Commr. of C. Ex. vs Universal Ferro and Allied Chem. Ltd.

Vasanti A. Naik, J.—This appeal has been preferred by the Commissioner of Central Excise, Nagpur under the provisions of Section 35G(1) of the Central Excise Act, 1944 (hereinafter referred to as "Act of 1944" for the sake of brevity) whereby the orders passed by the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as "CESTAT" for the sake of brevity) on 21-10-2005 in Appeal Nos. E/2691 to 2693/03 & E/1976/04 Mum, are impugned. A preliminary objection has been raised by the respondents to the maintainability of the appeal under the provisions of Section 35G(1) of the Act of 1944 before the High Court on the ground that the appeal would lie before the Hon''ble Supreme Court in view of the provisions of Section 35L(1) of the Act of 1944. According to the respondents, the order passed by the CESTAT and impugned in the present appeal relates, among other things, to the determination of a question having a relation to the rate of duty of the excise.

Few facts giving rise to the appeal and the present objection raised therein, are stated thus:

The respondent, a 100% export oriented unit was created by converting a part of an existing Domestic Tariff Area and had not availed any tax exemption or customs duty exemption for the past 7 years. The respondent No. 1 had achieved value additions in terms of net foreign exchange of nearly 100%. The Development Commissioner, Ministry of Commerce, Government of India is the sponsoring authority for the respondent No. l''s Export Oriented Unit. After seeking the necessary permissions, the respondent No. 1 started selling goods to various customers including Tata Iron & Steel Company Ltd. (hereinafter referred to as TISCO for the sake of brevity).

Due to financial constraints, the respondent No. 1 negotiated with TISCO, whereby TISCO was supplied Manganese Ore to manufacture Silicon Manganese. The Silicon Manganese produced was to be sold to TISCO after deducting the cost of material supplied by them. The respondent No. 1 added some of the raw materials of their own for which TISCO made the payment. The agreement for conversion of Manganese Ore sent by TISCO and sale of Silicon Manganese for use by TISCO was for the period 1-1-2000 to 31-10-2000. Excise Authorities were informed about the details of the assessable value of dispatches made to TISCO and also referred to the agreement entered between the parties.

It was then detected by the Department and the Central Excise Audit team in mid September 2001 that the dispatches made by respondent No. 1 to TISCO were not permitted under the Domestic Tariff Area sale as the same amounted to job work/sub-contracting. The Department, therefore, issued a Show Cause Notice dated 9-10-2001 to the respondent No. 1 asking it to show cause as to why the clearances made during September-2000 should not be charged to full Central Excise Duty as per the provisions of Section 3(1) of the Act of 1944 by denying the benefit of exemption under Notification No. 8/1997 dated 1-3-1997. Thereafter, notices demanding duty on the aforesaid basis were issued to the respondent No. 1.

The Commissioner, Central Excise, Nagpur, by an order dated 24-6-2003 confirmed the demand u/s 11A of the Act along with interest payable on the amount mentioned in the Show Cause Notice and further imposed a penalty of Rs. 50 Lakhs and a redemption fine of Rs. 50 Lakhs.

Separate appeals were filed by respondent No. 1 on the similar issue challenging the order passed by the Commissioner, Central Excise, Nagpur. The appeals filed by the respondent No. 1 were allowed by the Common Order dated 21-10-2005, which is impugned in the instant appeal.

The CESTAT held that the benefit of clearance at the rates applicable under Notification No. 8/1997 cannot be denied as there is no finding or an allegation of use of any duty free imported raw material having been utilized in the manufacture of Silicon Manganese by the appellants (respondent No. 1 herein). The order is impugned in the instant appeal.

It is submitted on behalf of the respondents that on a combined reading of provisions of Sections 35G and 35L of the Act of 1944, it is clear that the jurisdiction to hear an appeal against an order of the Tribunal which relates, among other things, to the determination of any question having a relation to the rate of duty of Excise would lie before the Hon''ble Supreme Court and not before the High Court. It is submitted on behalf of the respondent No. 1 that in the present case, the issue in question relates to the rate of duty i.e. 16% which is held to be payable by the respondent No. 1 under Notification No. 8/1997 as held by the CESTAT or whether it is payable in accordance with the provisions of Proviso to Section 3(1) of the Act of 1944. According to the counsel for the respondent No. 1, there is also a dispute regarding the value on which the duty is paid. The counsel for the respondent No. 1 took this Court to the memorandum of appeal filed by the appellant, in this appeal, to point out that the main issue which is sought to be agitated by the appellant in this case relates to the applicability or otherwise of the Notification No. 8/1997 and the Proviso to Section 3(1) of the Act of 1944. It is submitted on behalf of the respondent No. 1 that it is the case of the appellant that the benefit of Notification No. 8/1997 would not be applicable to the goods cleared by the respondent No. 1 to the Domestic Tariff Area and full duty under the proviso of Section 3(1) of the Act of 1944 is payable on the said goods.

