Customs, Excise and Gold Tribunal - Delhi
India Jute And Industries Ltd. vs Collector Of Central Excise on 11 January, 1991
Equivalent citations: 1991(33)ECC188, 1991(54)ELT235(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. These four appeals have been referred by the President, CEGAT, New Delhi for constituting a larger bench of five members to answer the question and settle the question of jurisdiction pertaining to matters of levy of cess on the Jute manufacturers for goods removed for export under B-l Bond as provided under Rules 12 and 13 of the Central Excise Rules, 1944. The appellants had urged in their appeals before the East Regional Bench, Calcutta, that Rules 3 and 4 of the Jute Manufactures Cess Rules 1984, effective from 15-09-1984 cannot and do not travel beyond the Act and, therefore, the orders passed in appeal by the Collector of Central Excise (Appeals), Calcutta, were liable to be set aside. The parties in dispute had submitted before the East Regional Bench, Calcutta, that the questions involved in these appeals were about the leviability of cess and rate of cess was not in dispute and both parties had submitted to the East Regional Bench that the matters were vested within the jurisdiction of Regional Benches to decide the appeals but, however, in view of few matters decided by the Special Bench, New Delhi, pertaining to these matters as reported in 1988 (38) ELT 306 (Tri.) and 1984 (16) ELT 477 (Tri.), the matter is required to be settled as to the question of jurisdiction between these Benches by a constitution of a larger bench comprising of five members. However, the East Regional Bench, Calcutta, while handing over their files to the President, CEGAT, New Delhi, for placing before the larger bench of 5 members, by their Order No. 116/Cal/1989 have opined that the Regional Benches have jurisdiction to deal with the matters of the like nature. This Bench has been constituted by Hon'ble Sr. Vice-President (as he then was) by his Office Order dated 18-08-1989 to decide the question of jurisdiction between Special Bench and Regional Bench in respect of levy of Cess on jute manufactures on goods, namely, jute when removed for export without payment of duty under B-l Bond as provided under Rules 12 and 13 of Central Excise Rules, 1944, read with Rules 3 and 4 of the Jute Manufactures Cess Rules, 1984 effective from 15-09-1984.
2. The notice of hearing was sent to the parties and also to the Secretary of CEGAT Bar Association to assist the Bench as amicus curie. Shri L.C. Chakraborty appears for Revenue and Shri R.K. Jain, Consultant, appeared for the CEGAT Bar Association, New Delhi, and very ably assisted the Bench and we place our appreciation on record. The parties have sent their written submissions and have sought for an order on merits.
3. In their written submissions, the parties have submitted as follows :-
(a) That the period involved in these appeals is 01-05-1984 to 16-11-1984. The issue in these appeals is as to whether cess would be payable on Jute Manufactures exported under Bond under Rule 13 of Central Excises and Salt Act, 1944.
(b) Jute Manufactures Cess Act, 1983 came into force w.e.f. 01-05-1984 and became effective from 15-09-1984. Cess on jute manufactures became leviable by virtue of Sub-section (1) of Section 3 of the Jute Manufactures Cess Act, 1983 w.e.f. 01-05-1984. Sub-section (2) of this section states that the duty of excise levied under Sub-section (1) shall be in addition to duty of excise leviable on jute manufactures under the Central Excises and Salt Act, 1944.
"Sub-section (4) states that - The provisions of Central Excises and Salt Act, 1944, and the rules made thereunder, including those relating to refunds and exemption from duty shall, so far as may be, apply in relation to the levy and collection of duty of excise on jute manufactures under this Act."
(c) As per Rule 3 of Jute Manufactures Cess Rules, 1984, Cess would be payable on finished jute manufactures removed for sale/subsequent sale by the producer for export abroad and/or for distribution and consumption within the country.
(d) Rule 4 ibid provides grant of refund on jute manufactures exported from India.
(e) Prior to 15-09-1984, i.e., the date on which the Jute Manufactures Cess Rules, 1984, came into play, only the provisions of Central Excises and Salt Act, 1944 were applicable. In other words, there being no existence of Rule 3, the question of realisation of duty on goods exported under Bond did not arise.
4. They have further submitted that the real dispute has arisen with regard to the period 15-09-1984 onwards. They have submitted that Rule 3 of Jute Manufactures Cess Rules, 1984 undoubtedly provides for realisation of cess on goods exported. There is no distinction made between exports on payment of Central Excise duty and exports under Bond provided for vide Rule 13 of Central Excise Rules, 1944. They have submitted that even after issue of Rule 3 of Jute Manufactures Cess Rules, 1984, the provisions of Section 3 of Jute Manufactures Cess Act, 1983, have not been withdrawn. It is their case that in contingencies not specifically covered by Rule 3 of Jute Manufactures Cess Rules, 1984, the provisions of Central Excise Rules, 1944 would have to apply. Rule 13 of the Central Excise Rules, 1944, provides for export under Bond without payment of Central Excise duty. Therefore, Cess which is another duty of excise [vide subsection (2) of Section 3 of Jute Manufactures Cess Act, 1983] is not leviable. It is the appellants' case that when no duty is payable on export under Bond, Rule 4 of Jute Manufactures Cess Rules, 1984, denying refund to them has no significance.
5. They have further submitted that the provisions of Rule 13 of Central Excise Rules, 1944 are absolute and cannot be interfered with by the provisions of Rule 3 of Jute Manufactures Cess Rules, 1984. They have submitted that where there is any apparent conflict between the provisions of the Act and the Rules, the conflict has to be resolved by harmonious construction. They have submitted that in their case the provisions of Rule 3 of Cess Rules for cess on export have to be read as a meaning that cess is payable in case of export where such export is not made in bond under Rule 13 of Central Excise Rules. It is their case that cess is payable on export if such export is made on payment of cess otherwise than in bond.
