any question in relation to rate of duty or value for the purpose of assessment". The word "any" and expression "in relation to"
gives appropriately wide and broad expanse to the appellate jurisdiction of the Supreme Court in respect of question relating to rate of tax or value for the purpose of assessment. Further, if the order relates to several issues or questions but when one of the questions raised relates to "rate of tax"
or valuation in the order in the original, the appeal is maintainable before the Supreme Court and no appeal lies before the High Court under Section 35G of the CE Act. Referring to the expression "other things" in Section 35G of the CE Act in the case of Bharti Airtel Limited 2013 (30) STR 451 (Del), a Division Bench of this Court has stated:
"3. On a plain reading of Section 35G of the Central Excise Act, 1944 it is clear that no appeal would lie to the High Court from an order passed by CESTAT if such an order relates to, among other things, the determination of any question having a relation to the rate of duty or to the valuation of the taxable service. It has Page 39 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined nothing to do with the issues sought to be raised in the appeal but it has everything to do with the nature of the order passed by the CESTAT. It may be very well for the appellant to say that it is only raising an issue pertaining to limitation but the provision does not speak about the issues raised in the appeal, on the other hand, it speaks about the nature of the order passed by the Tribunal. If the order passed by the Tribunal which is impugned before the High Court relates to the determination of value of the taxable service, then an appeal from such an order would not lie to the High Court.
4. However, we feel that although those decisions do support the contention of the learned counsel for the respondent, the approach that we have taken is a more direct. We reiterate, it is not the content of the appeal that is determinative of whether the appeal would be maintainable before the High Court or not but rather the nature of the order which is impugned in the appeal which determines the issue."
10. This brings us to the decision of the Supreme Court in Naveen Chemicals manufacturing & Tading Co. (supra). In the said case, the assessee had filed an appeal before the Supreme Court against the order of the appellate tribunal. The original adjudication order had directed confiscation under Section 111(d) of the Customs Act, 1962 read with Section 5 of the Imports & Export (Control) Act, 1947 (IEC Act, for Page 40 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined short) but had given option under Section 125 of the said Act to the assessee to pay fine of Rs.10,000/- in lieu of confiscation. The contention of the assessee was that the order of the Customs, Excise and Gold (Control) Appellate Tribunal affirming the direction in the original adjudication order was invalid as it was passed by a single member Bench whereas the appeal should have been heard by a Division Bench of the appellate tribunal. The Supreme Court interpreted Section 129C of the Customs Act, which was as under:
"129-C. Procedure of Appellate Tribunal-
(1) The powers and functions of Appellate Tribunal may be exercised and discharged by Benches constituted by the President from amongst the members thereof.
(2) Subject to the provisions contained in Sub-sections (3) and (4) a Bench shall consist of one judicial member and one technical member.
(3) Every appeal against a decision or order relating, among other things, to the determination of any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment shall be heard by a Special Bench constituted by the President for hearing such appeals and such Bench shall consist of not less than two members and shall include at least one judicial member and one technical member.Page 41 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined (4) The President or any other member of the Appellate Tribunal authorised in this behalf by the President may, sitting singly, dispose of any case which has been allocated to the Bench of which he is member where-
(a) the value of the goods confiscated without option having been given to the owner of the goods to pay a fine in lieu of confiscation under Section 125; or
(b) in any disputed case, other than a case where the determination or any question having a relation to the rate of duty of customs or to the value of goods for purposes of assessment is in issue or is one of the points in issue, the difference in duty involved or the duty involved; or (c) the amount of fine or penalty involved, does not exceed fifty thousand rupees."
11. It is noticeable that in sub-clause (3) to Section 129C, the words "determination of any question having relation to rate of duty or value for the purpose of assessment"
have been used. Sub-section (4) to Section 129C refers to matters wherein the President or a member of the Appellate Tribunal authorized in this behalf by the President may, dispose of any case singly. Under sub-clause (c) the single member could decide a matter of fine or penalty not exceeding Rs.50,000/-. The Supreme Court observed that the phrase "relation to"
ordinarily is of wide import but in the context of the Section, must be read as Page 42 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined meaning a direct and proximate relationship to rate of duty or value for the purpose of assessment. It was accordingly observed:-
"13. The order of the Additional Collector under appeal before CEGAT in the present case did not have any direct or proximate relation, for the purposes of assessment, either to the rate of duty applicable to the said goods or to the value thereof. All that the Additional Collector's order did was to confiscate the said goods allowing to the appellant the option of redeeming them upon payment of fine of Rs. 10,000/-. That the appellant might avail of the option, pay the fine and clear the said goods, when questions as to the rate of duty and value for purposes of assessment might possibly arise, is far too remote a contingency to satisfy the test that is laid down."
12. Submission of the Revenue is that the said judgment refers to sub-section (5) to Section 129D which was added by Customs & Central Excise Laws Amendment Act, 1988. It is submitted that the sub-section had influenced the ratio and finding of the Supreme Court as explanation to the said Section for the purpose of Section 129D had by deeming fiction defined the expression "rate of duty". It was submitted that provisions of Customs Act are not applicable to F. Act.
13. In fact sub-section (5) to Section 129D was never enforced and stands deleted from the said statute by Act 25 of 2004 w.e.f. 21st Page 43 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined December, 2004. Explanation to Section 129D was as under:
"Explanation; For the purposes of this subsection, the determination of a rate of duty in relation to any goods or valuation of any goods for the purposes of assessment of duty includes the determination of a question-
a) relating to the rate of duty of excise for the being in force, whether under the Central Excise Tariff Act, 1985 or under any other Central Act providing for the levy and collection of any duty of excise, in relation to any goods on or after the 28th day of February, 1986; or
b) relating to the value of goods for the purposes of assessment of any duty in cases where the assessment is made on or after the 28th day of February, 1986, or
c) whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil;
or
d) whether any goods fall under a particular heading or sub-heading of the Schedule to the Central Excise Tariff Act, 1985, or the Additional Duties of Excise (Goods of Special Importance) Act, 1957 or the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, or that any goods are or not covered by a particular Page 44 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty; or
e) whether the value of any goods for the purposes of assessment of duty of excise 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"
14. Drawing analogy, Revenue has submitted that clause (c) to explanation where the goods were excisable or where the rate of duty on any of the goods was NIL is not applicable as Section 35E is not one of the Sections which have been made applicable to CE Act or to the F.Act. Thus, the legislature did not want to broaden and expand scope of appeals before the Supreme Court by referring to Section 35E, which was identically worded as Section 129D of the Customs Act. In any case, the explanation to Section 35E of the EC Act has been deleted.
