The Commissioner Of Central Excise vs M/S Mangalore Refineries & ... on 1 September, 2010

[Cites 15, Cited by 8]

Karnataka High Court

The Commissioner Of Central Excise vs M/S Mangalore Refineries & ... on 1 September, 2010

Bench: N.Kumar, H.S.Kempanna

 

 

 

IN THE HIGH COURT 01+" KARNATAKA AT BgT:~:.Q;§.ig;j:;_ﬁ: 

DATED THIS THE .1 8'? DAY OF sEp'rEMf3ﬁ;.R.,  J'

PRESENT _ _
THE HOITBLE MR.VJUS'fICE*.V_i\I.KIfi\riA'R '  '

~~ 

THE HON'BLE MR.JUSTIC §E H;S__.KEMPAN'NA

BETWEEN:

THE COMMISSTONIEDR'. oi?j.cAE1\1TTeTAL[2:xc1sE,

7TH FLOOR "TRADE CEN R£:;.   '

BUNTS HQsTE.[,"'Rc:g9g3,  "  " 

MANGAVLQRE-T.__93 1-3' '  _  APPELLANT

 "  [BYV -- ADV.)

AND:

 , M /s MiANGALoR9iER1Es &

PE'rR0cHt::MicALs LTD,

 "_VII.LAGE--vB§ALA_. VIA KATIPALLA,

 .jE;XcJ:rsE ACT, £944 ARISING OUT OF ORDER DATED

HO; z3;.:J'r:ii'5TH OUR';
MANGALOREQ-§5174 149. ...RESPONDENT

{BS} SRLRAJESH. CHANDER KUMAR & _ " MS._YOViNI RAJESH -- Anvs. FOR "M/s CHANDER KUMAR & ASSOCIATES] ""._Vv""'I'}:IIS CEA IS FILED U/S. 35G(2} OF TI-IE CENTRAL E if ' xw ,9/Aw/»waW.y»¢.»,mMﬁ,W.N,. .

05.04.2006 PASSED IN FINAL ORDER NO.74e es: 7_I~IIV:?1j/-200$; IN EAPPEAL N085/03 81 531. /04. PRAYING 'I'}j1IS HONBLE COURT MAY BE PLEASIEZD TO I) 'l'O:__Di§;'C1'1DE'~T}-{E QUESTION OF LAW AS MENTIONED THEREIN<,.__II)v SET ASI1:)I«:.__ THE ORDER PASSED BY THE cI::STg§T IN E'.A'PP1§;AL'*NOA.85/O8, & 531/04 VIBE ITS FINAL ORDEZR N0;?=éL€I S; «7_47;_'06'*-DA'1"ED T 05.04.2006. WHICH IS ANNEXED, AS-~AAI\.?NEXUFEE-P-. f*I_fO=a{1'1~iE APPEAL. V 1__ THIS CEA COMING O;*~II0:"'I#_OI2 "AD.MISS'-IO'N;V'"THI'S DAY.' N.KU'MAR _ J. DELIVERED TIAIE:S'I:OI-I{OwII\:r;; " I J I'; .D"G__1'§!;E This appezdr i.S VF{-Qy'.6'i';i§.3 e .e'rI';ﬁ1enging the Order passed by 4.t1§*a.Ve Tax Appellate TribLInIa;1"'{£'0r:"ShOrt:.; hei*eIrI:iI"ter""referred to as CESTAT] hoiding that nOt excisable and therefore, there is no 1i.abViV'1iiyA U) pay t':1A'I:j,r,. .."' ' Tfie V aSSf;SSeewM'/S.Manga1Ore Refinery and PeI,'rOCf1eI;1_i'(i21ﬁ1S Ltd. IS a hoider Of Cemral Excise RegiSi.r3.ti0I1 .Ce';_'i.iI'i(:vziI;¢?,;_ is engaged in The II1a~1I1ufac:1ure of various : x{L_Si'"IS}..fed1i11g; Lmder heaciing 27 01' the Schechlle to the Centrai. p€' EI_'O1€V..§'1I'11.VA.:f)I'0dL1C1.S irlcluding Lower Sulphur Heavy Stock Excise Ta1"ilT Act. 1985 {for short I%1e1'ei11a1ft.e1" 1'efe1'1je_d-- u"'tAhe ACE'). The LSHS was Captively COI1Su1'11€d for the.gc%1'1eféiii'O15_'s_'Oi:'. steam. The steam so genera"aed \vas'i'1"t.iiiSed',4i'01j.ger1e.i*at.ie;1 ' of electricity. The assessee ﬂied c1aAi;:--".Vsii"-icéztiolld'deelvaraiidia, Claiming exemption from payn1e'fIt_M0f du1_,_y'x..md:ei*'~,fiotiﬁcatiorﬁ' No.67/95 CX dated 16_.,3.1.99V5-----"ea;pLi\}c«"C0I1S1in1ption of

3. Inteiligence g§fd1e1'ed the"dV_efp2V;rtn1ent: indicated that the e1ec;'Erici;1;_\:,}' sd ggenerateid --:."wa_$_§being diverted for pu1'p0se__s -_oLheV.rdd.'L'ha11»j'i;he'~~..use in 01' in reiation to the manufacture of V"'pef';OieV{i'1n' products i.e. for corlstruction. purpxjse '.vithi11"'Lh_eV vfactlory p1'em1ses. lighting MRPL residentiai dvicolgfly giﬁfgt to M/sﬁindustan G-as Industries Ltd. [HGIL}. 'I1,' V.-V7.'_clSx fdhai the exemption under the No1iI'icaLion supra was"'~._110§"admissible L0 LSHS capt,1'.ve}y rI1anufactu1'ed for « VV''gex1eraxt1ng:{ such electricity for other purposes. Such use of 'LSHSWX-'£1S not declalwed in Lheil" C1E1SSiﬁ{_'.El1,iOI'l declaratiolls and d V. .,Vi1'.E1'es£11'1ed in c(mt.1*a1vemci()11 of the p1'0visi0r1s 0fRu1e I 7'3}{3(2)[b}. Z, 6.5 ,Aceordi1'1g1y. a Show cause notice was issued de111:;:I1d:"ing"-g:1L1fey of Rs.33.1.2,928/- on the p1'opo1":'ior1a1',e c;L1a1ntit_.y;V--.ofiLSIfi$ in the generation of eleetricﬂy. whi_C.1r1_ir1 u;r'::"w.:;.es.not.,'usea 'in. 1 or In relatlon to the manufacture 'of 1-'i111a1--e'pI"0.dtzo:ts 'C'i'.:i'fi'1'1V':.¥;.7",,"[hE? period from April. 1996 to scipmnbef;-,_1'é3a?. i{r'oA;jo.sajVV\;_easVha}_sVo made to impose penalty under S4L»e'c_£ior}. 11 AC t.he}Ae1; and the Rules and also to dema~:1 ofint'ere:§1i.L'n'/.s;.,1.LAB of the Act.

4. The Commissi-onerjof?CenTt1ia:}.VExcise Bangalore III vide in Origina?:,.:oVrderlA_No.93"e1a1;Ved «VVS/I-V3.10.1998 Confirmed the d:§:rnane1'V'TojfV 'a}s'*'.Vproposed in the three show--cause noti(:es."£j_{e _a1So._ 'd'en1af1s:_1'ed'interest. and imposed penalty of 33,].2.;928,/-.V. V-.Ag'gfie\feri by the sa_.ir_1 orde.,1i. the El.FSS6'tSSEtP. aVppéa1;:»§'e. tb..«eEoA*f."'The Tribunal by its final order No.423 to remanded the matter for denova adjndieatiorjg(TAﬂ.er Such remand while adjudicating, the denova order". from three Show Cause notices which was subject rnaﬁer earlier, three more Show Cause notices for subsequent period were also taken up for consideration. The

1.;

.: L4,, * Commissioner of Central Excise. Mangalore. vidc':l'Cr_der'..A'i11 Original No.4/O3 dated 26.2.2004 c0ni'i1'rning duty. imposed penalty under Rule,l~73_Q 00 Section 11 AC of the Act. interest :L=n-1die14A~Seeltior1 Act was also demanded. Aggrieyed by the saidfurders, then' assessee preferred an appeal to___C'ESA.T. in ~a_sirnilar case in respect of the order in 'origilnal dated 27.4.2001 duty of and penalty of Rs.5,00,000 lend. .a's:§'essee by the Assessing Authority a,gglar.ins;€l@y'l1ie'l1' iiled an appeal. before the Cornniissioner ' -The appeal was dismissed upholding dema'nd.-- l:"=.Tl4'l1lereI'ore, the assessee preferred appeal 1".u. the CESTZXT bu-3111 against the appellate order as well as .the 01'igin_21l.~Qrder.

