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.”
25
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;?:锑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. Ȣ;;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.
50
(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.
60
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