15. We have considered the said contention but do not think it supports the view or contention of the appellant Revenue. Section 35E of the EC Act relates to power of the Board or the Collector of Central Excise to pass such an order. Sub-section (1) stipulates that the Board can direct Collector to apply to appellate tribunal for determination of points arising out of the decision or order of the Collector. Sub-
Page 45 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined section (2) relates to power of the Collector to call for and examine any record of any adjudicating authority subordinate to him and pass orders; or to apply to Collector (Appeals) for determination of such points. The said provision as noticed was inserted by Customs and Central Excise Laws (Amendment) Act, 1988, but was never enforced. Explanation to sub-section (5) to Section 34E and sub-section (5) to Section 129D were made in the context of Customs, Excise and Revenue Tribunal Act, 1986 which provided for appeals to the new tribunal in relation to matters relating to rate of tax and valuation instead of the appellate tribunal i.e. CEGAT.
16. Another contention raised on behalf of the Revenue is that Section 66 is a charging Section but also stipulates the rate of tax. Thus question of rate of tax does not arise in service tax. The contention in fact supports the stand of the contesting respondent assessees as chargeability, valuation and rate of tax are interconnected.
17. Reference was made by the counsel for the Revenue to paragraph 11 in the judgment in the case of Naveen Chemicals Manufacturing (supra) which reads as under:-
"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 Page 46 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined 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 129-D, 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 Page 47 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined assessment, questions arise directly and proximately as to the rate of duty or the value of the goods."
18. On reading of the said paragraph, it is lucid and clear that Supreme Court had stated that questions relating to rate of duty and valuation for the purpose of assessment as defined in the explanation to sub-section (5) to Section 129D of the Customs Act, would include question relating to classification of goods under the tariff, whether or not they are covered by exemption notification; whether value for the purpose of assessment should be enhanced or reduced etc. It was further observed that statutory definition accords to the meaning given to the expression above. For the purpose of present controversy, we are inclined to ignore and not take into consideration explanation 5 to Section 129D or sub-section 5 to Section 35E. However, inspite of the said position, we do not think that the decision in the case of Delhi Gymkhana Club Ltd. (supra) is required to be referred to a Larger Bench.
Determination of any question relating to rate of tax would necessarily directly and proximately involve the question, whether activity falls within the charging Section and service tax is leviable on the said activity. The said determination is integral and an important injunct to the question of rate of tax. In case service tax is not to be levied or imposed and cannot be imposed under the charging Section, no tax would be payable. The said determination would be direct or Page 48 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined proximate to the issue of rate of tax, which will include nil tax, when no tax is chargeable.
19. If the reasoning given by the Revenue is to be accepted, it will lead to anomaly and substantial confusion. All assessments necessarily have to determine and decide the rate of tax after determining and deciding whether or not activity is chargeable or tax can be levied. Assessments against the assessee would decide the rate of tax applicable once it is held that the activity is chargeable to tax under the F. Act. The words "rate of tax" in relation to rate of tax would include the question whether or not the activity is exigible to tax under a particular or specific provision. This will be a reasonable and appropriate interpretation and will not cause or result in confusion or ambiguity regarding the appellate forum. Line between exigibility and rate of tax as propounded can be rather thin and superfluous in the present statutory context."
13. Therefore, reading the question of law framed indicates that the issue under consideration is as to whether the assessee was eligible for exception / exemption under Notification No. 25 of 2012. The exemption if denied, would require Page 49 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined adjudication on rate of duty and therefore the appeal would fall under the caption "not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment'. Essentially even if it is the contention of the appellant that from the year 2012, a negative list of services was prescribed and therefore there is no classification of service left open, the case of Saumya Construction Pvt. Ltd. (supra) reads as under:
"10. In the backdrop of the facts and contentions noted hereinabove, it would be necessary to first deal with the preliminary objection raised by the learned counsel for the respondent regarding non-
maintainability of the appeal. For this purpose it would be necessary to decide as to whether the impugned order passed by the Tribunal is an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the Page 50 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined purposes of assessment, so as to bar the jurisdiction of the High Court to adjudicate upon the issue.
11. Before adverting to the rival contentions, it would be germane to refer to the decisions on which reliance has been placed by the learned counsel for the assessee.
12. In Commissioner of Central Excise & Customs v. Swiss Glass Coat Equipments Ltd. (supra), this High Court has agreed with the view taken by the Andhra Pradesh High Court in the case of Commissioner of Central Excise, Hyderabad-IV v. Shriram Refrigeration Industries (supra), wherein it has been held that whether the process undertaken by a manufacturer amounts to manufacture or not, and if the goods produced during the process are excisable or not, would fall within the meaning of expression "determination of the rate of duty of excise or the value of the goods for purposes of assessment of duty".