6. The appellants have finally submitted that there is no dispute in relation to the rate of duty or value of goods for the purpose of assessment. They have submitted that the question of levy of cess is within the jurisdiction of the Regional Bench as provided in Section 35D of the Act and have sought for transfer of appeal to the Regional Bench for hearing and final orders on merits.
7. In the conclusion, they have submitted that the intention right from the inception of Cess on jute products (i.e. 01-03-1976) was to levy cess only once and that too only on the final product sought to be cleared at the exit point from the jute manufacturer's premises. They have called for our attention, the Trade Notices : [C. No. IV-56(4)10-CE/PRO/Cal.-II/88], Calcutta Trade Notice No. 234(CH-56)21-CE/CAL-II/88 dtd. 30-09-1988 and relied upon the ruling in 1988 (19) ECR/11C, 1988 (38)ELTT-17.
Brief Facts of the case in Appeal No. 16/87-ERB as detailed in Order-in-Original No. 17/TI-18D/Demand/84 dated 25-07-1986 :
8. The appellants - M/s. India Jute & Industries Ltd., Serampore, Hooghly (West Bengal) produced and cleared for export 3305.147 M.T. of Jute Manufactures falling under old Tariff Item 22A by using packing material 24.789 M.T. without payment of any cess duty amounting to Rs. 2,21,841.24 and also produced and cleared 129.324 M.T. Jute yarn for export alongwith 3.80 M.T. packing material without payment of cess amounting to Rs. 8,760.87 as required to be paid under sub-section 1 of Section 3 of Jute Manufactures Cess Act, 1983 and Rule 9(1) of Central Excise Rules, 1944, and hence a Show Cause Notice-cum-demand notice was issued for payment of cess duty totalling Rs. 2,30,601.61. The reply of the appellants to the Show Cause Notice-cum-demand as detailed in the Order-in-Original has been detailed supra as urged in the Reference Application. The findings of the Assistant Collector had been as detailed below :-
"From the facts of the case it appears that M/s. India Jute produced and removed for export Jute manufactures and Jute yarn after packing with pack sheets of jute manufactures during the period from May '84 to Sept. '84 and they have not paid the cess duty on these goods as payable thereon. In this connection, party's contention for non-payment of cess duty becomes untenable. In view of the Sub-section (1) of Section 3 of Jute Manufactures Cess Act, 1983 read with Rule 9(1) of the Central Excise Rules, 1944, cess is leviable and payable on the jute goods, during the material period".
The facts and findings in Order-in-Original are similar in the other appeals also.
The Collector of Central Excise (Appeals), Calcutta while considering the appeal of the appellant in Appeal No. 16/87-ERB has observed as under (Para 4) :-
"I have considered the matter and I am convinced that the appellants have no case on merits, the levy and collection of cess on products came into being on 1-5-1984 as under Jute Manufactures Cess Act, 1983 when in terms of the Ministry of Commerce Notfn. No. 5/15/83-EP (Teg) M dated 28-4-1984 it came into operation. As per Section 3(1) of the Act '83 Cess has been levied as per schedule annexed under the Section for the articles manufactured thereof. The Jute Manufactures Cess Rules, 1984 issued subsequently with effect from 15-9-1984 made it clear that cess is payable on removal either for sale or export as per Rules 3 and 4 of the said Rules. Notfn. issued under Central Excises and Salt Act, 1944 and Rules for export of any articles under Rules 12 & 13 cannot thereby be made applicable on payment of Cess. Sub-section (4) of Section 3 of Jute Manufactures Cess Act '83 has permitted the authority for collection of the same in its fashion. The Asstt. Collr. is, therefore, correct in demanding cess on the jute manufactures in absence of any notification issued by the Govt. of India separately. Further, the rules though issued at a later date under Section 6(1) providing the procedure facilitating levy and collection Section 6(2) makes it clear that the said provision will not affect the-generality of the earlier Sec. It follows thereby that the levy of cess under the Act would not wait for the framing up of the rules but to start from the commencement of the Act i.e. 1-5-1984 itself and that being the case the demand for cess not paid in respect of clearances effected after the Jute Manufactures Cess Act '83 came into force was valid."
The Order-in-Appeals in other appeals are similarly worded and it is not required to be reproduced here for the purpose of consideration of this reference.