Tlie ls. ecific case leaded b the assessee was, LSPESV n1aniifa_c'i'ured in their refinery was captively consumed Was fuel.'~in";the refinery operations and also used in steaming '*.()pe1'a't«i()11s. The steam so developed was used (taptively in the la manL1i"act,u1'e of elect.ricit,y within the refinery and" thactx no portion of the LSHS has been moved outside the specific stand was LSHS was only an in'terme.ddiaf,e_jjroldu'ct"~ intended only for captive consumpt_i,.o.n._t"or use Vdas.dff=.iel.i1iV the refinery operations and the Captive' Powet' was only a residue omainedyaiwhile l13Aro'eessi11;_§ilow .Su3lp.hi.1rﬁ Crude oil which was burnt in the'-vrefiiiery bo.ilerS_.'aI1Ci.bheaters in order to meet e11vironme11t;al i-stipulat-foils imposed by the Central and State Governrne1its;§--.dtiliatdthde zinternal fuel oil {LSHS) did not meet the rigid.spe_cifications'tvfor LSHS specified by 181. :7.,_Th-eiefore.':'i-the was merely an internal fuel oil used for co'nsuInpt'ion neither marketed nor marketable. it was.§n'oi.aa11 ext:is_aE)le product and therefore. no duty could be onthe_":ii11_pug11ed quantity of LSHS. _ G.VV"«,_rS4éCQiiflly, they contended in the alternative that the' did not go into the questiorl. whether the xglisptited goods is excisable or not. The lower authorities fr'ejVec:t.ed the said contention of the assesses: and held the iii ggwi/__..

at which E=i"t' isviused atiid aiso iooking into the How diagram were oi" the impugned product as such is not it impugfned product. is not marketabie. the same is not "ext1.isa'hic. if the mipligiied product, is not excisablc. there is no disputed goods are excisable. They also heid thougtrthe exemption iioti'fic.arion is attracted, it is not attra;(ited'.V'_'ta: that= portion of the goods which are not utilised.ii1"..'t'he'« of the petroleum products by the it the extent the final product layout. used for construction. acViii'vity_:'aiitieAvto their sister concern, they held the is and therefore.

they affirmed the.:c:pierz_1a;r(id;' two orders the assessee preferred ;'tQ_ the

7. going through the records process by which these iower suipiiur pcrudped taking into consideration the I _ . _ $5 percentage of su..lphu'r iiithe said product. and the temperature marketable. though it is loosely termed as LSHS. Since "v2"

i_11'1_f)t1g11ed order I'€'C}'LEi1'€S to be set aside. 2;, merit. in the demand of d'LEl'.l€S. Titereiore. the o1'ders__'patss.ed the authorities as well as the demands we1*e'7«.set.fe.Side V' allowing the appeal. Aggrieved by the-i"'sa:::i 'ordert Reventi*e is in appeal.

8. The learned cotisnel'i'or"u:tl1'e"-.Reventioassaiiing the order of the Tribunal in dispute that the impugned of LSHS which is excisabie. illribunal that it is not excisable _o_1fi it marketable is erroneous and reqtivires Secondly, it was contended that the materiaiori .cieai*l»$r4establishes a portion of the final prodtiigittv was Limised [or construction activity, lighting a layout. and also sold to M/s.Hindustan Gas ijtiblic Ltd. Co. and therefore, it was not used for ca..ptitje' ge'iiAerai.ion. The demand raised is only to that ar1d;tll'1e exemption notification is not attracted to the _saiVCi'-p.ort.i()n of H16') demand and E4l1e1'efore, she contends the '*4 ll 1 1. Unless the inaiiitairiability of the appeal.'i's.t:£flee'i;ied one way or the other, the question of going intcjﬁtheu the appeal does not arise. Tl'1e1'efo1'e_, ilie prelii1lili'1'1sf_1'_j,7 poilnt . arise for Consideration in this appeal-._is as x..i'ncle.1_':"~ "whether the appeal __t'}1e.u against the irnpagned ' mailrttatnaflﬂe u/s.35 G of the Act" Cour_t

12. In order to _ap:prec'iat=§; the laforesaid contention, firstly ' see llltlhle statutory provisions as contained 35L which reads as under:

V V 45:'-ISVG; High Court~ (1) An appeal lie to the___H1gh Court from every order passed by the Appellate Tribunal on or alter the 2003 {not being an order" relating, things, to the determination of any qti-epsthiolh having :1 relation to the rate of duty of excise or to the value of goods for the purposes of .. ,.,,;g15s(:'SSI1'1(3I1l',}, if the 'I--iigla Court is satisfied that the case involves a stzbstantial qtiestion of law. axe, l2

351.. Appeal to the Supreme appeal shall lie to the Supreme Court from__«--'--i.

{ct} an_yjudgmer1tQfihe High Coiir£_.dVdeii2;ei*e§::l._ 3

(i) in an appeal n1ade'i1rrdeA19l SeC€'ivo'n. or _ V _

(ii) on a refereirclerplhllriiade lin1dlerl'lSe'{:iion 35c. b'y._i:he ,Appe.lE3.iesrflribdrial before the 1st"'dziy.oi*q¢;.iy, _ [iii] .On a A.re.f:é_re1ie.e 1/,111.adel":a_r1de1' section in on its own 1" im-c'il*u;_ior1-:_o1jl. on ar1':o1"al application made ll * flay or ofihe party aggrieved, after passing of the ' High Court; certiﬁes to = Vbe a._fiii~.olne for appeal to the Supreme 'V " =..Courf.: or lb) any order passed before the 'l ..e"staLjlisl1n1eni of the National T ax Tribunal V A Appellate Tribunal having a relation to l 'the rate of duty of excise or to the Value of goods for purposes of assessment."

13 A 'oare reading of the aforesaid provisions n1ake»s"-i.te:'*e1lear what are the matters which are eognisable by and as welt as by the Supreme Coti1ft:;""Any the V Appellate Tribunal other than question having a relation. to ofA.cl!t.ity'V of: "to the C value of duty of goods for the_....§ll\1rpose oi"C'asVsessi:l"1"1ent falls within the _l1,.lI'iSdiCtlOI"ll bi;l:"tI1¢l--. in al3P€al Under Section 350. If t"he detei'minat.ion of any question of excise OI' t;o t.he Value of assessment, the same falls of the Supreme Court under Section 35lLt{]o]t. _ 'liar lllot;.h"e.rll"_;u}oi*ds, the determination of any qU€S'lI_t3iFi 1*e1atinlg~t.o:the rate of duty of excise or to the value of goods for.ti'3.eA"«pVt11*pose of assessment, cannot be agitated in Expressly the statute has excluded the C it _ j1t.1i*isd-itttion oil"lt'.he High Court in appeal 1.1nder Section 35G and h7.e;»£C11,1sive'~ji.11*isdiction is conferred on the Suprenie Court in " _ t.hes»e..mat.te1's. The langtiage employed in these two sections it Li 2 '-3j€iC'7v*aﬂI'1i. \iro1'ds are as under: ~ K 14 read together is Clear and there is no scope for any dtiodtibdttvtéor confusion in this regard.

13. it is argued as the Xvordings of the"'se.c'tionV.stands it is only in respect of the two typeshof cases the j.o"r£sdtctito'13:Veof the High Court is denuded. TI'1»eyt_sre :V--'7. ' 1} Where the assessment to 't.he,.V:deternatnation of the rate of dttiygtt V. t t It 2} The question relates to L:i.etérnttn,(;.tton of the value of the 31;;

Any question relation to these two aspects alone, the Higli'Coo.rt'hats°no jurisdiction and in respect of 'V V' «--otl1.e-is it hasHji1'1'iSCiiCtiO11. h'-.14"-.V ' 7113 order' to appreciate this contention, we have to

--V caret;tilly"'--Vsee wordings ernpioyed by the legisiature. The a, ,~ 3/ 15 "Not. being an order relating. among other things. to the determirxaiion of any question having a reIat'io--21:"~«._"'*. to the rate of duty of excise or to the value q;f_gbods -1- 'for the purposes of assessmertt".

The key word in the said p1'ovisiori._is "for tVhe.VpL1rp:oseV'of assessment". That means the o_rd~er refer1__'ed,to.:thereiiis is an' order passed in the course of asrsessnleliatt 'I'herel'.ore:.§ all orders passed in the course of the determination of any question having ivolllduty of excise or to the value:.Qt§l--.._gQ$:§{:S.:; matter of appeal before the -'use of the word 'among other things' itis_ order which may not be directly 1'elate§:i'te_t'r1e rate 'or duty or the Value of goods, however which V. "are intierriiirigled Withﬂlthose matters are also excluded. In other tﬁwords._ti1ose:fare«--. not the only orders contemplated by the legishlation; order to understand the width and depth of the

-- orders covered under these words, it is necessary to know the .i11ean__ing of "assessment". 3;

WHAT IS ASSESSMENT?