13. In C.C.E., C. & S.T., Thiruvananthapuram v. Kerala State Beverages, the Kerala High Court held thus :
"4. The ratio of the precedents cited in support of the objection as to maintainability is that the question as to whether any goods are excisable or not, would also fall within the exclusion in terms of sub-section (1) of Section 35G and that Page 51 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined the bifurcation of jurisdiction between the Supreme Court and the High Courts seems to be clearly intended, also to exclude conflict of opinions between the different High Courts on matters which relate to issues having national impact in the fiscal scenario. We see abundant substance and support for this view in the manner in which the provisions of Section 35G relating to exclusion of jurisdiction of the High Court need to be understood. Section 35G(1) provides, among other things, that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment). The precedents noted above are rendered dilating on the concept of the term 'rate'. The question whether any particular transaction or goods is excisable is an issue directly linked to the question as to what would be the rate of duty of excise. If it is not liable for levy of excise duty, then it would be a case of 0% or 'nil'. The question of coverage is, thus, a matter intrinsically linked with the determination of questions having a relation to the rate of duty of excise. Not only that, the phrase "any question having a relation to the rate of duty of excise" is part of the exclusionary clause in Section 35G(1). Reverting to Section 35L, we notice that clause (b) thereof provides for an appeal to the Supreme Court from any order passed by the Appellate Tribunal relating, among Page 52 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined other things, to the determination of any question having a relation to the rate of duty of excise. This means that anything attendant to the determination of any question having a relation to the rate of duty of excise would also fall within the trappings of the exclusion, thus, taking the jurisdiction away from the High Court; to be agitated before the Supreme Court in terms of Section 35L.
5. Thinking a little deeper, if we were to understand the classification on jurisdiction to be that what would fall before the Apex Court are only appeals either as to the rate of duty or as to the value of goods for the purpose of assessment, we may immediately note that rate of tax is a prescription of the Parliament and it is not part of judicial function to tinker with the rate of tax. This has also been noticed in Karnataka State Beverages Corporation Ltd. (supra). Secondly and more importantly, if we were to find jurisdiction with the High Courts to decide as to whether there could be levy of duty of excise in relation to a particular situation, incidence or goods, that would be conceding to the position that what would be left to the Supreme Court is only to determine the rate of tax and the value of goods for the purpose of assessment which matters would get confined to issues which are fundamentally inferior in jurisprudential content vis-à-vis questions relating to the coverage itself. We do not see that the Act envisages that the High Courts would have the power of such nature that they decide Page 53 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined the question of coverage; leaving to the Supreme Court only issues relating to the rates, sans the issue of coverage. We say this in furtherance of the reasoning that led to the precedents cited on behalf of the respondent."
14. In Commissioner of Central Excise v. JBF Industries Ltd. (supra), this court has held that the question as to the applicability of a notification or a circular which has a bearing on the determination of duty is a question which has a direct and proximate relationship to the rate of duty and to the value of goods for the purposes of assessment. In Union of India v. Guwahati Carbon Ltd. (supra), the Supreme Court held that when a Revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy in a particular forum, in a particular way, it must be sought in that forum in that manner and all other forums and modes of seeking remedy are excluded. It was further held that the excise law is a complete code in order to seek redress in excise matters and hence, it may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution of India. In the facts of the said case, the question before the Tribunal was regarding determination of the assessable value of the commodity in question for the purpose of levy of duty under the Act, which according to the Supreme Court, ought to have been carried by the assessee by way of appeal before it under Section 35L of the Central Excise Act, Page 54 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined 1944.
15. In Commissioner of S.T., Bangalore v. Scott Wilson Kirkpatrick (I) Pvt. Ltd. (supra), the Karnataka High Court has, after discussing various decisions on the controversy in issue at length, held thus :
"Determination of rate of duty in relation to any Service include determination of a question whether any Service or not, whether the process if any undertaken in the service centre amounts to taxable service or not, and if the service rendered 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' used in Section 35G(1) and Section 35L(b) of the Act. Therefore, the phrase 'rate of tax' does not mean fraction of tax payable because what is the tax payable i.e., fraction payable is decided by the Legislature. Once that is prescribed by the Legislature in the Act, the Court cannot sit in judgment and alter or modify the said rate of tax. The Court has no jurisdiction to go into the correctness or otherwise of the rate of tax payable in the sense that the rate prescribed by the Legislature. In the case of Finance Act, 1994, the rate of Service Tax payable is uniform to all the services. If the rate of tax is to be understood in the sense it is suggested, Sections 35G and 35L, has no application at all to the Finance Act. Such an interpretation would render Section 83 in Page 55 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined so far as applying the provisions of Sections 35G and 35L redundant. Then there is no provision in the Finance Act, 1994 for determination of the aforesaid disputes. That was not the intendment of the Parliament. Therefore, the argument that rate of tax means only the rate at which tax is payable or a fraction is unsustainable. Act :-
36. Broadly, the following disputes do not fall within the jurisdiction of the High Court under Section 35G of the (a) Dispute relating to the Service Tax payable on any service/taxable service.
(b) The value of the taxable service for the purposes of assessment.
(c) A dispute as to the classification of services.
(d) Whether those services are covered by an exemption notification or not?
(e) Whether the value of services for the purposes of assessment is required to be increased or decreased?
(f) The question of whether any services are taxable services or not?
(g) Whether an activity is a service rendering activity or not, so as to attract levy of Service Tax?
(h)Whether a particular service falls within which heading, sub-heading of Section 65(105) of the [Finance] Act, 1994 which defines "taxable Service"."
The court held that an order passed by the Appellate Tribunal relating to the Page 56 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined determination of any question having relation to the rate of Service Taxes or to the value of service for the purposes of assessment lies to the Supreme Court under Section 35L(b) of the Act and not to the High Court under Section 35G of the Act. The Court further observed as follows :
"38. The intention behind this bifurcation of jurisdiction between the Apex Court and the High Court seems to be that more often than not, any decision on these aforesaid aspects not only affects the interest of the parties rendering services who are parties to a dispute, but also to the parties rendering those services throughout the country. In a country governed by Parliamentary legislation because of the territorial bifurcation in forming States and because of the divergent opinion which is possible, the Service Tax payable would vary from place to place. In order to bring uniformity in the levy of Service Tax throughout the country and consequently to see that the country's finance is not affected, the Parliament has vested the jurisdiction to decide the disputes with the Apex Court. Therefore, we see a policy underlining this bifurcation 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 service providers 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 Page 57 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined particular manufacture falls within the jurisdiction of the High Courts. In other words, all disputes emanating from the orders determining the rate of Service Tax and value of service, which has reached finality are to be determined by the High Court and not disputes arising prior to the stage of determining the rate of Service Tax and value of service."