9. In appeal No. 69/87-ERB, the party has submitted that duty of excise as cess was levied on the classes of goods, manufactured wholly or in part of jute, specified in Item 23 of the First Schedule of the Industries (Development & Regulation) Act, 1951, under Notified Order S.O. No. 141(E) dated 25-02-1976 for a period of one year from 01-03-1976. The levy has been continued by issue of notifications from time to time and collection of the duty is at the point of removal under Rule 9 of the Central Excise Rules, 1944, as applied by Rule 3 of the Jute Manufactures Cess Rules, 1976. They have further submitted that different rates of cess have been prescribed in the table annexed to the said Notifications. Accordingly, the cess duty has been paid since the inception i.e. from 01-03-1976 on delivery of jute goods from Mill premises. They submit that a dispute was raised by the Central Excise Department for payment of cess on yarn and twine captive -ly used for manufacture of jute manufactures at the specified rates in addition to payment of cess being made on respective fabrics at the time of clearance from Mill premises. Show Cause Notices cum demand notices demanding the produce cess on spinning production captively consumed for jute manufactures were served covering Rs. 6,68,997.86 for the period from 01-03-1976 to 14-12-1982. This has been confirmed by Assistant Collector of Central Excise and Collector (Appeals). They had paid Rs. 3 lakhs in cash under protest against threatened action by way of confiscation of goods. They submit that they have appealed against these orders before Special Bench in E/A. No. 1706/85-D, dated 19-07-1985 and E/1713/85-D, dated 18-07-1985. This appeal in 69/87-ERB is against the Order-in-Appeal dated 19-01-1987 and Order-in-Original, dated 9-10-1986 rejecting their refund application and in this appeal they have sought to reply on the Board's clarification contained in the letter dated 30-01-1986 reproduced in the Calcutta-II Collectorate Trade Notice dated 19-03-1986. They have submit ted that the Industries (Development & Regulation) Act, 1951, notification and the rules issued thereunder, do not specifically provide levy of cess on the goods at the intermediate stage of production, jute yarn. Therefore, they have relied upon the Board's clarification in their letter TLM No. 1079 to 1081 dated 30-01-1986 wherein the Board has stated that "Cess on Jute Manufactures should be collected only at the point of clearance from the manufacturers' premises and only on product sought to be cleared at this stage from the factory. Therefore, captive manufacture of cloth/bags and other manufactures would not be chargeable to this Cess". Therefore, basing on this submission, they have submitted that the amounts paid by them of Rs. 4 lakhs in cash and Rs. 1,03,115.73 vide P.L.A. as above on jute yarn captively consumed by them during the period 01-03-1976 to 30-04-1984 are liable for refund and Bank Guarantee for Rs. 2.75 lakhs furnished by them to the Collector of Central Excise on 18-3-1985 vide GL No. Com/Br/183/85 have to be released. They have sought for interpretation of Notification No. 141(E), dated 25-2-1976 as amended by Notification No. 683(E), dated 19-10-1986 in the light of Section 30 of Industries (Development and Regulation) Act, 1951 (65 of 1951) and Rule 3 of the Jute Manufactures Cess Rules, 1976 alongwith Section 3 of Jute Manufactures Cess Act, 1983. They vave also relied upon the Calcutta II Collectorate Trade Notice No. 69/Jute Manufacturers -1986 dated 19-3-1986 for claiming refund and release of bank guarantee furnished by them in this appeal.
10. The appellants in E. Appeals No. 15,16 and 69/87-ERB India Jute & Industries Ltd. v. Collector of Central Excise, Calcutta have taken the stand as enumerated above and the orders of the authorities are also enumerated as above.
11. The appellants in E. Appeal No. 77/84-ERB M/s. Auckland International Ltd. have contended that they are manufacturing jute yarn falling under item 4 of the order No. 102(E) dated 19-2-1980 issued under Section 9 of the Industries (Development and Regulation) Act, 1951 and subsequent orders in their composite jute mills. The said yarn is twisted/blended to jute twine falling under item 5 or woven to hessian item 2 or sacking item 3 of the said order. Twine is used in sewing hessian or sacking fabrics/bags. They have further submitted that cess at the appropriate rate has been paid on the end product, jute yarn, twine hessian or sacking at the point of removal from the factory. Cess has been demanded on the jute yarn and twine used as captive consumption in the manufacture of twine, hessian or sacking fabrics/bags. They have further contended that the dispute is as to whether cess levied under the Industries (Development and Regulation) Act, 1951, the rules and the orders made thereunder is payable on jute yarn and twine used in captive consumption in the manufacture of jute products and have submitted that there is no dispute in relation to the rate of duty or value of goods for the purpose of assessment. Therefore, it is their submission that matter has to be decided by the Regional Bench as provided under Section 35D of the Act.
12. Shri L.C. Chakraborty appearing for the Revenue, argued the matter with his usual exuberance and submitted that the issue to be decided in these appeals is as to whether cess would be payable on jute manufactures exported under Bond under Rule 13 of Central Excise Rules, 1944. He submitted that this question is pertaining to leviability of cess on jute goods. Jute cess is also a kind of excise duty. Any matter having any indirect reference to rate of duty or any relation to the rafe of duty has to fall within the ambit of Special Bench for decision. He submitted that cessability of jute goods is also rate of duty and has got relation to rate of duty. Leviability to cess and excisabihty are corelated matters and have a bearing on rate of duty. He submitted that to levy duty, the product has to be a manufactured one and again whether it comes within the schedule of the Central Excises and Salt Act, 1944 and referred jute legislations has to be gone into which requires the determination of leviability, excisability, marketability and rate of duty and hence these four appeals are required to be heard by the Special Bench within the ambit and scope of Section 35(D)(2) of the Central Excises and Salt Act, 1944.
13. Shri L.C. Chakraborty submitted that a similar question was referred to a larger Bench with regard to interpretation of Notification No. 201/77 where the question was with regard to quantum of clearances in a financial year and the rate of duty leviable thereon in Collector of Central Excise, Chandigarh v. Kashmir Vanaspati case as reported in [1987 (29) ELT 208]. The case was of Special Bench and likewise the matter in these four appeals is pertaining to interpretation of notification in the light of Section 3 of Central Excises and Salt Act, 1944 and Jute legislation and the question being of leviability of cess on jute products, it has to be dealt by Special Bench alone.