15. The word "assessment." is used as .rﬁe--2111ing sometimes the c0n'1pL11.211.i0n of rate of duty. sQr:1e'ii11'1'e.s; {he assessable value of goods and sometimes the \vhQ1efp'r0Seedu.fe W laid down under the Act for iI11p0sV.i;1iebd'uty"<.lia-biliiiy.iipoiﬁ. ihe mam1facLLirer or importer. The \vC:rd"..assessf;*ne11t =is,u_ capable of bearing a very cO111q51=ehe11s§ve w1I1_"eaﬁ2'Vn€3i" in the Context, ii. can c0r11p:jehen.d"" 'the "whole "'pr0eedure for ascteytaining and imposing (iii Eial:iiIiﬁ,yi;-. * ,¢dLi:ii'(?i1' the Case of COMMISSIONER OF INCOME »'I§HEMcILaND RAMDAS has observed as 1.1i--idef~ :-« Qf the pecuiiarziies Of most Incomeizax 1 is?'-{hats the word 'assessment' is used as f'i1€iif:'i~if?1:(:j sometimes the compui'aI.ion of income. a sQr'riexi:in'1es the determination of the amount of tax ficiyable and. sometimes the whole procedure laid down in the Act: for imposin_q liability upon the 17 taxpayer. T he Indian Incomewtax Act' is r1o__ exception in this respect: .....

37. in HIRJIBHAI TRIBHUVANDAS OFFICER RAJNANDGAON AND AN€:)h'I"'HER¢_[1e958:Ah33_ _I:1'R:744x.13] 3. it was held as under-

"In the normal ser1se»""ite assess"',.V:rhear1s} "to fbc 'the amount: dtte_tort.._t:o'V%'e{eter'rnViheHsttch amount.''. The is to the same purpose ar1af"'tU'0:;ttdV 'th_u.s ihcvthaded tn the COf1T10iCtf.ft)I1 the 'ii{3I'i:'?f_1 ";assVess'a"1'1eat.;""

assessment and collection ttr'1de:;s"tar1d_:'thehf: trtclude all the processes by i;'uI__14tch the ascertained. demanded and ghreatiseti being one of these .<'_pL*'ocess corhes"'tvttI1ir1 the ambit qf the phraseotogy V' " ».

be observed that section 34 Qf the Ir}et)r_rté2~thax Act cor1t'en1plat"eSfo1tr d;'fferent cases in ~'wi'1';z'cf1 t.he power to assess escaped income has A 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 (1 ii x..»""'-

18 rate or with iu'iji.:.st:if'ied exemptions, the term "reg___ assessrneni" would be appropriate. It was t:hiis._i".. necessary to resort' to the use of two dfﬂerer1i.,ter1_&ns_' "

to cover with clarity the chfferent cases in that section. This does not rnean the-.thift'e.:i€.rn'L§"_ should be treated as mutually :exclzi.s?iu:e.u'._ it h In interpret.in_q the ierni.__"assessrneni"'v used in Section 7 of iheV:"Taxat'io.'1._Laios it should be given its plain meanirig. It shoiiltt be underst-pod in ang}: 'restr'ie't'e;j: especial in which it may have Inaian Income tax Act in a particular' it 1%}. --. 'rh§ 'iri the case of INCOME TAX OFFICER, BANGALORE»~i2s"_K.iV.GURUSWA1|dl'Y [1 958 ITR VOL. 34 explaiiimg vtheimeaning the word assessment arising in t.h'e:i11..ﬁCbr;1e Tax Act has held as under: ~ 1 income means the total amount of A incorne,j'..--15r'Qfits and gains computed in the manner iaitti; down in the Act. and there are no good. " +.__reasons why the word "assessment" occurring in saving provisions should be restricted in the 19 manner suggested. so as to exclude proceedings"fort":g:

assessment. of escaped income or iiridervasisessleif :"

income. .......... .. In its normal sense, ._ means "to fit the amount q;":'t-t§§»t"o,+ atop V' such arnoiint". The process Qll"1ije~a'_ssessrnevrit,is it the same purpose aria'-..__ is llinclluded:din; connotation of the term "asses"smerit'l§' ~.The-reaétoris which led us to give a co;'rip--rehens_ive to the word "assess"rnerit"'--.3(I) of the Finance Act, 1950. _operateV__lez§gudtl_i,i 'it._iiVthl" regard to the saving proi;~isio.i:1s i_1n_oEer'~.p'resent: consideration."

"t_A'l:A1"el5"Si1pr~eme{e0:ii:'1'_ii': the case of C.A.ABRAHAM --- VS- INC(5ME 7--- I-j.0FFI§}'ER, KOTTAYAM. AND ANOTHER explaining the nieenving'-oi" the word assessment in the context l V. of Tax Aetifllhevld as under :--

= of the provisions of Chapter IV of 'the ..5'sz,i[ficierit;ty discloses that the word "as----sessrnent." has been used in its widest con.notat"ion in that chapter. The title of the chapter 'is "Deductions and Assessment." The section which deals iuit.h assessment merely as "ex?

20 compiitat.ion of income is section 23; but seUeral"L";_aV sections deal not with computation of iricorne, '7' determination of liability, machinery liability and the procedure in't:'hat"be_halfi.;« Sectiorinh' ISA deals with advance pa.i;nie:ntc'lV of"~.t,a:t_"

imposition of penalties for-.__failiire.V_to carry"ottii"gie_V'§ provisions therein. Sectioi'i,2'3A deals with piower to assess iridividitdl mern.bers"L_otf; certain Alcornpavnies on the income deeined to--,ha_ve ubeen"distr'ibul'ed as dividend, section w'i't:~h"oé.svsessinent in case of deioaijtttre[froni't.«t'a):abile~. tories, section 248 collection oj outuof the estate of deCease df:.t 25 deals with aVssessn'ient: H of -discontinued business, Séctién 25/Vi':'.tvith~_:d:3$é;3srnent after partition of Hindi:4_tindiiiidedljaniiilies and sections 29, 31, 33 ;and 35 deal"u}ithV'f,he issue of demand notices and ._.":th§;.t_¥/'i.iing oj"ap'pedls and for reviewing assessment __a?1df~se-etion 34 deals with assessment of incomes tol'iic'ii_hcii)e'"escaped assessment. The expression. "assessment" used in these T sections is not used merely in the sense of , aCOlTlplLffCliIi()Tl of income and there is in ourﬁtdgtnent. no ground for holding that when by section. 44, it is 21 declared that the partners or meinbers of association shall be jointly and severally '7' assessment, it is only intended to liability to computation of incofrriel limiter section.

and not to the application iii declaration and impositiojn-..o.f machinery for enforcement thereof.

Nor has the provisions of Chapter IV shall so to such assessrrzentlfila._res;irictecl; it says that all the shall apply so far as which have disco'ntiniled l5tisiness'L"""" ' DETEI{l§lIINAfI'I(l«N 'MEAD! I

20. it Sitmiiarly"vt'he'lmeéiiing of the word "determination" also has to be kept' ling'JASWANIVMSUGAR MILLS LTD. MEERUT -123- AND OTHERS, reported in AIR 1963 _ V context in which it occurs in Art.I36 signifies an otjzsonr 677 (V 50 c 104), it is held as tinder.'-

"IO. The expression "determination" in the £33//,..

22 effecijiue expressiori of opinion whicrh ends controversy or a dispute by some ai1i:hop1,iy4'_»t'o':7 V whom it is submit'ied under a valid disposal. The expression "order'»" r71i1si"'li'ail;§'v a similar meaning. except that it "not éoperlatef «V to end the dispute. Deierinir1la.t_ionVor orderniusi be judicial or qlt(I.'3i:]"llClfiLK'.I'u(.iil;..1l9LlI'£Z'Al_l,f adnzi.iiist;§at~ii.u,e or executive direction is lnotj:'cioVnieniplated to} be made the siibjectldnatterllofappealAto i'his"C"ourt'. The essence of the a1tt'FioVrTii'ty 'Court being J'udi.cial, athis :.€3oul';i' exercise adminisIfaiiil.ie or"«.e)cec'L"ttiv'e i.e. character of thelpo_we}*"C:1_r1]e1jfeVd"-z.ip'on" thi.s'Court original or being judicial, the CVl€'f(5.lF'4l_7'il'VT'iC'IlfViO.iV;l"s<'oi'-_t5}'déiT. sought to be appealed fror'nrn=,istV' _h4a.i)e the character of a judicial '(1'i;udlC{1»l";OlI.