16. The above decision of the Karnataka High Court has been followed by it in a subsequent decision in the case of Commissioner of Central Excise, Customs & Service Tax v. Bellary Computers - 2014 (33) S.T.R. 504 (Kar.), and by the Allahabad High Court in the case of Royal Bank of Scotland N.V. v. Commissioner of Customs & Central Excise, Noida - 2014 (35) S.T.R. 68 (All.).
17. Reference may now be made to the relevant statutory provisions. The Finance Act, 1994 does not provide for any mechanism for appeal against an order made by the Appellate Tribunal under Section 86 thereof. However, Section 83 thereof provides for the application of certain provisions of the Central Excise Act, 1944 and reads thus :
"83. Application of certain provisions of Act 1 of 1944. - The provisions of the following sections of the Central Excises and Salt Act, 1944 as in force from time to time, shall apply, so far as may be in relation to Service Tax as they apply in relation to duty of Page 58 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined excise."
18. It is in the light of the provisions of Section 83 of the Finance Act, 1994 that an appeal lies to the High Court under Section 35G and to the Supreme Court under Section 35L of the Central Excise Act, 1944 against any order passed by the Appellate Tribunal under Section 86 of the Finance Act, 1994. For the purpose of appreciating the controversy in issue, it would be germane to refer to the provisions of Section 35G and Section 35L of the Central Excise Act, 1944, which to the extent the same are relevant for the present purpose read as under :
"35G. Appeal to the High Court. - (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.
(2) xxx (3) xxx (4) xxx (5) xxx"Page 59 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined "35L. Appeal to the Supreme Court. - An appeal shall lie to the Supreme Court from -
(a) any judgment of the High Court delivered -
(i) in an appeal made under Section 35G; or
(ii) on a reference made under Section 35G by the Appellate Tribunal before the 1st day of July, 2003;
(iii) on a reference made under Section 35H, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or
(b) any order passed before the establishment of the National Tax Tribunal by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment."
19. In view of the provisions of Section 35G of the Act, an appeal would lie before the High Court against every order passed in appeal by the Appellate Tribunal, provided such order is not an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purposes of assessment. While applying the Page 60 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined said provision to an order passed in relation to Service Tax under the Finance Act, 1994, what would be required to be examined is as to whether the order passed by the Tribunal relates to the determination of the rate of Service Tax or the value of any service for the purpose of assessment.
20. Therefore, the moot question that arises for consideration is as to whether the order passed by the Tribunal is an order relating to determination of the rate of Service Tax or the value of any service for the purpose of assessment. As can be seen on a combined reading of Section 35G and Section 35L of the Act, if the order of the Tribunal relates to determination of the rate of duty, the appeal would lie before the Supreme Court and not before the High Court. The expression "rate of duty" has not been defined under the Act. However, for the purpose of considering the meaning assigned to the said expression, the Supreme Court in the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector of Customs - 1993 (68) E.L.T. 3 (S.C.), has looked into the Explanation under Section 35E of the Central Excise Act which deals with the powers of the Board or Commissioner of Central Excise to pass certain orders. Section 35E of the Act, insofar as the same is relevant for the present purpose, reads thus :
"35E. Powers of Board or Commissioner of Central Excise to pass certain orders. - (1) The Board may, of its own motion, call for Page 61 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined and examine the record of any proceeding in which a Commissioner of Central Excise as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself as to the legality or propriety of any such decision or order and may, by order, direct such Commissioner or any other Commissioner to apply to the Appellate Tribunal or, as the case may be, the Customs and Excise Revenues Appellate Tribunal established under Section 3 of the Customs and Excise Revenues Appellate Tribunal Act, 1986 (62 of 1986) for the determination of such points arising out of the decision or order as may be specified by the Committee of Chief Commissioners of Central Excise in its order.
(2) The Commissioner of Central Excise may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct (such authority or any Central Excise Officer subordinate to him) to apply to the Commissioner (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Commissioner of Central Excise in his order.
(3) xxxxx.
(4) xxxxxx.Page 62 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined (5) The provisions of this section shall not apply to any decision or order in which 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 of any duty is in issue or is one of the points in issue.
Explanation - For the purposes of this sub- section, the determination of a rate of duty in relation to any goods or valuation of any goods for the purposes of assessment of duty includes the determination of a question -
(a) relating to the rate of duty of excise for the time being in force, whether under the Central Excise Tariff Act, 1985 (5 of 1986), or under any other Central Act providing for the levy and collection of any duty of excise, in relation to any goods on or after the 28th day of February, 1986; or
(b) relating to the value of goods for the purposes of assessment of any duty of excise in cases where the assessment is made on or after the 28th day of February, 1986; or
(c) whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil; or
(d) whether any goods fall under a particular heading or sub-heading of the First Schedule and the Second Schedule of the Central Excise Tariff Act, 1985 (5 of 1986), or the Additional Duties of Excise Page 63 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined (Goods of Special Importance) Act, 1957 (58 of 1957), or the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), or that any goods are or not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty; or
(e) whether the value of any goods for the purposes of assessment of duty of excise 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. On a plain reading of the above provision, the intention of the Legislature as regards the expression "determination of the rate of duty or value of goods" is clear, viz., it includes the determination of a question relating to the rate of duty of excise under the Central Excise Tariff Act or any other Central Act providing for levy and collection of duty, relating to the value of goods for the purpose of assessment of any duty of excise; whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil; or whether any goods fall under a particular heading or sub- heading of the Schedules to the Central Excise Tariff Act, 1985 etc.; or whether any goods are or not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty; or whether the value of any goods for Page 64 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined the purposes of assessment of duty of excise shall be enhanced or reduced. Insofar as the applicability of Service Tax is concerned, the rate of determination of duty in terms of the above provisions can be stated to be relating to the rate of Service Tax for the time being in force relating to the value of any service for the purpose of assessment of Service Tax; whether the activity is a service within the meaning of such expression as defined under the Finance Act, 1994; or whether the rate of Service Tax in respect of any service is nil or whether any service falls under the category of taxable service under sub-section (105) of Section 65 of the Finance Act, 1994; or whether any service is or is not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from payment of Service Tax; or whether the value of the service for the purposes of assessment of Service Tax shall be enhanced or reduced by the addition or reduction of the amounts in respect of such matters as are specifically provided in the Act.