14. Shri R.K. Jain, learned consultant who assisted the Bench on behalf of the Bar Association, commendably and very capably argued the matter at length. He has also raised very interesting legal points with regard to jurisdiction and constitution of this Bench to hear and decide this matter. He has submitted that the Regional Bench while referring the matter to the President, had expressed its view that the matter fell within the scope of the Regional Bench. When such was their view, then they should have proceeded to deal with it and not referred the matter to the President for constituting this Bench to answer the point. Further, it would have been proper for the Regional Bench to refer the matter to High Court for clarification as was done in respect of Baggage matter under Section 35(B)(i) of the Act. He further submitted that the President has no power under the Central Excises and Salt Act, 1944 to constitute a larger Bench to decide any matter on reference by Regional Bench. He submitted that the Regional Bench can refer its matter to a third Member to resolve any contrary view by a majority decision and that there cap be no constitution of Three Member or Five Member Bench at Regional level. The Statute does not provide for the same. This Bench cannot sit outside the territorial jurisdiction of the Regional Bench (ERB) to settle the reference matter. He submitted that the Central Excises and Salt Act, 1944 provides for reference and review to High Court and Supreme Court and there is no scheme or provision for constitution of Five Member Bench to settle any controversy. In support of this argument, he relied upon Rule 3 of CEGAT Procedure Rules which states that the Bench shall hold its sitting at its Headquarters or such other place within its jurisdiction. He emphasised the words "within its jurisdiction" to mean its terrritorial jurisdiction. This Bench of Five Members is not duly constituted to sit outside the territorial jurisdiction to deal and decide its issue and hence any finding on this issue will not be a proper one in the eye of the law. He submitted that this is not a competent Bench and hence these matters have to be sent back to the Regional Bench to deal with it as per law.
15. Shri R.K. Jain further sumitted that the matter in these appeals does not involve leviability of cess and it is not a deciding factor for determining the rale of duty. The purpose of assessment is the controlling factor in these appeals which falls within the ambit and scope of the Regional Bench. He, however, submitted that in Appeals No. 15/87 amd 16/87-ERB, the question is of rate of duty and in Appeal No. 69, 77/84, there is no determination of rate of duty and hence the matter has to be dealt with by the Regional Bench alone. He further submitted that the matters pertaining to cess on export goods fall within the jurisdiction of Revisional authorities as empowered in the Central Excises and Salt Act. Shri Jain submitted that Appeals No. 15/87 and 16/87-ERB deal with rate of duty and hence Special Bench can deal with it but Appeals No. 69/87 and 77/84-ERB deal with captive consumption and have to be dealt with by Regional Bench alone. In this connection, he relied upon larger number of citations which throws light on the type of matters dealt with by the respective Benches. He relied upon Mahabir Jute Mills Ltd. v. Colleclbr of Central Excise, Allahabad [1984 ECR 306] and National Jute Manufacturers Corporation [1988 (18) ECR 649] which dealt with captive consumption and the matters were dealt with by Regional Benches.
16. He relied upon the under-noted cases which dealt with penalty on value of goods; exemption notification; export under Bond; reassessment under Section 11A and preliminary question of law dealt with by Regional Benches. They are as follows -
1. Collector of Customs v. J.K. Batteries -1985 (20) ELT 89
2. Malwa Vanaspati & Chemicals Co. Ltd. Indore v. Collector of Central Excise Nagpur -1983 (13) ELT 1004
3. Indian Aluminium Co. Ltd. v. Union of India -1988 (36) ELT 435
4. Mysore Prefabs And Prefabs India v. CCE, Bangalore - 1987 (27) ELT 487 (Tribunal)
5. Navin Chemicals Manufacturing & Trading Co. Ltd. v. CC, Bombay -1987 (31) ELT 304 (Tribunal)
6. Hindustan Aluminium Corporation Ltd. v. Supdt., Central Excise, Mirzapur and Others -1981 (8) ELT 642 (Del.)
7. Bharat Petroleum Corporation Ltd. v. CCE, Bombay-I - 1984 (18) ELT 462 (Tribunal)
8. Arson Industries, Agra and Ors. v. CC, Calcutta - 1986 (24) ELT 86 (Tribunal)
9. Anil Starch Products Ltd., Ahmedabad v. CCE, Ahmedabad -1985 (21) ELT 306 (Tribunal)
10. Indian Oil Corporation Ltd., Madras v. CCE, Madras -1987 (28) ELT 361 (Del.)
11. Krishna Fabrics Pvt. Ltd. v. Collector of Customs -1988 (36) ELT 633 (Tribunal) 16A. In Hindustan Aluminium Corporation Ltd. v. Supdt, Central Excise, Mirzapur & Ors., as reported in 1981 (8) ELT 642 (Del), the Delhi High Court answered the question as to whether the goods which are exported under bond are liable to payment of excise duty as demanded by the respondents/Central Govt. or are totally exempt as maintained by the Petitioner. The Court examined the various provisions of the Act and Rules and held in that the facility (by bond) of removing without payment of duty cannot be equated with a substantive right of exemption from payment of duty, unless an exemption notification has been issued by the Central Government under Rule 8. The Court had held that substantive right is to be found in Rule 12 read with notification issued under it. It further observed that Rule 13 does not confer any independent and substantive right and held that Rule 13 is a procedural provision and gives an additional facility to the person who exports under a bond to remove goods without payment of duty in the first instance.
17. This view of the Division Bench of Delhi High Court has been differed to by the Single Bench of Calcutta High Court in the case of Indian Aluminium Co. Ltd. v. Union of India as reported in 1988 (36) ELT 435 (Cal.) in so far as interpretation of Rule 13 vis-a-vis Rule 12. It has been held that Rules 12 and 13 are basically different and independent of each other and not supplementary as held by Delhi High Court. It further held that Rule 13, as it is, has not been made dependent on Rule 12 since it is self-contained and does not require any notification to be issued as in Rule 12 and there is even no reference therein as to the grant of rebate. It further held that the bond that is required to be executed under Rule 13 is not by way of security or payment of the unpaid duty on the exportation being completed. It stands as security only for proper exportation of the goods, which is apparent from the provisions of the rule.
18. The Tribunal has followed the view of the Delhi High Court in the case of Indian Oil Corporation Ltd., Madras v. CCE, Madras as reported in 1987 (28) ELT 361 (Del.)