'V 7 A. ..... .. 9 "2l';._ it YV€21i_Va-mother word which also assumes importance is 'the'hmeg1.ni:i.gAof the word "GoocIs".

' 23 In the Case or UNION OF INDIA AND -~ VS -- DELHI CLOTH AND GENERAL was 4_ OTHERS REPORTED IN AIR 1963:SC.79§I .MTee'.~f1OOst'it:g,1t'iOnuA Bench Of the Supreme COL1ri: while €iOns'{T't1'ing;'*:heygoéfci held as ur1der:~ "Moreover. the dejit1iﬁO;1$ 'gOOcis'__{na}'5:e it clear that to becO.rr£e-- 'gO_Od§s.' "an'.a"fticles must; be something which can Ofdificifiiy .{Oj'.he market to be bOL1gf'1:1'. (i.'._i_'1d s_Old* ' '~

22. _ SUGAR MILLS LTD. AND ANOTHER: . Vs'. OF INDIA AND ANOTHER REPQRTED 1,; AIR' 2963 sc 9.22 has heid as uI1der:--

& V Acteaarges duty On the manufacture Of word 'marugfacture' implies a change change in the raw material is not rwlcxvfligjaettzre. There must be such a trans; formation t'f1a_1" a new and dﬂerent: article must emerge ""~havi.ng a distirtctive name. character or use. 24 As the Act does not define goods, "

legislature must be taken to have used uﬁlorldj *' in its ordinary dictionary meaning. T meaning is that to become;"goods¢_ it n:1.l$'lb«._be~.f} something which can ordir1aril_t'j<«corae' to it A to be bought and sold and is___Vlcnou»-nlto the 'rna;"lCe_t.:'

23. En BHOR 11\'.z.)"trs1tfé21r;s,l"L:1f1)l;'~,,«evs --- COLLECTOR OF CENTRAL EXCISE (40) E.L.T) 280 (s.c.) THE APEX he1_a'"'las"_'u§1dér 1 fflt--i:__appe.drs under the Central Exbtée-Aer: asl:is"'stood' at the"relevant time, in order be in the entry t.he first condition was'* a result of manufacture _ goods in icomelin tosexis tence.

. I For Artiele4s«'to be goods these must be known 'V 'll"l'lLr'iI:g';.';'f'l"1GVT'lC€'l as such or these must be capable of the market as goods. Actual sale in the fnark§el is not necessary. user in the captive l .',.'OltlSLtmptiO71 is not determirtative but the Articles it be capable of being sold in the market or fknouan in the market as goods."

24. In the case of MOTI LAMINATES PVT. --~ COLLECTOR OF CENTRAL EX. AHMEDABAD .1995 :f*fSjt.t%iL:i*t*v.' 241(s.c.) THE APEX comm' held as tmder :9 H ' "9. Although the gauge' q}f'*e§ccise_"':_.§~'g manufacture or prodLtct1'on..__of t'bhe_ goodS5v't")i.Jgt:~_gVtVf1e entire concept' of bringing gjtaﬁetu commodity is linked with rnark€§Qbtti¢1J'."" x"«:1.Tticlet ' doesvdjnot become goods in thettbcornnton unless by production or manVufac.tjtLre new and dg(ferent:.m'rbroug}'§a_c o;tt.:...iui1.tch".jcan bought and sold. 5 t « Lt H attract" excise duty rn:i.:st"' sat'is_f;g;}'?i:t1e " rnarket'ability. The tariff schedute the goods in specific and ggener tbbcategobry not alter the basic character

-behbtioficevtabilitytb "ITr'teVduty is attracted not because an ,Vart:tcEe:'tsi"Covered in any of the items or it falls in "-t".___revsétittarticategory but it mustfurther have been pFQd1t;n'é2'd' or manufactured and it' is capable of betng bought and sold. "

5, my ,.

26

25. The Apex Court' in the case of MOTI_ PVT. LTD. vs. COLLECTOR OF CENTRAL reported in 1995(76) ELT 241 (S¢'3J)>H>irite2'pi'et.i:1gﬂVSeetioh* shm-Vij A' the Central Excise and Salt Act, 1942L.héi-s_A.held es "Section 3 levies duty "VQ%%..V">all Vexcisatﬁe mentioned. in the scf1ed_LLlVVé:A;'v._p'rovided;' --l5?_fLAe'gV:§ are produced or mah':--.;.f.'a--ctLL1}ed.§g-- . Vt\'F.he»rej'ore, when the goods are specified they are excisabte goods, staid goods can be s11bject_e§:;?. qj ' uwhether they are pr'odu€e_ed;:.'or person on whom d_uty._ --fsVﬁsQt~r.g'}1t be ~ levied. T he expression produetiort ._.(')'.":'.:'~.t;It(Z1t%t'i§jdC['LlI'8 has further been explauzedv by -__thAts Court to mean that the goods so gar-oduced' ".'="f,1ttSI' satisfy the test' of marketabitttry. dCéousequentlyrutthts always open to the assessee to 3 even though goods in which he was business were excisable goods being mertttohed. tn the schedule, but they Could not be szvthjectiect to duty as they were not goods either ~._because they were not produced or manufactured by It or [f they had been produced or 27 mam.;factured_. they were not marketed or ca;QdI3l_"e._ of being marketed, " d d V MEANING OF "RATE OF DUTY"

26. It is in this backgrotlnd xgire..:1ave_ to_"int.ef}3\1'e'Egthe word rate of duty.

The question is, dnieianjingdﬁattaehed to the 'rate of duty' as vA.u1:.dedt;A"'ihese Atmiovisions. In order to understand and the dispute relating to that, to reierdio iihe meaning assigned to the said word'dv.by..V_t.'he 'P.aﬂiame'nt by way of an explanation to sub-seeii.oI1 [5}_ bypéiilleiidiiienti Act. 29/ "1988. The said ani.endmei?1i..'v'v*a.s to be brought into force ;I'0I1'l the dateito xi:-e I3.otdi'I"ied,_ ____ ijlowever. it' was not brought. into force at 1\:Io:iavi'th_sta11ding the same, in order to understand the to the word 'rate of duiy' by the Parliament:

'iI}S€(','i.vii)E1S 350: and 35L of the Act which reads as under 1» as 'per tsheiidaforesaid intended amendment, the same could be

1.oo1'§eds"inio'in order to appreeiatte the phrase 'rate of duty' used 28 "Explanation: For the purposes of this sub-section, the det,erminat'ion of a rate of duty in relation to any goods or uah.tat.1'or't Qf any goods jot' the pl4[rpOS€l)l!"r3"..'(':B:fr_ assessment of duty includes the d€I'€FIT1.i!1a['iO?t.uQf"'Cl_ quest'ton~ (1) relating to the rate of duty of exctse.Jt.ot_:

being in force, whether tu7,'deVr"':h«e1.«Cent:t*a!_ Excise Tartff Act", 1985 or t's::(1di:'%'_t't AV Central Act providing'/orshthe tevytarid coltecttgom of any duty ofexctse. in feIat»ton toV"ar_1ygo0cfs on or after the 281t§.--g:tay 19<§6;'or t'fe:a:i::;g the.:'value""'of goods for the pturp:')ses Voj"fassessh1.e'nt' of any duty in cases where the assesstnentts made on or after the X 281.12 day o/'Fe:!jrtt:1r;j;..1986. or 4_"5?.C)L{Jhe.tt1er ar1y.....goods are exctsabte goods or ' 2 , z_:,;}A1e:?ti:e.f'*~t'Vhe rate Q/'duty ofexctse on any goods is hit; torch' - . V

d)u;z-:¢g,é;§j_t:2:} any goods fall under a particular fleadthg or subheading of the Schedule to the .. Central Excise Tariff Act", £985. or the :.A.~Addtt:tc)r1aI Duties of Excise {Goods of Special Importance) Act", 195'? or the Addtﬁonat Duties 29 of Excise (Textiles and Textile Articles} Act, 1978. or that: any goods are or not covered by an parIicula.r non_'fz'caI'ion or order issued by '' Central Government. or the Board. as ll1e-u'case.«y:' may be. gran ('mg {oral or parlictlexenlpiiorl*_,l}}ern"=.

duty: or _ l _

e) whether the value of gjookis _f()._*.. the; purposes of assessmenil galuly of be enhanced or reducedlzl' acmftzcin or reduction of the '"aI.noun1's" ii:.lrespecl ofvvsulch matters as are specgficallg_"'i'his Act"