22. It may be recalled that the first question proposed by the appellant is as to whether the Tribunal has committed a serious error in interpreting the definition of "Real Estate Agent" defined under Section 65(88) of the Finance Act, 1994 by not finding the respondent herein liable for discharge of Service Tax under the category of Real Estate Agent services for the amount Page 65 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined received by them as development charges? The Tribunal, in the impugned order has held that the service rendered by the assessee does not get covered under the category of Real Estate Agent services. Evidently, therefore, the dispute involved in the present case relates to whether the activity carried out by the assessee is a service within the meaning of such expression as defined under the Finance Act, 1994; or whether such service falls under the category of taxable service under sub-section (105) of Section 65 of the Finance Act, 1994. Therefore, the controversy involved in the present case is a classification dispute which has a direct and proximate relation to the rate of Service Tax or the value of any service. Consequently, this court has no jurisdiction to adjudicate upon the said controversy."
14. Even the Karnataka High Court in the case of Scott Wilson (supra) held as under:
"What is assessment?
14. The word "assessment" is used as meaning sometimes the computation of rate of duty, sometimes the assessable value of Service and sometimes the whole procedure laid down under the Act for imposing duty liability upon the manufacturer or importer. The word assessment is, thus, capable of bearing a very comprehensive meaning; in the context, it can comprehend the whole Page 66 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined procedure for ascertaining and imposing duty liability.
15. The Privy Council in the case of Commissioner of Income Tax v. Khemchand Ramdas has observed as under :-
"One of the peculiarities of most Income-tax Acts is that the word 'assessment' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the taxpayer. The Indian Income-tax Act is no exception in this respect,..............."
16. In Hirjibhai Tribhuvandas v. Income Tax officer Rajnandgaon and Another [1958 33 ITR 448] it was held as under :-
"In the normal sense "to assess" means "to fix 'the amount of tax due or to determine such amount". The process of re-assessment is to the same purpose and would thus be included in the connotation of the term "assessment." "The words levy, assessment and collection as we understand them include all the processes by which the tax is ascertained, demanded and realised and "re-assessment" being one of those process comes within the ambit of the phraseology employed."
It will be observed that section 34 of the Income-tax Act contemplates four different cases in which the power to assess escaped Page 67 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined income has been given. Where there has been no assessment at all, the term "assessment" would be appropriate and where there was an assessment at too low a rate or with unjustified exemptions, the term "re-assessment" would be appropriate. It was thus necessary to resort to the use of two different terms to cover with clarity the different cases dealt with in that section. This does not mean that the terms should be treated as mutually exclusive. In interpreting the term "assessment" as used in Section 7 of the Taxation Laws Act it should be given its plain meaning. It should not be understood in any restricted or special sense in which it may have been used in the Indian Income- tax Act in a particular context.
17. The Apex Court in the case of Income Tax Officer, Bangalore v. K.N. Guruswamy [1958 ITR Vol. 34 601] explaining the meaning the word assessment arising under the Income Tax Act has held as under : -
"Total income means the total amount of income, profits and gains computed in the manner laid down in the Act, and there are no good reasons why the word "assessment"
occurring in the saving provisions should be restricted in the manner suggested so as to exclude proceedings for assessment of escaped income or under-assessed income .............. In its normal sense, "to assess" means "to fix the amount of tax or to determine such amount". The process of re- assessment is to the same purpose and is Page 68 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined included in the connotation of the term "assessment". The reasons which led us to give a comprehensive meaning to the word "assessment" in section 13(1) of the Finance Act, 1950, operate equally with regard to the saving provisions under present consideration."
18. The Supreme Court in the case of C.A. Abraham v. Income-Tax Officer, Kottayam, and Another explaining the meaning of the word assessment in the context of the Income Tax Act held as under :-
"A review of the provisions of Chapter IV of the Act sufficiently discloses that the word "assessment" has been used in its widest connotation in that chapter. The title of the chapter is "Deductions and Assessment."
The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18A deals with advance payment of tax and imposition of penalties for failure to carry out the provisions therein. Section 23A deals with power to assess individual members of certain companies on the income deemed to have been distributed as dividend, section 23B deals with assessment in case of departure from taxable territories, section 24B deals with collection of tax out of the estate of deceased persons, section 25 deals with assessment in case of discontinued business, section 25A with Page 69 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined assessment after partition of Hindu undivided families and sections 29, 31, 33 and 35 deal with the issue of demand notices and the filing of appeals and for reviewing assessment and section 34 deals with assessment of incomes which have escaped assessment.
The expression "assessment" used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, "all the provisions of Chapter IV shall so far as may be apply to such assessment" a restricted content: in terms it says that all the provisions of Chapter IV shall apply so far as may be to assessment of firms which have discontinued their business.
Determination - Meaning :
19. Similarly the meaning of the word "determination" also has to be kept in mind.
In Jaswant Sugar Mills Ltd. Meerut v. Lakshmi Chand and others, reported in AIR 1963 Supreme Court 677 (V 50 C 104), it is held as under :-
Page 70 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined "10. The expression "determination" in the context in which it occurs in Art. 136 signifies an effective expression of opinion which ends a controversy or a dispute by some authority to whom it is submitted under a valid law for disposal. The expression "order" must have also a similar meaning, except that it need not operate to end the dispute. Determination or order must be judicial or quasi-judicial: purely administrative or executive direction is not contemplated to be made the subject-matter of appeal to this Court. The essence of the authority of this Court being judicial, this Court does not exercise administrative or executive powers i.e. character of the power conferred upon this Court original or appellate, by its constitution being judicial, the determination or order sought to be appealed from must have the character of a judicial adjudication.