19. These citations go to show that the matters pertaining to rebate of duty on export under Bond or without Bond as per Rules 12 and 13 and relevant notifications issued under relevant rule come within the ambit and jurisdiction of Special Bench and not Regional Bench.
(i) In 1985 (20) ELT 89 - Collector of Customs v. J.K. Batteries, cited by Shri R.K. Jain is not helpful to determine the controversy in this case.
(ii) In 1983 (13) ELT 1004 - Malwa Vanaspati & Chemicals Co. Ltd., Indore v. CCE, Nagpur, it has been held at para 19 of the order that "when the question comes up for determination of duty, may it be with reference to an exemption or concession notification, it would necessarily affect the rate and therefore, the question would be in relation to the rate of duty and would be dealt with by a Special Bench as contemplated by Sub-section (2) of Section 35D of the Central Excises and Salt Act, 1944". Further, it has been held by the Bench that "Clauses (a) and (b) of Sub-section (3) of Section 35D contemplate situations where the point in issue is not in relation to the rate of duty. The provisions of Sub-section (3) have a specific purpose inasmuch as in a given case a duty may have been paid and a claim of refund is made on the ground that the payment was wrongly made or in excess of what was done. There may be more than one reason for such a claim without contesting the rate. Similar would be the case with regard to penalty. But the case in-hand stands on a different footing. It is not one of those situations where duty is paid and/or levy is being contested or exemption is being claimed which does not a affect the rate. The effect of the claim of exemption under the Notification No. 23/72-C.E. is to change the rate itself. To further elaborate the point, those cases where duties are paid - it may be excise duty or import tariff or export levy - and subsequently it is contested that they were wrongly collected without contesting the rate or accepting certain rates, will stand on different footing than the type of cases before us where question would normally be whether an exemption notification or a concession notification issued under Rule 8 and/or Rule 192 will affect the rate of duty. Such cases certainly would involve a question in relation to rate of duty of excise which are contemplated under Sub-section (2) of Section 35D to be dealt with by a Special Bench. To repeat, when the question comes up for determination of duty, may be with reference to an exemption or concession notification, it would necessarily affect the rate and, therefore, the question would be in relation to the rate of duty. Therefore, I cannot be a party to my Brother's view point that the jurisdiction of the case did not vest but a chance factor brought the case before the Special Bench.
(iii) In citation 1984 (18) ELT 462 (Tribunal) - Bharat Petroleum Corporation Ltd. v. CCE, Bombay-I, the Special Bench has dealt with matter arising from the order of Collector (Appeals) in respect of shipment of superior kerosene (Aviation Turbine Fuel) from Bombay airport as aircraft stores to foreign bound aircraft under Bond Rule 13 of Chapter IX of Central Excise Rules, 1944, [Chapter IX Heading is "Export under claim for rebate of Duty or under Bond".] This Chapter IX deals with rebate claims. The Bench has also distinguished the procedure under this Chapter IX with Rule 191B, which is a rule that provides for manufacture in bond of articles from excisable goods on which duty has not been paid; Rule 12 and 12A dealing with rebate of duty on goods exported and 12A rebate of duty on excisable material used in the manufacture of goods which are exported. The Special Bench while dealing with this case, has gone into Rules 12, 12A and 13 dealing with refund of duty that has already been paid on the goods exported and with the procedures for the exporter to get a refund of duty on the duty paid goods. But, however, this case had arisen as a result of the order of Asstt. Collector correcting the Classification List which needed correction. The Bench had set aside the demand as no Show Cause Notice had been issued to the appellant and also as the procedure as laid down for recovery of short levy had not been followed.
(iv) In 1985 (21) ELT 306 (Tribunal) - Anil Starch Products Ltd., Ahmedabad v. C.C.E., Ahmedabad, the Special Bench while hearing the Reference Application under Section 35G of the Act, the Special Bench observed that the question of excisability also should be held as one bearing relation to a rate of duty and calling for decision by a Special Bench. It further observed that "nil" duty is a rate of duty coming within the scope of Special Bench. The Bench also held as Paras 30 and 31 of the order that "nil" rate of duty under an exemption notification would attract the provisions relating to a Special Bench.
(v) In the case of Arson Industries, Agra and Ors. v. Collector of Customs, Calcutta, as reported in 1986 (24) ELT 86 (Tribunal), the Bench observed that the Special Bench will take up those matters which touch upon or determine any issue having a relation to the rate of duty or value for the purpose of assessment of duty or any question having a relation thereto.
(vi) In Mysore Prefabs and Prefabs India v. C.C.E., Bangalore, as reported in 1987 (27) ELT 487 (Tribunal), the South Regional Bench held that even though the appeals relate to issues which a Special Bench alone would be competent to decide, since a preliminary question of law has been canvassed before their Bench with reference to the very legality of the impugned order appealed against; without going into any question relating to either valuation or classification, it had jurisdiction to dispose of the appeals. As the appeal pertained to the invoking of extended period of limitation in terms of Section 11A, the Show Cause Notice was issued by the Superintendent of Central Excise instead of Collector and hence the Special Bench decided the question; as the issuance of Show Cause Notice itself was without jurisdiction and not legally valid.
(vii) In 1987 (31) ELT 304 (Tribunal), in the case of Navin Chemicals Manufacturing & Trading Co. Ltd. v. Collector of Customs, Bombay, the West Regional Bench has held that the adjudicating authority has nowhere in the impugned order touched upon the question of exemption under notification. Although the assessment of the goods would depend on the validity or otherwise of licence product, the assessment question was not in question before the lower authority, and also before the Tribunal and hence the appeal was within the jurisdiction of that Bench and not before the Special Bench regarding transfer of the appeal.