~perl{1s.a'1 1.l'1.e»'~..ex'p1"anaiion makes it clear that deter111vi11al;ionrol"li;he_ra! means whether any goods are exeisable §o.oC1s_ and the rate of duty of excise on any goods is'~ni1. Whether the said goods are or are not covered on-der 2; par.tVie~L/1_1a1' ;no1'.ifi<:ation or order issued by the Central "L1«o{re;fnn1eff1'i.. __or,. the Board , as the case may be, granting total or oart:1'a..1: lexenlption from duty and whether the value of any fof lhe purpose of assessment of duty of excise shall be _' er;h'ariced or reduced by addition or reducl:ion of the a,mounl.s 30 in respect of such niatters as are specifically _p1fo.\-éidetishiider the Act. Though the det.em'1ina't.ion of the worti._dtit}y._rha.y" 1191.'; i.r1e1u.de all those cguestions. the exp'Eah'ation1.rnakes' ii. elear the afoi-esaid expanded meaning is to the.

phrase for the purpose of thiVs'--s_ieet.ioI1A.on1y; the said explanation is added" to \vhie}';..,dee:1s with the power of revision of Board' Central Excise in C€I.'1»8eif1 CEISE5 to be conveyed by the while exercising the revisional those questions. That in no of"t1nde1'standing the meaning of the phrases_'_"1'ateVV'of the contrary it clearly sets out the "ii_§:1te1'it--ioii of 1egisEa'tt:re In so far as the meaning to be f.'.o"~the said phrase. Therefore. the said meaning "i:otif1.d.b"e r'eadv.i_'rii:o the phrase whereever it is used in the other parts ().{.:'.J{.11.(3:"" statute. held by the Apex Court. in Nat/in '"..V"Cher:1ie'a3s case. It also would be in coni'o1'mit:y with the ' i.1ii.er.p51'etatir)11 piaced on the said phrase by the Apex Court" as .. __weEE as the Higli Court. as is ciear from the followirlg decisions. 5 3,-

31

27. The Supreme Court had an occasion_i.o_'C;oiasider the meaning of the word 'rate' in SUNDARAM (PRIVATE) LIMITED vs commrssromm "oF.;4.ii\rC:_)Ji1E1'«' TAX,' MADRAS [1967 VOL. 66 Int 66~e§1°vghe1~e"';_::'Awas under:-- V 4' Vb V b "The ;~'(l:SSl£H11?3'i'f0?;l_: - iheﬂ bexgeressiori "raie" has been used in Sjecllloa meaning a 'fraction oj"i'olal iricome gr-:_dgn1er1t not warrani'ed'«..B;i; iise...'of"«rh'e'.jexb_ression "rate" in ihe co:'2iéJxl:5:._izil 'Loifiich«e.._iL'-7oecu.rs~. undoubtedly a relalfiori K income and the tax ehargede the relation need not be of the neaiure Qf ofjraciion. The expression X _"iraie"Ki"s the sense qf a standard or "5¥.r71:eAasilre. the tax is computable by the A _V of a prescribed standard or measure, iitoiigvli directly related to taxable income. it maybbei called tax computed at a certain rule. We a agsreehvioith the High Court that the rebate of tax arid the reduction of such rebaie are essentially 3%

- :

_:--'matt.'ers of measure or standards of rate. " 32

28. A Division Bench of the Andhra Prades'hd"'-High Court in the ease of CRANE BETEL NUT Powbsﬁ' VS - COMMISSIONER REPORTED__IN 2005 "{5} Q4)» held that the dete1'm.iI1ati0n. of theA;4ratjeo of in to d any goods mciudes determination of ':1 t;:;es'tiVoiL§wI:;e1.her any' goods are exctisabie or not Bench of the Andhra Pradesh High eoM1i§1ss1oNER OF C.EX., 1- "V"REFRIGERATI0N INDUSTRIES?_:fej§d.:fted'-- sine' 201 (AP) heid that the question' dany undertaken in the servic: £;t\n,/x\\5v;-;VfV smounts to manufacture of startersddbyédthedres1o.o11dde1o%§'x5i' not, and if the goods produced d11ring that Iﬁocess' are exeisable goods or not would fall within the'e"7d1e:in.if§g of tlnedddeﬁcpression 'determination of the rate of the value of the goods for the purposes of of the"Aet.

ass.eVssm..ef1:t:'ofV'duty' used in Section 358(1) and Section 35L(b] B/.e

29. I*'()11c)wi11g the said judgment a lmvision Bentth of the Delhi }*f1'g11 Court. in the case o£' COMMISS1'QNERV,"OF SERVICE TAX VS. DELHI GYMKHANA cLU._B3. .o in, 2009 (16) same 129(Del.] held __1.,h;,_u 125'"{o11e1ii'o';VqLiesﬁQ:1e-_git:

cietermination relates to the rate oI"._d'u={:y éxcise"o1'V{3i'e«.{}:i:lL1e of goods for the purposeS oi: 21._s.sese'n-1ef1iV apii3'e§ié;Iv«--1.i4c:s--V3i,o the Supreme Court.

30. The BVo111bayA.Ié{i:,"<g17L.(Jo1T1,éf1.i"ﬁ"1li'é-'ease of COMMR. or C.EX., NAGPUR "I-"ERRO AND ALLIED CHEMICALS Li*iJ.'j'j-rgzpoftegi' ~91 20091234) ELT 220 (Bom.) at para 6 heldﬁs "

A _ }'1Veiz}e"eor1.sidered the rival contentions ' '_'or§."b_eha£f of parties and also perused the Sections 356 and 35L{b} Qf the Act of A 194:4 appeal agcdnst the order passed by the £ijr2éj¢'lIate Tn'b1.uo1a1 would lie to the High Court A' ' exeept an order relating. among other things. to the VV '-- --ﬁlererminai"fon. of c:m.y quesrion. having a relatI'.on. to the rate of duty of excise or to the value of goods 34 for purposes of assessment. Secrion provides that an appeal against an order by the Appellate Tribunal re.l.aiii_ng ahio'r'1g'_fV things, to the determination arig l1a'.oi'l'2g__l A' a relaiion to the rate Of dlLaJ"Qj\"!?w'CClS€3.:iC2!fill) "izbe; value of goods jor purpos'és_ of aissessrrleril'"'a}ol1ld:

lie to the Supreme Courl. ilius, .C."l't'3C1:l:'Lf"i'Ol?:3'l lhe aforesaid proviso all appeaI_uag.ains(- glnuorder passed by the Appei_l_ale among other things, vijo the question having lo iilgelllralle.o]"'duiy" of excise or to the pllrposes of assessment' 1lgou.ldA:.i_he Sliprerrze-----C.oL'lrl and not the High Cf0ur_l.." V V'

31. Apexlfilloalri. in the Case of I.T.C.LTD. ---- VS -- , . g_ comizcfrog OFl"'CEN'FRAL EXCISE, PATNA REPORTED IN '1Q97[9=4)V'E}'Il{T¢.456 [S.C.} dealing with Section 35L('o} of the Ceal'ra1 1944 has held as under :-

"A perusal of the said. clause shows that an V x 'appeal lies lo this Court against an order passed by the 'Fr1'bur1al relating to the delerminalion Q/"any E ;/ " 'CASE ZPREMIER IRRIGATION EQUIPMENT LTD. M VS »- 35 question relating lo {he rate of duly of excisepr the value of goods for the purposes of assc:ssmeri'ir:.l:"' Srz'.Ra.uinder Narain as SIll)HIH7V1.lll.(3Cl '- impugned order passed by ('I11-eh znpw;;;.i,_re1q--::.§s--.;o.;""' the value of goods . The said l;u_esi:ior1 relaling «to V ualue of goods has l1oz,ueL_=e':~=,_ arisen on lhe for refund of excise ClLll>y_'>:'Sllbl71l'l.l€Cl:I 'U16 appellant; be ore CVolleclor.d"Iri'l our opmion. the quesﬂori 1}o.lz:liaiiori'£gi3ods in the context of a I'E.f]'.Lll'l'iul"»C:C:U'll"lOAl' as a question re:lalioLr£";to."tl1:e ':l)'al.v_1_elof' the goods for the The assessment lhe__p_resent case and the a§s;sessr7lr£er1.iVorders«had__a.lready been passed. It is only when returned, me question (U. refiu1d'----.aro.sel We therefore, unable to accept cor1i'em:ior1 S.ri.Rauindrer1 Narain rhai the V" apiplealsgare rvlalrllairlalale under clause {B} of the " "3..'§£;--.oj' the Act and the appeals are liable to "