Meaning of "Rate of Duty"
20. It is in this background we have to interpret the words "rate of duty". The question is, what is the meaning attached to the 'rate of duty' as mentioned under these provisions. In order to understand the word 'rate of duty' and the dispute relating to that, it is useful to refer to the meaning assigned to the said word by the Parliament by way of an explanation to sub-section (5) of Section 35G by amendment Act 29/1988. The said amendment was intended to be brought into force from the date to be notified. However, it was not brought into Page 71 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined force at all. Notwithstanding the same, in order to understand the meaning assigned to the word 'rate of duty' by the Parliament as per the aforesaid intended amendment, the same could be looked into in order to appreciate the phrase 'rate of duty' used in Sections 35G and 35L of the Act which reads as under :
"Explanation : For the purposes of this sub- section, the determination of a rate of duty in relation to any goods or valuation of any goods for the purposes of assessment of duty includes the determination of a question-
(a) relating to the rate of duty of excise for the being in force, whether under the Central Excise Tariff Act, 1985 or under any other Central Act providing for the levy and collection of any duty of excise, in relation to any goods on or after the 28th day of February, 1986; or
(b) relating to the value of goods for the purposes of assessment of any duty in cases where the assessment is made on or after the 28th day of February. 1986, or
(c) whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil; or
(d) whether any goods fall under a particular heading or sub-heading of the Schedule to the Central Excise Tariff Act 1985, or the Additional Duties of Excise Page 72 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined (Goods of Special Importance) Act, 1957 or the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, or that any goods are or not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty;
or
(e) whether the value of any goods for the purposes of assessment of duty of excise 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" A perusal of the explanation makes it clear that determination of the "rate of duty" means whether any Service are excisable goods and whether the rate of duty of excise on any Service is nil, whether the said service are or are not covered under a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty and whether the value of any service for the purpose of assessment of duty of excise shall be enhanced or reduced by addition or reduction of the amounts in respect of such matters as are specifically provided under the Act. Though the determination of the word duty may not include all those questions, the explanation makes it clear the aforesaid expanded meaning is to be attributed to the aforesaid phrase for the purpose of this section only.
Page 73 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined It is because the said explanation is added to Section 35E which deals with the power of revision of Board or Commissioner of Central Excise in certain case. In other words what is sought to be conveyed by the explanation is that the authorities while exercising the revisional jurisdiction shall not go into those questions. That in no way comes in the way of understanding the meaning of the phrase 'rate of duty'. On the contrary it clearly sets out the intention of the legislature in so far as the meaning to be attributed to the said phrase. Therefore, the said meaning could be read into the phrase wherever it is used in the other parts of the statute, as held by the Apex Court in Navin Chemicals case. It also would be in conformity with the interpretation placed on the said phrase by the Apex Court as well as the High Court, as is clear from the following decisions.
21. 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 Page 74 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined proportion of fraction. The expression "rate" is often used in the sense of a standard or measure. Provided the tax is computable by the application of a prescribed standard or measure, though not directly related to taxable income, it may be called tax computed at a certain rate. We agree with the High Court that the rebate of tax and the reduction of such rebate are essentially matters of measure or standards of rate."
22. A Division Bench of the Andhra Pradesh High Court in the case of Crane Betel Nut Powder Works v. Commissioner reported in 2006 (5) ALD (NOC104) held that the determination of the rate of duty in relation to any goods includes determination of a question whether any goods are excisable or not. Again, a Division Bench of the Andhra Pradesh High Court in the case of Commissioner of C.Ex., Hyderabad-IV v. Sriram Refrigeration Industries reported in 2009 (240) E.L.T. 201 (A.P.) held that the question whether the process if any undertaken in the service centre of the respondent amounts to manufacture of starters by the respondent 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' used in Section 35G(1) and Section 35L(b) of the Act.
23. Following the said judgment a Division Bench of the Delhi High Court in the case of Page 75 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined Commissioner of Service Tax v. Delhi Gymkhana Club rendered in 2009 (16) S.T.R. 129 (Del.) held that if the question of determination relates to the rate of duty of excise or the value of goods for the purpose of assessment, appeal lies to the Supreme Court.
24. The Bombay High Court in the case of Commr. of C.Ex., Nagpur v. Universal Ferro and Allied Chemicals Ltd. reported in 2009 (234) E.L.T. 220 (Bom.) = 2009 (13) S.T.R. 498 (Bom.) at para 6 held as under :
"We have considered the rival contentions made on behalf of parties and also perused the provisions of Sections 35G and 35L(b) of the Act of 1944, an appeal against the order passed by the Appellate Tribunal would lie to the High Court except an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Section 35L(b) provides that an appeal against an order passed by the Appellate Tribunal relating among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment would lie to the Supreme Court. It is, thus, clear from the aforesaid proviso that an appeal against an order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of Page 76 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined assessment would lie to the Supreme Court and not the High Court."