(viii) In the case of Krishna Fabrics Pvt. Ltd. v. Collr. of Customs, as reported in 1988 (36) ELT 633 (Tribunal), the North Regional Bench has held that the questions relating to quantum of duty do not come within the jurisdiction of Special Bench. It further held that matters which indirectly involve questions of rate of duty or value of goods will also lie within the jurisdiction of Special Bench. Such matters can be where the question of duty is directly in dispute. It further held that any matter which does not directly involve the quantum of duty cannot involve, even indirectly, the question of rate of duty or value of goods. It further held that if the dispute is only about fulfilment of one (or more) condition of an exemption notification, and no further question of rate of duty or value of goods is involved for determination, the jurisdiction is with the Regional Bench.
20. The matter pertaining to the levying of a cess on jute yarn captively consumed for the manufacture of jute fabrics, and in the light of Section 9(1) of the Industries (Development and Regulation) Act, 1951, came up for consideration before the Special Bench in the case of Mahabir Jute Mills Ltd. v. C.C.E., Allahabad as reported in 1984 (16) ELT 477.
21. The question of levy of cess on the jute yarn captively consumed for the manufacture of the other jute products, namely, Hessian sacking etc. after suffering cess under the Jute Manufactures Cess Rules, 1976, read with Section 9 of the Industries (Development & Regulation) Act, 1951, also came up before the Special Bench in the case of Mahabir Jute Mills Ltd. v. Collector of Central Excise as reported in 1984 (16) ELT 477. The Bench examined various provisions of the Excise rules vis-a-vis Jute Manufactures Cess Rules and also examined in detail a large number of citations. It held in para 25 that under Rule 3 of the Jute Manufactures Cess Rules, 1976, only the Central Excise rules as in force on 18-2-1976 would be applicable for the purpose of levy of cess. Subsequent amendment of these rules, even if given retrospective effect by legislation, could not have the effect of amending the aforesaid Jute Manufactures Cess Rules in so far as they were applicable to the levy of cess in the absence of another specific provision. Therefore, Rules 9 and 49 of the Central Excise Rules, 1944 subsequently amended with retrospective effect would not be applicable to jute yarn and jute products for the purpose of levy of cess under the Jute Manufactures Cess Rules, 1976. On this issue the Bench relied on the rulings as reported in the case of Union Carbide Co. Ltd. v. Assistant Collector of Central Excise and Ors. and also in the case of Mahindra andMahindra Ltd. v. Union of India (AIR 1979 SC 798). It is further held in para 28 that as per Section 9(1) of the Industries (Development & Regulation) Act, 1951, cess is a duty of excise. Moreover, as per Rule 2(g) read with Rule 3 of the Jute Manufactures Cess Rules, 1976, words and expressions used therein and defined in Central Excises and Salt Act, 1944 and rules made thereunder have the meaning respectively assigned to them in that Act or those rules. It is, therefore, difficult to conceive that when the whole body of the Central Excise Rules as in force on 18-2-1976 was made applicable for the levy of cess and also the meaning to expressions whatsoever assigned in these Rules, there should be a different set of meanings with reference to some expressions used in the Central Excise Rules and only because they have not been specifically defined in the Central Excise Rules, 1944.
22. Further relying on several rulings, the Bench has held that captive consumption of intermediate goods which are produced and used in the manufacture of other finished excisable goods in the same factory amounts to 'removal' within the meaning of even the unamended Rules 9 and 49 of the Central Excise Rules, 1944. This also gets substantiated from Section 9(1) of the Industries (Development and Regulation) Act, 1951 which authorises levy of cess on all goods produced or manufactured in any scheduled industry. The word 'all' in the present context means 'every goods' as also the legislative deliberately used the words 'manufactured or produced' to include both the intermediate and final products of the scheduled industry for the purpose of levy of cess. Moreover, the retrospective amendment of Rules 9 of 49 of the Central Excise Rules, 1944, though not applicable to the Jute Manufactures Cess Rules, 1976 but permissible to look to the intention of the legislature for the purpose of interpretation make it clear beyond doubt the utilisation or consumption of goods within a factory amounts to removal within the meaning of unamended Rules 9 and 49 too.
23. Again the Bench held in para 41 that the contention that cess is leviable only if there is both manufacture, removal and sale is not tenable inasmuch as expression 'capable of being sold' occurring in Explanation thereto makes it clear that sale is not a necessary ingredient. Further, the argument based on reference to 'time of their removal' does not also survive because the word 'removal' in explanation has been interpreted to include captive consumption within even the unamended Rules 9 and 49 of the Central Excise Rules, 1944. Moreover, explanation to Section 9(1) ibid has reference only to the manner of collection of duty and deals with the 'value' to be adopted for the purpose.
24. Further, in para 43 of the order, the Bench has held that, since cess is leviable on all goods manufactured and produced in any scheduled industry as also 'removal' occurring in explanation to Section 9(1) of the Industries (Development & Regulation) Act, 1951 includes captive consumption within even the unamended Rules 9 and 49 of Central Excise Rules, 1944, jute yarn used for captive consumption in the manufacture of Hessian/sacking is liable to cess under the said Act.