DIVISION BENCH OF THIS COURT IN THE 1;

1/' 36 U01 REPORTED IN 1998 (100) BELT [Keir] in1'c%1*1)1j(.:i.i_'::1g; 35 L ofihe Act. held as under :' b b b V M "From the reading Qf t;?:é"'ai:o;_,»¢;

contained in. Section 35L of m;>.«Ac't_;c :

to as that even. gfone of (.Fcte..gLtesVifio_ris raiseci the Tribunal for deierrniaaﬁorl reIate._Vi_o"Ara'ie duty of excise onto thee-~vo..l'a<a"'Qf' goocisvv;.!brV§U1e purposes of assess-x1.9i5er_1At,'«._then.tf'1;efre'medy by way of appeal against {be the can be oniy b¢Ef"Q7'£/"i:.h'('. LjOVAL'Ir;i'::~--(;xf1.(3l'V¢Si'vLC}1 question carmo_I_' ._ijhe--._Aiiuisofgbjurisdiciion of the High 'i'r'i the specific bar _ Jiobdﬂvof' the Act which s;}ecf}"'£cai£y:V' on the said questions per(,a:'m'r1g to 'duty and value of goods .~i1e£I;her".aI2V1; can be made by the Trfbuzlal w'.~*1or.ca11. be caliedjor by the High Court"

"'§'1A1e Sup1_'én1e Cm]:-1' had an 0CCE1SH)1'1 to intm-prct the said 35G{1} and 35i,.{b} of the AC1: are in pe11A'a-r_nai_e1'iaVbA ﬁﬁriih Se<:li(m 129K) and 13013 of the Customs AC1... L 'x M 37 Semicm 1.291) and 130K in 3 mmlber of de(:isi()ns,_l'}{()'t§Je\re1'. ihough not. in an ide1'1ti(:al §I']Ell',l.€'}'. but almost near V' matter, interpreting ihe powers of ll:1eA"A1Jpel1i::1te_.Ti'ri'b'i;11la'l--,fwith reference to the jurisdiction of 21 speci'e,1 Bench and *Ei,v1"l'.C)i'Q.l.l'i'lvEli1'":'}.7_ Bench, the Supreme Court head océas_ionV to éaﬁsieer the very same words used inlooth the----sle"e--tionps in of NAVIN CHEMICALS MFG. 82. t}t:i,..,frsi.VcoLLEcToR op CUSTOMS reported in" SC under the Customs Act_..--T1ae Apeix C0u_ri.Vhe1;;i under:

H ore, relates to the mearilr1_gl to the expression 'cieliern14irzav('io12_o;'".:ar1.z;'_.qiLeslion having a relation to grhe rate of Vdzlty easloms or to the value of {he lfjoaidsjor purposes ofassessnieni'. It seems to as ..1l1aVi"ih>e_ lfceii; lies in (she words for the purpose of therein. Where the appeal involves the A deieI'rn:i'iir,ai,ior1 of any question ihai has a relation to i:'~iel";ral'e of customs duty for the purposes of A' auasslessmeni that appeal must be head by a Special Bencli. Simi.lariy, where the appeal involves the aieler'minal.ic)n o/"any qu.est'ion rhaz': has a relation to 39 of goods for the purpose of assessment' iixplanation thereto provides a definition Q{'::'t jjorf"

the purposes of this su.l3»seCt.io71',W The Efxpianation ' says that the expression _ineti'ide1s*.__: 't;he,_ determination of a qiiestion relat;ing_ to the rate duty. to the value of for the piirpos»es--v assessment; to the classi]'icatio_n goods_tun:dergt'he Tariff and whether: or jtqyglp'-eotwerediibg an exemption nol1ftcation;."and value of goods jor thepiirp'oses:fof""ﬁsessment should be enhancec_t i_j(:di;.¢eét. "hai}i:1g"--xregaird to certain mat't'er5s thatj said-:pro%b:ides for. Although tl1ist~~veviEéEplanatiori slg nleonfines the said de/'inition"qf.t;h4e~isaidexpression to subsection (5) OfAS¢Ci"t'QT1' that the expression iised the other iparts of t.he said Act' should be . interpret.ed' =..similc-;rly. The statutory definition ae'eords,_with the meaning we have given to the 'Vlsaidie§+épr1'>ssion above. Questions relating to the "'lirafe'.V--}:;ffVduty and to the value of goods for purposes of assessment. are questions that sqiiarely fall within the meaning of the said "expression. A dispute as to the class1_'ficatr'on of goods and as to whether or not they are covered by an exemption r'1ott]"ieati.or'1 relates d.i.reet.ly and ~ "value of the goods."

40 pTO)Cit71Cll€l._lj to the rate of duty applicable for purposes of assessment'- Wheiher the va~l':_1e of '7' goodsfor purposes ofassessmeni is reqi:i.red:"loVb-e' increased or decreased is a qiiestion «that .;i'el'c'1i;e_sV V' directly and proximately to the "'ualu_e"o]' g>oodsjor~ purposes of ClSS€SSTT1€r1l."'Tl1'€ stat-3__.it.'org dejfi:ﬁi'i!Vioi1 of the said. expression irldicaitees t,hati'" toebe read to limit his applicalio.n."'i:o.. wl1.ere~u.,.f'r_>r:..l'l1e purposes of assess"mer1t..':qi.l;estilo*rils iarise directly and proximatjely as to._the_rd__te:ofthe value of the goojdsft. _f --

12. »AtT'paréij;12ll"fi.1ey 'C--onC1ude'd~a~s under:

"test for the purposes of clet'eri't1iriii1glwhet'rier'or not an appeal should be heard lSpeci'ol. licerich of CEGAT. whether or F102;;-.e.:c1 re 'erelrice*--*E3y CEGAT lies to the High Court __and'<u':h,eiher or not an appeal lies directly to the from a decision of CEGAT: does the qi.iestioi:.i requires determination have a direct: and .~:roJ:jimat;e relation, for the purposes of assessment, ' ' to the rate of duty applicable to the goods or to the 41

34. in the case of COMMISSIONER or CHENNAI VS. JAYATHI KRISHNA AND: -

REPORTED IN 20000 19) ELT 4(sc;,~~ -the qtigstitatt 'i.dI"i\!oviVe'~'i d"

was whether the assessee is liable to 61(2) of the Customs Act. theh"1mposittion:._:o'fwinterest"..i' under the aforesaid provisiona....xijas_ before the Tribunal, the Tribunal having been made applicab1e'_toV__ t'he:"go'odfs the question of payment of Agaisnt the said order, to the Supreme Court under Secti'on which came to be dismissed. In 't.h'e..t::aS€ ﬁr COMMISSIONER or' CUSTOMS (EX), Nrcco BATTERIES LIMITED, REPORTED IN (SC), the benefit of exemption notification was.°g§ranted"'to earlier four consignments and at the stage of it it ' .i,'¥cie.arance.of the fifth consignment, the said beneﬁt was denied _d i:_ni:ier the orders of the superior officer w.itho'ut assigning it "reasons. The Tribunal found fauit with the said action and ' Ctgstioms.

42 extended the benefit to the fifth eorlsigiiriient also.W Ag,g1*ir:Etye'd by the said order of the Tribunal, the revenue'lpdrderreddd appeal to the Supreme Court under Seetion. Aetﬁ;

36. In the ease of COMMISSIQNER 014* e:rrs14§;)1s2ts, , NEW DELHI VS. PUNJAB 'rN1$§IsTR1Es, REPORTED IN 2oo1(13;§§jja;;LT yarreggatien against the assessee was that the export;

obligation wereid as he used the material of §'i;;1'ts:_i}ig3_.§"':7 "one required in the rr1a1*1L1fa<:y::t't1;~r¢ charge was held to be proved on the' report. of t.he expert and therefore the goods were _eoi1fi.sea'£;ed':: The said order was Challenged by d it "the a.s:ses'aee~vt.}V3et'ore'Vti'te'V"1"rib'ur1a1. The Tribunal set aside the s__a'id_orade'r_.y dr'~4ggi'ieyed by the same, the revenue preferred an ur_1de:iiV_AC§3ec:t.ior1 130E of the Act before the Supreme 'Court and the Supreme Court set aside the order of the "«."1':'i:b1i'1~«1aI and restored the order of the Commissioner of 'i

-'t5-/./ /"' 43

37. In the Case of JINDAL DYE 1NT,r;_Rzi;;t*§.i31,l1rE LIMITED vs. COLELCTOR OF cUsr1'o-M_:"s,, ;.vzjairivii?2$1Il"» REPORTED IN 2006(197) 1:1;.T 4f71"[s--c), 5i,he_,V4l*fr':I:4lhe;.1i1.ligdl' upheld the order of the exuthorities 2-thd tiel'r1iedl't}_1Ve-.(:XCm;j'tiOlf1s.._ The assessee preferred an aplpe_éi'iv..Vt111de':" ._S€:€3l.iVOl_'1 bf the"