25. The Apex Court in the case of I.T.C. Ltd. v. Collector of Central Excise, Patna reported in 1997 (94) E.L.T. 456 (S.C.) dealing with Section 35L(b) of the Central Excise Act, 1944 has held as under :-
"A perusal of the said clause shows that an appeal lies to this Court against an order passed by the Tribunal relating to the determination of any question relating to the rate of duty of excise or to the value of goods for the purposes of assessment Sri Ravinder Narain as submitted that the impugned order passed by the tribunal relates to the value of goods . The said question relating to value of goods has however, arisen on the claims for refund of excise duty submitted by the appellant before the Assistant Collector. In our opinion the question of valuation of goods in the context of a refund cannot be regarded as a question having relation to the value of the goods for the purposes of assessment. The assessment had been completed in the present case and the assessment orders had already been passed. It is only when the goods were returned, the question of refund arose. We are therefore, unable to accept the contention Sri. Ravinder Narain that the appeals are maintainable under clause (B) of the Section 35L of the Act and the appeals are liable to be dismissed"
26. The Division Bench of this Court in the Page 77 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined case of Premier Irrigation Equipment Ltd. v. UOI reported in 1998 (100) E.L.T. 29 (Kar.) interpreting Section 35L of the Act held as under :-
"From the reading of the above provisions contained in Section 35L of the Act, it seems clear to us that even if one of the questions raised before the Tribunal for determination relate to a rate of duty of excise or to the value of goods for the purposes of assessment, then the remedy by way of appeal against the order of the Tribunal can be only before the Supreme Court and such question cannot be subjected to the Advisory jurisdiction of the High Court. Keeping in view the specific bar contained in Section 35G of the Act which specifically provides that on the said questions pertaining to rate of duty and value of goods neither any reference can be made by the Tribunal nor can be called for by the High Court".
Customs Act
27. Section 35G(1) and 35L(b) of the Act are in pari materia with Section 130 and 130E of the Customs Act. The Supreme Court had an occasion to interpret the said Section 130 and 130E in number of decisions. However, though not in an identical matter, but almost near to the said matter, interpreting the powers of the Appellate Tribunal, with reference to the jurisdiction of a special Bench and an ordinary Bench, the Supreme Court had an occasion to Page 78 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined consider the very same words used in both the sections in the case of Navin Chemicals Mfg. &. Trading Co. Ltd. v. Collector of Customs reported in 1993 (68) E.L.T. 3 (S.C.) under the Customs Act. The Apex Court held as under :
"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 the goods for purposes of assessment'. It seems to us that the key lies in the words for the purpose of assessment' therein. Where the appeal involves the determination of any question that has a relation to the rate of customs duty for the purposes of assessment that appeal must be head by a Special Bench. Similarly, where the appeal involves the determination of any question that has a relation to the value of goods for the purposes of assessment that appeal must be heard by a Special Bench. Cases that relate to the rate of customs duty for the purposes of assessment and which relate to the value of goods for the purposes of assessment are advisedly treated separately and placed before Special Benches for decision because they, more often than not, are of importance not only to the importers who are parties thereto but also to many other importers who import or propose to import the same or similar goods. In the decisions of CEGAT in such matters would have wide application they are, by the terms of the statute, to be rendered by Special Benches. The phrase Page 79 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined relation to" is, ordinarily, of wide import but, in the context of its use in the said expression in Section 129C, it must be read as meaning a direct and proximate relationship to the rate of duty and to the value of goods for the purpose of assessment."
Further at para 11 they held as under :
"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 purpose 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 value of goods for the 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 the 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 said definition of the said expression to sub- section (5) of Section 129D, it is proper that the 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 Page 80 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined 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 his 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."
At para 12 they concluded as under :
"This, then, is the test for the purposes of determining whether or not an appeal should be heard by a Special Bench of CEGAT, whether or not a reference by CEGAT lies to the High Court and whether or not an appeal lies directly to the Supreme Court from a decision of CEGAT: does the question requires determination have a direct and proximate relation, for the purposes of assessment, to the rate of duty applicable to the goods or to the value of the goods."
28. In the case of Commissioner of Customs, Chennai v. Jayathi Krishna and Company reported in 2000 (119) E.L.T. 4 (S.C.), the question involved was whether the assessee is liable to pay interest under Section 61(2) of the Customs Act. When the imposition of Page 81 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined interest under the aforesaid provision was challenged before the Tribunal, the Tribunal held that DEEC Scheme having been made applicable to the goods in question, the question of payment of interest would not arise at all. Against the said order, the revenue preferred an appeal directly to the Supreme Court under Section 130E of the Act. which came to be dismissed.
29. In the case of Commissioner of Customs, (Ex), Mumbai v. Nicco Batteries Limited, reported in 2001 (129) E.L.T. 292 (S.C.), the benefit of exemption notification was granted to earlier four consignments and at the stage of clearance of the fifth consignment, the said benefit was denied under the orders of the superior officer without assigning reasons. The Tribunal found fault with the said action and extended the benefit to the fifth consignment also. Aggrieved by the said order of the Tribunal, the revenue preferred an appeal to the Supreme Court directly under Section 130E of the Act.
30. In the case of Commissioner of Customs, New Delhi v. Punjab Stainless Steel Industries, reported in 2001 (132) E.L.T. 10 (S.C.), the allegation against the assessee was that the goods exported under the export obligation were mis-declared. In as much as he used the material of inferior grade to the one required in the manufacture of utensils. The said charge was held to be proved on the basis of the report of the expert and therefore the goods Page 82 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined were confiscated. The said order was challenged by the assessee before the Tribunal. The Tribunal set aside the said order. Aggrieved by the same, the revenue directly preferred an appeal under Section 130E of the Act before the Supreme Court and the Supreme Court set aside the order of the Tribunal and restored die order of the Commissioner of Customs.
31. In the case of Jindal Dye Intermediate Limited v. Collector of Customs, Mumbai reported in 2006 (197) E.L.T. 471 (S.C.), the Tribunal had upheld the order of the authorities and denied the exemptions. The assessee preferred an appeal under Section 130E of the Act to the Supreme Court. The Supreme Court set aside the order of the Tribunal and held that the assessee is entitled to the benefit of exemption.
32. In the case of Commissioner of Customs, New Delhi v. Phoenix International Limited reported in 2007 (216) E.L.T. 503 (S.C.), the question involved was whether the assessee has imported in violation of the Exim Policy and consequently liable to pay customs duty. The Tribunal held that there is violation of Exim Policy. In an appeal preferred against the order of the Tribunal under Section 130E of the Act, the Supreme Court reversed the finding of the Tribunal by holding that assessee is guilty of violating Para 156(A) of the Exim Policy 1992-97 and therefore, they are liable to be assessed under Tariff Heading 64.04 and accordingly, they were liable to pay duty of Page 83 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined customs at 50% + CVD at 15% ad valorem and the assessee was not entitled to concessional rate of duty under Notification No. 45/94-Cus., dated 1-3-1994 and the department was right in invoking Rule 8 of the Customs Valuation Rules.