25. Again at para 44 of the order, it was held that if cess was levied on jute yarn as well as on jute manufactures produced therefrom, it was argued the cumulative incidence of duty would exceed 13 paise per cent of the value of the respective goods, the limit prescribed in the Industries (Development and Regulation) Act, 1951. But there is nothing in Section 9(1) ibid of the Act to the effect that the limit of 13 paise per cent of the value should be taken to refer to the cumulative incidence of the goods produced by a particular industry even though the goods may be quite different and distinct from each other. This is because the charging Section 9(1) of the Act clearly states that different, rates may be specified for different goods or different classes of goods. Also, that in the table annexed to the various orders thereunder, there is a column ''description of classes of goods' in the entries in this column, hessian has been shown under one entry while yarn has been shown under another i.e. both have been shown under the same entry as yarn but undoubtedly those are different classes of goods distinct from each other. Accordingly, the contention that levy of cess on jute yarn would be contrary to Section 9(1) of the Act and, therefore, illegal inasmuch as payment of cess both on jute yarn and manufacturers produced therefrom, would exceed the prescribed limit therein, is not tenable.
26. The Special Bench followed this ruling of Mahabir Jute Mills (supra) while deciding the question of exemption of Central Excise duty on jute yarn used captively for the manufacture of jute products on which duty was being paid under the Jute Manufactures Cess Rules, 1976, in the case of National Jute Manufacturers Corporation Ltd. v. Collector of Central Excise (Appeals) Calcutta as reported in 1988 (18) ECR 649(CEGAT SB-D).
27. In Indian Oil Corporation Ltd., Madras v. Collector of Central Excise, Madras as reported in 1987 (29) ELT 361, the Special Bench examined the provisions of Rules 12,13,14,14A and 14B of the Central Excise Rules, 1944 relating to the export of goods by it under claim for rebate or under bond claim for rebate or under bond without payment of duty and was held as interlinked with each other. Under Rule 14A, it was held that the exporter should export to the satisfaction of the Collector, in the manner laid down in any notification issued under Rule 12.
28. After having examined the various contentions of the parties and the rulings cited before us, let us see the provision of the Jute Manufactures Cess Act, 1983. The preamble of the Act reads "an Act to provide for the levy and collection, by way of cess, of a duty of excise on jute manufactures for the purpose of carrying out measures for the development of production of jute manufactures and for matters connected therewith. Section 2 deals with definition. Section 2(a) defines 'jute manufacture' means any article specified in the schedule which contains more than fifty per cent of jute (including Bimlipatam jute or mesta fibre of any sort) by weight of the total fibre content and in the production of which any process is ordinarily carried on with the aid of power. Explanation - 'Power' means electrical energy or any other form of energy which is mechanically transmitted and is not generated by any human or animal energy. Section 3 reads levy and collection of cess on jute manufactures produced in India.
"There shall be levied and collected by way of cess for the purposes of the Jute Manufactures Development Council Act, 1983, on every article of jute manufacture specified in column 2 of the Schedule and produced in India, a duty of excise at such rate not exceeding the rate specified in the corresponding entry in column 3 thereof, as the Central Government may, by notification in the Official Gazette, specify -
Provided that until such rate is specified by the Central Government, the duty of excise shall be levied ad collected at the rate specified in the corresponding entry in column 4 of the Schedule."
The Rules framed under this Act are known as 'The Jute Manufactures Cess Rules, 1984. Cess is defined in Section 2(a) as "Cess" means the duty of excise levied under Sub-section (1) of Section 3 of the Act. Rule 3 reads Rate of Cess, which is as under -
"Cess shall be payable at the rate specified by the Central Government in accordance with the Act from time to time on finished jute manufactures removed for sale/subsequent sale by the producer for export abroad and/or for distribution and consumption within the country".
It follows from the object of the Act and reading of the various provisions of the Act and Rules that 'Cess' means the duty of excise leviable at the rates specified by the Central Government in accordance with the Act from time to time on finished jute manufactures, removed for sale/subsequent sale by the producer for export abroad and/or for distribution and consumption within the country. The provisions of the Central Excises and Salt Act, 1944 and rules made thereunder have been made applicable to the Act in question.
29. Sub-section (2) of Section 35D of Central Excises and Salt Act, 1944, lays down that 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 excise or to the value of goods for the purpose of assessment, shall be heard by a Special Bench constituted by the President for hearing such appeals etc.
30. Rule 12 of Central Excises and Salt Act, 1944 deals with rebate of duty on goods exported and Rule 12A relates to rebate of duty on excisable material used in the manufacture of goods which are exported and Rule 13 deals with export under Bond of goods on which duty has not been paid. Export under bond of goods without payment of duty under Rule 13 is subject to export being made in accordance with the procedure set out in the relevant provisions of Chapter IX of the Central Excise Rules, 1944.
31. We have also noted in the preceding paragraphs several rulings on these rules and we have also observed that matters pertaining to rebate of duty on export under Bond or without Bond as per Rules 12 and 13 and relevant notification issued under relevant rules has a bearing on rate of duty and hence such matters arising therefrom come within the ambit of a Special Bench.