On the basis of the challenges made by the appellant in the instant appeal, it is submitted on behalf of the respondent No. 1 that the present appeal involves an issue which has a direct and proximate relation to the rate of duty payable by the respondent No. 1 and on a combined reading of the provisions of Sections 35G and 35L(b) of the Act of 1944, the appeal is not maintainable. The counsel for the respondent No. 1 relied on the decisions reported in Navin Chemicals Mfg. and Trading Co. Ltd. Vs. Collector of Customs, , Union of India (UOI) Vs. Auto Ignation Ltd., and 2007 (213) E.L.T. 658 (Bom.) (Sterlite Optical Technologies Ltd. v. Commr. of C. Ex., Aurangabad) to substantiate the aforesaid submissions.

The counsel for the appellant submitted that the appeal was maintainable before the High Court and the preliminary objection raised by the respondent No. 1 to the maintainability of the appeal was not sustainable. According to the counsel for the appellant, the question involved in the instant matter did not involve an issue relating to the rate of duty of Excise.

We have considered the rival contentions made on behalf of parties and have also perused the provisions of Sections 35G and 35L(b) of the Act of 1944. u/s 35G of the Act of 1944, an appeal against the order passed by the Appellate Tribunal would lie to the High Court except an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Section 35L(b) provided that an appeal against an order passed by the Appellate Tribunal relating among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment would lie to the Supreme Court. It is, thus, amply clear from the aforesaid proviso that an appeal against an order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment would lie to the Supreme Court and not the High Court.

This Court was considering a similar issue in the case of Sterlite Optical Technologies Ltd. v. Commr. of C. Ex., Aurangabad reported in 2007 (213) E.L.T. 658 and Union of India (UOI) Vs. Auto Ignation Ltd., . In the case of Sterlite Optical Technologies Ltd. v. Commr. of C. Ex., this Court observed that the dispute involved in the appeal in that case, which is also similar to the one involved in this case, was about what should be that rate of duty on the goods cleared to the Domestic Tariff Area. In the aforesaid case, this Court observed that direct and proximate issues involved in the appeal for the purpose of assessment related to the rate of duty applicable to the goods and the value thereof and hence, the appeal was not tenable before the High Court. Similarly, in the case of Union of India v. Auto Ignation Ltd., this Court by following the ratio laid down in the case of Navin Chemicals Mfg. and Trading Co. Ltd. Vs. Collector of Customs, , held that the dispute as to the classification of the goods and as to whether or not they are covered by the exemption Notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. By applying the dicta in the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector, this Court held in the case of Union of India v. Auto lgnation Ltd. that the question whether or not the assessee is well within the exemption Notification was a question directly involved in the dispute which relate directly and proximately to the rate of duty of Excise for the purpose of assessment. This Court, therefore, further held in the aforesaid case that the issue involved in the case of Union of India v. Auto lgnation Ltd. could be conveniently gone into in the appeal u/s 35L of the Act of 1944.

We duly follow the decision of the Hon''ble Supreme Court in the case of Navin Chemicals Mfg. & Trading Co. Ltd. v. Collector as also the judgments rendered by this Court in case of Sterlite Optical Technologies Ltd. v. Commr. of C. Ex., Aurangabad and Union of India v. Auto lgnation Ltd. to hold that the present appeal is not maintainable.

It is not in dispute that the issue involved in this case also relates to the rate of duty payable by the respondent No. 1. According to the respondent No. 1, it is payable at 16% under the Notification No. 8/1997 and according to the appellant/Department, it is payable at full rate under the proviso to Section 3(1) or the Act of 1944. The issue involved in the instant case and the issue involved in the appeal before the CESTAT had direct and proximate relation to the rate of duty of Excise. As rightly pointed out on behalf of the respondent No. 1, the ground raised in the appeal memo also referred to the applicability of the proviso to Section 3(1) of the Act of 1944 to the facts of the case and inapplicability of the Notification No. 8/1997 for the payment of excise duty on the goods. The objection raised by the respondent No. 1 to the maintainability of the appeal is sustainable. Since in the instant case, the appeal has been preferred against an order of CESTAT having relation, among other things to the determination of the question having relation to the rate of duty of Excise, appeal would lie before the Hon''ble Supreme Court and not before this Court.

For the reasons recorded hereinabove, the appeal is dismissed with no order as to costs.