33. In Commissioner of Customs, Tuticorn v. Edhayam Frozen Foods, reported in 2008 (230) E.L.T. 225 (Mad.), objection was taken regarding the maintainability of the appeal before the High Court under Section 130 of the Customs Act. It was held that the determination of question involved in this case does not have a relation to the rate of duty or the value of the goods for the purpose of assessment and therefore, the appeal was maintainable. The question involved therein was whether Prawn/Shrimp is also fish and liable to export cess under Agricultural Produce Cess Act, 1940. In coming to the conclusion they relied on the judgment of the Apex Court in Navin Chemicals case wherein an observation was made that the case did not have a direct or proximate relation for the purpose of assessment either to the rate of duty applicable to the said goods or to the value thereof. All that the Additional Collector's order did was to confiscate the said goods allowing the assessee option of redeeming them upon payment of a fine of Rs. 10,000/-. That the assessee might avail of the option, pay the fine and clear the said goods. When question as to the rate of duty and value for the purpose of assessment might possibly arise is far too remote a contingency to Page 84 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined satisfy the test that is laid down. Therefore it was held that the principle laid down in the said case squarely apply to the facts of this case, where question involved as stated earlier, was whether fish includes Molluscs and Crustaceans and as such the Crustaceans would otherwise mean and include Prawns/shrimps and hence Prawns and Shrimps should be regarded as a fish for the purpose of assessment and such meaning should be given to the expression "fish" incorporated as Item No. 7 to the Schedule to the Act.
34. In the case of Commissioner of Customs, New Delhi v. Sony India Limited, reported in 2008 (231) E.L.T. 385 (S.C.), the question involved was whether the assessee had committed breach of Exim Policy. Ultimately, the Tribunal held that there is no breach of Exim Policy and consequently, no duty was paid. The revenue aggrieved by the said judgment preferred an appeal to the Supreme Court under Section 130E of the Act. The Supreme Court upheld the order of the Tribunal.
Conclusion
35. Therefore, the expression 'rate' is often used in the sense of a standard or measure. 'Rate' generally is an impost, usually for current or recurrent expenditure, spread over a district or other local area and is distinct from an amount payable for work done upon or in respect of particular premises. 'Rate' is defined by Webster to be Page 85 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined the price or amount stated or fixed for anything. The word 'rate' includes any toll, due, rent, rate or charge. It means the scale or amount of any other charges. The word 'rate' is used with reference both to a percentage or proportion of taxes, and to a valuation of property. 'Rate' is used in an Act declaring that the Legislative Assembly shall provide by law for a uniform and equal rate of taxation and assessment, applies to the percentage of fixation, as used in connection with 'taxation' and to the valuation of the property, as used in connection with 'assessment'. It is a valuation of every man's estate or setting down how every one shall pay, or be charged with, to any tax. By the use of the expression 'rate' 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 Explanation to sub-section (5) of Section 35E of the Central Excise Act, the expression includes the determination of a question relating to the rate of duty, to the value of Service for the purposes of assessment; to the classification of Service under the Tariff and whether or not they are covered by an exemption notification: and whether the value of Service 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 and to the value of Service for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as Page 86 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined to the classification of Service 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 Service for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of Service for purposes of assessment. Determination of rate of duty in relation to any Service include determination of a question whether any Service or not, whether the process if any undertaken in the service centre amounts to taxable Service or not, and if the Service rendered 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' used in Section 35G(1) and Section 35L(b) of the Act. Therefore, the phrase 'rate of tax' does not mean fraction of tax payable because what is the tax payable i.e., fraction payable is decided by the legislature. Once that is prescribed by the legislature in the Act, the Court cannot sit in judgment and alter or modify the said rate of tax. The Court has no jurisdiction to go into the correctness or otherwise of the rate of tax payable in the sense the rate prescribed by the legislature. In the case of Finance Act 1994, the rate of service tax payable is uniform to all the services. If rate of tax is to be understood in the sense it is suggested, section 35G and 35L, has no application at all to the Finance Act. Such Page 87 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023 NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined an interpretation would render Section 83 in so far as applying the provisions of Section 35G and 35L redundant. Then there is no provision in the Finance Act, 1994 for determination of the aforesaid disputes. That was not the intendment of the Parliament. Therefore, the argument that the rate of tax means only the rate at which tax is payable or a fraction is unsustainable.
36. Broadly the following disputes do not fall within the jurisdiction of High Court under Section 35(g) of the Act :-
(a) Dispute relating to the service tax payable on any service/taxable service.
(b) The value of the taxable service for the purposes of assessment?
(c) A dispute as to the classification of services.
(d) Whether those services are covered by an exemption notification or not?
(e) Whether the value of services for the purposes of assessment is required to be increased or decreased?
(f) The question of whether any services are taxable services or not?
(g) Whether an activity is a service rendering activity or not, so as to attract levy of service tax?Page 88 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023
NEUTRAL CITATION C/TAXAP/129/2023 CAV JUDGMENT DATED: 27/09/2023 undefined
(h) Whether a particular service falls within which heading, sub-heading of Section 65(105) of the Service Act, 1994 which defines "taxable service".
37. From the aforesaid discussion, it is clear that an order passed by the Appellate Tribunal relating to the determination of any question having relation to the rate of service taxes or to the value of services for the purposes of assessment lies to the Supreme Court under Section 35L(b) of the Act and not to the High Court under Section 35(G)."
15. For the aforesaid reasons, this appeal under Section 35G, on the substantial questions of law raised, is not maintainable and is therefore accordingly dismissed. No costs.
(BIREN VAISHNAV, J) (BHARGAV D. KARIA, J) ANKIT SHAH Page 89 of 89 Downloaded on : Fri Sep 29 20:40:09 IST 2023