32. From the reading of the facts of the case in Appeals No. 15/87 and 16/87, it follows that the matter pertains to demand of duty for clearance by export of jute falling under erstwhile Tariff Item 22A without payment of cess duty as payable in terms of subsection (1) of Section 3 of the Cess Act read with Rule 9(1) of the Central Excise Rules. The appellants have contended that removal for export of jute goods without payment of Central Excise duty under Section B-l, duty is provided for under Rules 12 and 13 of Central Excise Rules, 1944 and the notification issued thereunder. The lower authorities have held in the impugned order that the contention of the assessee that the export of jute without payment of cess duty in view of the provisions of Rules 12 and 13 of Central Excise Rules, 1944 and cess is not correct. The lower authorities have held that in accordance with provisions of revised Cess Rules, 1984 cess on jute manufactures is leviable and payable on final finished products cleared from the factory on sale either within the factory or abroad. Therefore, in order to decide the contention of the assessee in these two appeals, the relevant notifications granting exemption from payment of duty under the Bond have to be gone into. The levy of duty under the relevant notifications under Rule 12 of Central Excise Rules, 1944 is a matter pertaining to determination of the question of rate of duty; although there is no dispute of classification in these two appeals, yet the determination of the question will have effect on the rate of duty. The matters pertaining to interpretation of notification for levy of duty or cess on goods exported under Bond has all along been dealt with by the Special Benches as can be seen from the case law discussed above. This has been the view expressed in the case of Malwa Vanaspati and Chemicals Co. Ltd. as reported in 1983 (13) ELT 1004. All cases requiring interpretation of Rule 12 to 14A of Central Excise Rules, 1944 have come up before Special Benches in view of the questions coming up for determination of duty with reference to an exemption or concession notification which would necessarily affect the rate of duty. However, by Section 47 of Finance Act, 1984, Section 35B pertaining to appeals to Tribunal was amended by adding a proviso. The First proviso to Section 35B has taken away the jurisdiction of the Appellate Tribunal to decide any appeal pertaining to rebate of duty on excise of goods exported to any country or territory outside India or on excisable materials used in the manufacture of goods which are exported to any country or territory outside India. The rebate of duty of excise on goods exported to any country is granted by issue of Notification under Rules 12,12A and 13 of Central Excise Rules. In view of the amendment by which the jurisdiction of the Tribunal has been taken away, these appeals No. 15/87 and 16/87 may not lie within the ambit of jurisdiction of appellate Tribunal.
33. In Appeal No. 69/87-ERB and Appeal No. 77/84-ERB, the assessees have preferred refund claim against their payment of cess on jute yarn captively consumed for manufacture of jute goods under TI22-A and TI18-D of erstwhile GET. The asses-sees have taken a ground that they have paid such duty against confirmation of demanded cess by way of cash payment or covered by way of bank guarantee with a presumption that the said amount is refundable to them in view of Board's letter under TRM No. 1079 to 1081 dated 30-1-1986 as received by the Superintendent, Central Excise, Range VI, Calcutta. Similar questions as involved in these appeals have been dealt with by Special Bench as in the case of Mahabir Jute Mills Ltd. as reported in 1984 (16) ELT 477. As contended by the learned Departmental Representative Shri L.C. Chakraborty, the question of leviability, excisability, marketability and rate of duty will also come up while interpreting captive consumption of jute products in the manufacture of finished jute good. Even interpretation of notification and results flowing therefrom will have an effect on the cess and rate of duty. The valuation of goods captively consumed may also be raised while determining the questions of captive consumption in the manufacture of finished goods. There may be questions requiring determination regarding the quantum of clearances in a financial year and the rate of duty leviable thereon. The matters pertaining to interpretation of Notification No. 201/79 which deals with captive consumption have been held to come within the ambit of Special Bench as, held in the case of Kashmir Vanaspati as reported in 1987 (29)ELT 208. Therefore, it are of the view that appeals No. 69/87-ERB and No. 77/84-ERB are also to be heard and decided by a Special Bench as per Sub-section (2) of Section 35-D of the C. Ex. and Salt Act, 1944.
We answer the reference accordingly.
K.S. Venkataramani, Member (T)
34. I am in general agreement with the order of Ld. Brother, Sh. Peeran. However, it may be noted that the question of jurisdiction in the matter will have to be decided also having regard to the first proviso to Section 35B which says that no appeal from a Collector (Appeals)'s order shall lie to the Tribunal and the Appellate Tribunal shall not have jurisdiction to decide any appeal relating to rebate of excise duty on exported goods, or of excisable material used in the manufacture of exported goods, (Rules 12 & 12 A of Central Excise Rules), and to goods exported outside India (except to Nepal or Bhutan) under Bond (Rule 13 Central Excise Rules). This provision barring Tribunal's jurisdiction came into effect with the enactment of Finance Act 1984, on 11-5-1984. Therefore, where the appeal from an order of the Collector (Appeals) turns on the interpretation of 12,12A and 13 of the Central Excise Rules and the Notifications thereunder relating to excise rebate on excisable goods or relating to export under Bond without payment of duty under Rule 13 after 11-5-1984, in my view, neither the Speical Bench nor the Regional Bench will have jurisdiction because by the amendment to Section 35B by the Finance Act 1984, the jurisdiction in such matters has been vested in the Govt. of India under Section 35EE.
Jyoti Balasundram, Member (J).
35. I agree with the order of learned brother, Shri Peeran. However, I am of the view that the issue raised in para 14 regarding jurisdiction of this Bench, is to be answered. The matter has been referred to us by the learned President considering the importance of the issue. The issue, has been settled by the Supreme Court in the case of Union of India & Anr. v. Paras Laminates (P) Ltd. [1990 (30) ECR 305] wherein the powers of the President have been elaborately discussed and it has been laid down that the power under sub-section 5 of Section 129C of Customs Act, 1962 (Tribunal is constituted by the Central Government under Section 129) has to be construed to be wide enough to enable the President to riiake a reference where members of a Bench find themselves unable to decide a case according what they perceive to be correct law and fact because of an impediment arising from earlier decisions with which they cannot honestly agree. In such cases, it is necessary for the healthy functioning of the Tribunal that the President should have the requisite authority to refer the case to a larger bench. Therefore, in view of the above, there is no force in the submission of Shri R.K. Jain that this Bench is not duly constituted to decide this issue.
FINAL ORDER
36. In view of the decision of the Bench, Appeals No. E/15 and 16/87-ERB shall be returned to the appellants for presentation to Proper authority under first proviso to Section 35B of the Central Excises and Salt Act, 1944.
37. Appeal No. E/69/87-ERB and 77/84-ERB shall stand transferred to respective Special Benches. Reference order accordingly.