2019 (12) TMI 392 - HC - Central Excise

Tax Appeal Jurisdiction Clarified by Full Bench: Supreme Court Exclusive for Pre-2014 Tribunal Orders

The Full Bench concluded that appeals regarding taxability/excisability issues from Tribunal orders before 6th August 2014 are only appealable to the ... Maintainability of appeal - appropriate forum - SC or HC - Appealable order of not - Classification of goods - marketibility - whether such an order is appealable to this Court or the Hon’ble Supreme Court under the Act? - HELD THAT:- The appeals from the orders of the Tribunal under the Finance Act, 1994 and the Act prior to the introduction of Sub-Section (2) to Section 35L of the Act were governed by Section 35G(1) and 35L(1) of the Act. In terms of Section 35G(1) of the Act, every appeal from order of the Tribunal passed after 1st July, 2003 giving rise to a substantial question of law would be to the High Court except orders of the Tribunal relating to the rate of duty of excise or value of goods for the purpose of assessment. The above orders were excluded from the jurisdiction of the High Court and were appealable only to the Hon’ble Supreme Court in terms of Section 35L(1)(b) of the Act. Appeals from orders of the Tribunal relating to taxability / excisability passed prior to 6th August, 2014 i.e. the date of insertion of sub-section (2) to Section 35L of the Act being a rate of duty issue, would be appealable only to the Hon’ble Supreme Court and not the High Court. Scope of amendment made to Section 35L of the Act on 6th August, 2014 by insertion of sub-section (2) therein - clarificatory or prospective in nature? - HELD THAT:- The amendment / insertion of sub-Section (2) to Section 35 of the Act became necessary to set at rest all doubts as to where appeals arising out of orders of the Tribunal relating to excisability / taxability would lie – whether before the Hon’ble Supreme Court or the High Court. It appears that this insertion of sub-section (2) to Section 35L of the Act became necessary as this issue, viz. where such an appeal would lie, was being urged time and again before various High Courts. To settle the issue being urged and set the matter at rest, it appears that the amendment has been introduced. The amendment, therefore, is in the nature of a clarification and not bringing about any change in the law, i.e. excluding a set of orders of the Tribunal, which were earlier appealable to the High Court, now made appealable to the Honb’le Supreme Court for the first time - The amendment made to Section 35L of the Act by insertion of sub-section (2) therein is clarificatory and retrospective in nature. The appeal be placed before the Division Bench for appropriate decision in accordance with law. Issues Involved:1. Whether the question of taxability or excisability of goods is an issue of rate of duty appealable only to the Supreme Court under Section 35L(2) of the Central Excise Act, 1944, even for appeals from orders of the Tribunal passed prior to 6th August, 2014.2. Whether the amendment made to Section 35L of the Act on 6th August, 2014 by insertion of sub-section (2) is clarificatory or prospective in nature.Issue-wise Detailed Analysis:Issue 1: Taxability or Excisability of Goods as an Issue of Rate of DutyThe Division Bench referred to a Full Bench the question of whether the taxability or excisability of goods constitutes an issue of rate of duty appealable only to the Supreme Court under Section 35L(2) of the Central Excise Act, 1944, even for appeals from orders of the Tribunal passed before 6th August, 2014.1. Appellant's Argument:- Prior to the insertion of Section 35L(2), appeals on taxability/excisability issues were under Section 35G(1) and 35L(1)(b) and were appealable to the High Court.- Cited the Supreme Court's decision in Commissioner of Customs Vs. Motorola India Ltd., which held that the satisfaction of conditions in an exemption notification is not a rate of duty issue.- Referenced the decision in Greatship (India) Ltd. which stated that the amendment to Section 35L by insertion of sub-section (2) was a new condition and not retrospective.2. Respondent's Argument:- Various High Courts have consistently held that issues of excisability are not appealable to the High Court.- Cited multiple High Court decisions supporting the view that excisability issues are rate of duty issues and thus appealable only to the Supreme Court.- Argued that the insertion of sub-section (2) to Section 35L is clarificatory, making explicit what was implicit.3. Court's Analysis:- The court noted that the determination of excisability/taxability is integral to the rate of duty for the purpose of assessment.- Referenced the Supreme Court's decision in Navin Chemicals, which supported the view that classification and excisability questions relate directly to the rate of duty.- Highlighted that different High Courts have held that excisability issues are appealable to the Supreme Court to avoid conflicting decisions across states.- Concluded that the insertion of sub-section (2) to Section 35L was clarificatory and not a new provision, thus appeals on excisability/taxability issues were always meant for the Supreme Court.Conclusion for Issue 1:Appeals from orders of the Tribunal relating to taxability/excisability passed prior to 6th August, 2014, as a rate of duty issue, would be appealable only to the Supreme Court and not the High Court.Issue 2: Nature of the Amendment to Section 35LThe second issue was whether the amendment made to Section 35L of the Act by inserting sub-section (2) is clarificatory or prospective.1. Appellant's Argument:- Argued that the insertion of sub-section (2) to Section 35L should be prospective as it does not explicitly state that it is retrospective.- Claimed that the amendment creates a new category of issues appealable to the Supreme Court, which should be considered substantive and prospective.- Cited the Supreme Court decision in Videocon International Ltd., which held that changing the appellate forum is a substantive change and should be prospective.2. Respondent's Argument:- Asserted that the amendment is clarificatory, supported by various High Court decisions and the notes on clauses to the Finance Bill, 2014.- Referenced a clarification issued by the Tax Research Unit, Ministry of Finance, stating that the amendment clarifies existing law.- Emphasized that the amendment was intended to settle doubts and make explicit what was already implicit.3. Court's Analysis:- The court agreed that generally, statutes are presumed to be prospective unless explicitly stated otherwise.- Noted that the consistent view of various courts and the interpretation of Section 35G(1) and 35L(1)(b) supported the retrospective nature of the amendment.- Cited the notes on clauses to the Finance Bill, 2014, which indicated that the amendment was meant to clarify existing law.- Concluded that the amendment was clarificatory and retrospective, ensuring uniformity and avoiding conflicting decisions.Conclusion for Issue 2:The amendment made to Section 35L of the Act by inserting sub-section (2) is clarificatory and retrospective in nature.Final Judgment:The Full Bench concluded that appeals from orders of the Tribunal relating to taxability/excisability passed prior to 6th August, 2014, are appealable only to the Supreme Court and not the High Court. Additionally, the amendment to Section 35L of the Act by inserting sub-section (2) is clarificatory and retrospective. The case was referred back to the Division Bench for appropriate decision in accordance with these findings.