Act to the Supreme Court. ".£'l'ie...S:i'ip1*e»n1e Cdt1--r:t_set' aside the Order of the Tribunal anti' 'helct tllie,?a1»elsesSee is entitled to the benefit of exe1_n--pvt.i011,A"" --

38. 1111 zn'~v:.}1é'1'1ease-»--:§f._" COMMISSIONER or CUSTOMS. NEW NELHI VS.' 'ff-» ' INTERNATIONAL LIMITED REPORTEEIN {2¢ii}f7f2l.1':3j};LT 5o3(sc). the question involved was .?.xi]1eti;e1* the 'a.ssessee has imported in violation of the Exim Policy .ai1(J_ --ee'nseqL1e11tly liable to pay cust10r11s duty. The 'f1?ih't1_I;ial" '~tl"1}:1€, there is violat.i0r1 of Exim Policy. In an V _ appeal prei'er1'ed against the order of the Tribunal under ,:lSer:tt.eiQ11V"l..'3»OE 01' the Act, the Supreme Court reversed the

-v--'§elzit,i11g Para l56[A) of the I:3xi.m I-'01iey 1992437 and t'here1'0re, l'i':1tl'ing;>; of the Tribunal by holding t:112tt assessee is guilty of 46

40. In the Case of COMMISSIONER OF cﬁsifqﬁzs, NEW DELHI VS. SONY INDIA LIMITED, REPORTED f,'°1;.~i 20031231 )ELT 335 (so), the que;sm:r1»-mmivegiy .£x.--=h¢1-.r1x.--.;~' "

the assessee had Committed E-1'e.=jeh 0f'-- _Exi.m Uitimately. the 'I'ribu.na1 held is HQ of":Exin1~h Policy and e0r1seqL1e11i1y,,. 'no d§1L3rVyOvaS"--paid.' revenue aggrieved by the said 231'} appeal to the Supreme Court uh;d_e1' se;+,eo:$": }30_1§3._0f'.VLh.ej The Supreme Court Ltpheleuthe coNcLtISiON.. if". _ K :7;

Q «"1'he1*eVVi'o::':e.,V_fhe'2e2s;i:2;'essi0n 'rate' is often used in the :~_:ense of a sE.ayndaV1'd-_0i'._(rhe.a'SL1re. 'Rate' generally is an impost. usL1a§}y for CL11*r'e_nt 01f recurrent expenditure. spread over a r.1is«{..1'_ict_0':.'. Q{.I'1.e1' local area and is distinct from an amount "1;.aya;;1e'*v.f'o.;~_ done upon or in respect of pa1't'1eu1ar p1*efnise$... is defined by Webster to be the price or . ]a".mQ1.111t.'"séfated or fixed for anything. The word 'rate' ineiudes '-aVr1y_At:'o1}. due. reni. 1'a1e or charge. It means the scale or 47 amount of any other charges. The word 'rate' iswuys-ecl'~t.Vvith reference both to 21 percelitage or proportion of-t>:1lxes';--. E; valuation of property. "Rate' is L1S§'.d._i_I1 a1i"ACt'-:decla.ring ./_tl'1';'«;*ri;. the Legislative Assembly shall provide éi''nii.il'orni::sind ' equal rate of taxation ancl"'--~.§tsses-snient. percentage of fixation. ss useclin"eoxineetioltyyith 'taxation' and to the valuation of in oonneetion with .gLSsessment'. Ittis a estate or setting down how. »¢;;hsi1*ged With. to any tax.

By the 21 relation between the taxable tarxpclharged is intended. but the relation need nature of proportion of fraction. The Explanation t;:)iVv"st.ﬂ:«~seotion {5} of Section 35E of the Epxoisev" hhhhh the expression includes the 21 question relating to the rate of duty. to the Value for the purposes of assessment: to the classivfieation of goods under the Taiiff and whether or not they covered by an exemption notification; and whether the Value of goods for the purposes of assessment should be ex' phrase 'rate 01' tax' does not mean fraction of tax payable because what is the tax payable i.e.. fraction payab1e_4ts_deC:i._ded by the Eegislature. Once that is prescribed by the the Act, the Court cannot sit in jL1dgthe11t anti"a.tt:e1f moctiiufyu the said rate of tax. The Court 110-.j1.ti3tstijCti.dr1 t'0"g0 =i:j_t.:o the Correctness or othenvise Oi'-tj_11e 1'at:e 'Of ta}:*'fJ:ty.etb1e tn Vt;he'*. sense the rate prescribed by thue=._1hegts1at'11re«_.At'Therefore, the argument that the rate 'o:[_"t'.ax rheettls the rate at which tax is payable or a fraction is t1_:i's:uVstaf'i1'tVa.b'1'e. -- V .. ._ Bt"e:;;{:.113z_»athe'<vfe1'i{)_\x*iIig disputes do not fall within the jL11"iSC1'i(1f,i'O1'1 tmder Section 35(g) of the Act:~ I égjtcii Dis;:J.1e;teVret¢:tin_q t" H13 duty Qf e'-'case payable on ,CU1_tj g:):)ds... *

--._value Q!" the goods for the purposes of " 'V asis-essntentz.

(c)v\.~ ~ dispute as to the clasS;'f1'ca£:'1'0n Q1' goods.

('cit " Whether those goods are covered by an exemption. :'1oi1ft'e:tat:ion or not.

(e) Wheiher the va.iu.e of goods for the piirpoées of assessment is required to be inc;*'.eased or decreased. * " "

(I? '1' he question Qf whether a.n.y good;"areuexcisrxbieu goods or not.

Lg} Whether a process is iforni:i_h.i'gfaefr:rii1g. profjenes1s'vi.or not. so as to aiiracf; ievy Qfexcfse di1iy..A ' ' ' {h} Whether a }JaFE'fCLiZd=i}V"'gOOd§ ~._fCiE{--V' iuiihin which heading, s__ub~headir.1qa._ or; t:aryj'7iV_ item or the descriptiorlvojgioods as ITi1:'I1ifOH€d in eoliumn No.3 of the Cer1t.ralE'Xeisre 'Fl

43. F1'or},1"the a!ToV1"VeS'aii¥cl is Clear that an order §)eiiSseCiI"j; by*:1§:.:he"*-- Appeilatei-'ifribunai relating to the deierxtliiaatioxl' M hhaving relation to the rate of duty of .01:io th'enli?a1LIe of goods for the pulposes of &_ assveésarnelzi. lies "['C.1,v1:1'§"SL1p1'€111€ Court under Section 35L(b} of to the High Court u.ndE:1' Section .'35[G]. 'i"He.ii1ieI1ti01] behind this bifL11*c.ai:i()11 of jilrisdiciion bef;\"rv.ee13.__"i.i19«fﬁpex Court. and the High Court seems to be that h "';'11()o:"e ()t'i.en. E11211} not, any decision on these aforesaid alsspeeis ':'1o'.:. only affects the interest of the manuf21eEu1'e1's who are 2 1 5 52

45. In so far as the Conteiition that once the declared by the Apex Couri, in the schedule there: . rriention of the item. the duty payablepthe and interpreting those entries while laid down the law, the qL1est.i0hQillagetirid ; the said dispute would not irifirespect of Cases which are already and pending for years. there is no_'1*1ecessiity' lﬁtiex Court': even in such 1'I1'c1ll€1:'_s.; lithe: law declared by the Apex under Article 141 of I the cljolhot see any merit in the said comentiotill It that no one has 8. right of Right. 3}, eppeal is El erer3.t'ure of a statute. appeal has to be worked out under a parameters prescribed expressly under the Sté;tL1t,e'." '1fi"i1:ilcie1' E1 statute appeal is provided and then in some 'V r.o7eit.t;e1':3:t.l1e jurisdiction of one Appellate Court. is ousted and l "'V_l,l'iC,~"1"";'»E3_1f11E'. is eonferreci in yet anotlier Appellate Court, the party

--7lwho wei11t.s to ex.e1'c.isae the right of appeal can only exercise the it/" i .. ,. .,.V..,,.w»aH»;.v;/»Ww»w»Mmw&%&%5fﬁ5 C' . o'eCr.ided 53 same in 2-1eoorc.iaii('e with the stiatuie. The question '10i"':1o'p.1yvi.¢rig the law of the land with referen(:<:r to the decrisiti-its 1'end'e'i"<;d""i3y"» the Apex Court'. or the entries in the sCh_ectt.1§.e wot};-id 11VVovt._:;:1ri'-se. ' The question is. an aggrieved pe1'son shottilcitt'a[§p.roa:cii_C'wh'ieii Court. Once that forum is speL§i_fi"ee1 'L'lHd.€l'VU1€. is only C that: forum which can ent',ertai1iV__t__he».sppeai...'inC.t.hat_iuie\v oi' the matter, either the p€11dei"i..(.ijf_Qi';--_th~i€§ this Court I01» Considerable time. or finvoivect in these appeals are of the Apex Court woulci niaintaiiiabie, if it is not maiiitziiiiabie 'I'he1*efore, we do not see any stibstteirioe in A C learned counsel for the Revenue relied upon the"'j.iidgniez.:t'. 'otvtthis Court in the ease of Coinmissioner of Central E'X7ci:~3'e W vs -- M/s.I-'ushpad(-rep Erilterprises decided on in"'.CI*3A 17/2007 and contended that this court: has the Case on merits as if it: has jui'isdiCt.io1i is nrsiwithstz11'1ding the ob_jeetion taken by the assessee that SE.E('h ! it .

it/' 54 an appeal i.s not maihtaihable 11/ s.35(} of the perusal of the said order discloses that the jurisdiction was raised in para 2 of"t;"r'ie¢0rdeif,.. KThelivearr£ed if it Judge of this Court has observed as "When the matter ti;as"itaken'----:;_,f)' the learned counsei for the---respdiidient llic1s.rais§ed a preliminary objecti})nA uiith " to the maintainability of the l9y."stdtii_'igl.lil1at even if the ques.ticéii [to j,@f:e:t;éiéi"_:r:jie activity Qf the respo1jdent--cis_is*essee_&_isjieid to rnanufaciuring activit:y..V.Ve:3e:'iV then rate duty applicable for s':.,ich__ aA__0.ctivity has to be decided or1lIgu"Co'urt in view of the express provistahsv -_Sectionll~*bi'35G r/w. Section 351, of the , Ceritrai Act 2 is notfdisputed by the learned counsel for the _Rew/5lli:mii§~_,;£;hat'; .though such a Contention raised by the assessee was_llli9ecoi'ded_tAi::as set out above, the learned Judge did not lxudecide question of maintainability at ali. Without deciding fithel jurisdictional aspect the case was 'decided on iiierits as if 55 they have got jurisdiction. Therefore, the learned the Revenue submits that the said judgment is the proposition that such an appeal" i-s.yn1aintai"nab1eaf:s by ' implication this Court in the said has_Th--e.ld.. issue against the assessee. V are."afraid~-,th'2:t"*such an inierence is not possible Whenﬂav.juri'sdict.ion.al giuestion is raised before a court settled law that such authority whether it has jurisdiction or is before it. Unless a the question of such an order deciding the question of jurisdiction"Wotaldneitheroperate as a binding precedent or by in1p1i.r.iat:io1i thejpuifisdictional issue has been held against if such construction is to be placed, it is said assessee is concerned and it is open _ for the assessee to approach the superior court contending ,:lirstly that, the court which passed the order has no jti_risdict.ion and in which event. the Appellate Authority has to

-decide whether the court has jurisdiction to pass order or not. 12/ Therefore, the said jtidgziieiit is of no assistance cont1'ove1'sy in this case. i i i V i ON FACTS

48. The assessee COIiteii'd..s 'Eh'OA.t1:':%}"1 goods are manufactured, it is not n1Vari:{e't.abiepA \.m1:e_refore, they are consuming the said for the purpose of manufacturing steam. IF vso:'.vinanut'actui'ed, they are produc.in§,: eteictricity so produced is used which again makes it not .have aiso contended because the fina} product them irvhouse t.he Notification No.€g7;' 1995.' grants comptete exemption from the payment of excise ~__It is contention of the Revenue that a portion otftiie "pi"od.tict. is used for construction activity, for ﬁghting at -.r_esidc=~nt'ifa£. Iayout and soid to HGIL 3 public sector undert'va_t?iir1g and to that extent the assessee is 11211316 to pay duty. i't/,-/ »»»» "

57

49. l.e211'ned counsel for the Reventie relying fti'p():"1"1V the decision in COMMISSIONER OF C.EX. t-

CHENNAI PETROLEUM CORPN. LT,ir;;ii»repert:eet'V"4iii7;2oo%i(2 1'1 )9' "

ELT 193150) where it is held the e1etS'ii'iei_t.y" i;eiie.i~_;ti,e'ei Reg which was actively consumecl b)~'._llli.§ Cor.po1'ati0ii.Vwas'*i1Qt~liable. . 9' to duty to t:ha.t extent. D§,'.I.11'r11'1ClVA}t1.1.'rVV1:d-2*.'i'I1_vth€.t3ll.Ql§{'AQaitlse notice dated 17.08.1999 fails. a part of the electrieit.y produeedV__lfr0r:nl" during the period Augtlei to ltiomthat extent alone the of duty. This requires f€Ca.lCL1:l,?_3'tl.lC}1'l.A--£0' that extent alone the matter is being authority for fresh Cl€[€F§'t1'1lI}'c1tl0}flV'0Alf tl1€ dtit Erable '.3' the ztssessee for the .. 13 y 1998 to January 1999. Relying on the said v..¥§ts--"'co11te11ded. to the extent. the final product. is used for_feonst.i'L1et,io11 activity and not a residentiztl layout. and to"i-alnother public. sector ttndertziking. the duty payable *r;a1':no1. be disputed and that question can be gone into by the Court.

58

50. It was also contended that the Apex ilie ease of COMMISSIONER, C.EX. Vs. FERTILIZERS co. LTD. reported in' 2'oo9(24o} 1S617=(s'CI V held Where they' were dealing with llowl'-Siilphliiiiilleavy--Silo:ei:_u ILSHS) which is the impugned in l.ll1.i.'.3V was a case where the il1e'-assessee was assailed. Aggrieved by preferred an appeal before ilvere referred to a larger Bench. held that credit was Aggrieved by the said order, tlhe appeal to The Apex Court":

under Sectio;1ll35Il{'b_)l'ol" in which the Apex Court held that _i_{ll1e LCENVVA"-.lT_Vllo'r duty paid on individual Cases in the e:o'f._exempi.ed final products is not liable. Sub--1'ule {"'i]_ Viigis ap:;i,:_ea.i'_-in' respect of goods used as fuel and on such V _ 21ppl'ie2}ii.c)'Ii. -the Credii will not be permissible on such quantity 5:1 fiiel which is used in the m.anufaci.u:~e of exempted goods. _ l~le'1*e agaiiii when the 'l'ribimal held l.l'£€ assessee is eiitiiled to Ci?,l\EVA'I' c1'edit., which in S1,IbSl,E-111('.€? amoLm'{S to saying the 59 impugned goods is not excisable and no duty "-..l°e--\V5'i'aJ.ble against. such an order. the appea} is pi-eferi-ed theT'R'eve.n'uev. under Section 35L[b} to the Apex Courft and"no't..':t.o'.Vtl1'_eeVHigh ' . Court. Therefore. the said judginent iIist:e:ad of s1.i'p;)o17tii1§'=ti.he case of the Revenue supports 'the-ease oftlie

51. All these questions Telate to determination of rate of duty payable, the 'v~a1ueAh' of mantifaetured and entitlement of exemption They have to be decided by the~'Af_se;§'Cot1._rt ti:-V.a'n"ai5';'i-ealvoigfeferred under Section 35L{b)'.of _1;he_'the High Court in an appeal preferred undser'S.ee'tion:_43.5ﬁ{G} of the Act. The learned counsel for the assesseeis jti-stiiied in contending that this appeal .°'Apre'fe1:.red'A..the challenging the order passed by the holding that the impugned goods are not extttsable 'accordingly. setting aside the Eevy of duty and the W,deIna1'idi~iotice issued by the department is not maintainable the Iiigli Court.

52. Therefore, we are of the considered §.).}'_')"i}'_} E'u()"Z.:1"',.1'}'i«?3.t the present appeal preferred under Section 35[C;§]__"0f not nlaintamabie before this C0L:;rt'§'"The",ap.pe21l'._is'~13; be V preferred to the Supreme Court mﬁvdper--.See1:ier1__A3*5L(.b)"

Act. Accordingly, the appeai is d._iemisse5. No L sax:

1s%WTUDGE re ksp fuj k

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Karnataka High Court

The Commissioner Of Central Excise vs M/S Mangalore Refineries & ... on 1 September, 2010

Bench: N.Kumar, H.S.Kempanna