TaxTMI 
TaxTMI 
2010 (9) TMI 756
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....The LSHS was captively consumed for the generation of steam. The steam so generated was utilised for the generation of electricity. The assessee filed classification declaration for claiming exemption from payment of duty under Notification No. 67/95 C.X., dated 16-3-1995 for captive consumption of LSHS. 3. Intelligence gathered by the department indicated that the electricity so generated was being diverted for purposes other than the use in or in relation to the manufacture of petroleum products i.e. for construction purpose within the factory premises, lighting MRPL residential colony and sale to M/s. Hindustan Gas Industries Ltd. (HGIL). It was found that the exemption under the Notification supra was not admissible to LSHS captively manufactured for generating such electricity for other purposes. Such use of LSHS was not declared in their classification declarations and is resulted in contravention of the provisions of Rule 173B(2)(b). Accordingly, a show cause notice was issued demanding duty of Rs. 33,12,928/- on the proportionate quantity of LSHS used in the generation of electricity, which in turn was not used in or in relation to the manufacture of final products ....
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....(LSHS) did not meet the rigid specifications for LSHS specified by ISI. Therefore, the LSHS was merely an internal fuel oil used for consumption being neither marketed nor marketable. It was not an excisable product and therefore, no duty could be levied on the impugned quantity of LSHS. 6. Secondly, they contended in the alternative that the authorities did not go into the question, whether the disputed goods is excisable or not. The lower authorities rejected the said contention of the assessee and held the disputed goods are excisable. They also held though the exemption notification is attracted, it is not attracted to that portion of the goods which are not utilised in the manufacture of the petroleum products by the assessee. In other words, to the extent the final product was used in lighting residential layout, used for construction activity and supply to their sister concern, they held the duty is liable to be paid and therefore, they affirmed the demand. Aggrieved by these two orders the assessee preferred an appeal to the Tribunal. 7. In the appeal, the Tribunal after going through the records carefully, going through the process by which these lower sulp....
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....ufactured, it is not marketable and therefore, there is no liability to pay tax. Even if it is held that duty is payable, the notification issued in this regard completely exempts from the payment of duty and therefore, the Tribunal was justified in holding that no duty is payable on the ground that it is not excisable at all. 10. In reply, the learned counsel for the Revenue submitted once the tariff is stipulated in the schedule it is correctly applied and when the Supreme Court has already ruled on the matter and any decision rendered by the Tribunal in consonance with the law declared by the Apex Court, if it has to be challenged it could be challenged in the High Court where the High Court is only expected to follow the law declared by the Supreme Court and decide the case. In such cases, the question of determination of the rate of tax would not arise as it is not in doubt or dispute. The Supreme Court jurisdiction is attracted only when there is a dispute of duty, regarding the classification or the rate of duty payable and therefore, he submitted the contention that all matters relating to the rate of duty of excise or the value of the goods ought to be determined b....
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....h Court in appeal under Section 35G. If the matter pertains to determination of any question having a relation to the rate of duty of excise or to the value of the goods for the purpose of assessment, the same falls within the jurisdiction of the Supreme Court under Section 35L(b). In other words, the determination of any question relating to the rate of duty of excise or to the value of goods for the purpose of assessment, cannot be agitated in both the forums. Expressly the statute has excluded the jurisdiction of the High Court in appeal under Section 35G and exclusive jurisdiction is conferred on the Supreme Court in these matters. The language employed in these two sections read together is clear and there is no scope for any doubt or conflusion in this regard. 13. It is argued as the wordings of the section stands, it is only in respect of the two types of cases the jurisdiction of the High Court is denuded. They are :- (1) Where the assessment relates to the determination of the rate of duty; (2) The question relates to the determination of the value of the goods. Any question relating to or in relation to thes....
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....fix 'the amount of tax due or to determine such amount". The process of re-assessment is to the same purpose and would thus be included in the connotation of the term "assessment." "The words levy, assessment and collection as we understand them include all the processes by which the tax is ascertained, demanded and realised and "re-assessment" being one of those process comes within the ambit of the phraseology employed." It will be observed that section 34 of the Income-tax Act contemplates four different cases in which the power to assess escaped income has 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 a rate or with unjustified exemptions, the term "re­assessment" would be appropriate. It was thus necessary to resort to the use of two different terms to cover with clarity the different cases dealt with in that section. This does not mean that the terms should be treated as mutually exclusive. In interpreting the term "assessment" as used in Section 7 of the Taxation Laws Act, it should be given its plain meaning. It should not be understood in any restricted or special ....
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....eviewing assessment and section 34 deals with assessment of incomes which have escaped assessment. The expression "assessment" used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be Jointly and severally liable to assessment it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the -machinery for enforcement thereof. Nor has the expression, "all the provisions of Chapter IV shall so far as may be apply to such assessment" a restricted content : in terms it says that all the provisions of Chapter TV shall apply so far as may be to assessment of firms which have discontinued their business. Determination - Meaning : 20. Similarly the meaning of the word "determination" also has to be kept in mind. In Jaswant Sugar Mills Ltd., Meerut v. Lakshmi Chand and Others, reported in AIR 1963 Supreme Court 677 (V 50 C 104), it is held as under :- "10. The expression "det....
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....ndition was that as a result of manufacture goods must come into existence. For Articles to be goods these must be known in the market as such or these must be capable of being sold in the market as goods. Actual sale in the market is not necessary, user in the captive consumption is not determinative but the Articles must be capable of being sold in the market or known in the market as goods." 24. In the case of Moti Laminates Pvt. Ltd. v. Collector of Central Ex., Ahmedabad - 1995 (76) E.L.T. 241 (S.C.), the Apex Court held as under :- "9. Although the duty of excise is on manufacture or production of the goods, but the entire concept of bringing out new commodity etc. is linked with marketability. An article does not become goods in the common parlance unless by production or manufacture something new and different is brought out which can be bought and sold. Therefore, any goods to attract excise duty must satisfy the test of marketability. The tariff schedule by placing the goods in specific and general category does not alter the basic character of leviability. The duty is attracted not because an article is covered in any of the items or it falls in res....
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....te of duty of excise for the being in force, whether under the Central Excise Tariff Act, 1985 or under any other Central Act providing for the levy and collection of any duty of excise, in relation to any goods on or after the 28th day of February, 1986; or (b) relating to the value of goods for the purposes of assessment of any duty in cases where the assessment is made on or after the 28th day of February, 1986, or (c) whether any goods are excisable goods or whether the rate of duty of excise on any goods is nil; or (d) whether any goods fall under a particular heading or sub-heading of the Schedule to the Central Excise Tariff Act, 1985 or the Additional Duties of Excise (Goods of Special Importance) Act, 1957 or the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, or that any goods are or not covered by a particular notification or order issued by the Central Government or the Board, as the case may be, granting total or partial exemption from duty; or (e) whether the value of any goods for the purposes of assessment of duty of excise shall be enhanced or reduced by the addition or reduction of the amounts in respect of su....
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....expression "rate" is often used in the sense of a standard or measure. Provided the tax is computable by the application of a prescribed standard or measure, though not directly related to taxable income, it may be called tax computed at a certain rate. We agree with the High Court that the rebate of tax and the reduction of such rebate are essentially matters of measure or standards of rate." 28. A Division Bench of the Andhra Pradesh High Court in the case of Crane Betel Nut Powder Works v. Commissioner reported in 2006 (5) ALD (NOC104) held that the determination of the rate of duty in relation to any goods includes determination of a question whether any goods are excisable or not. Again, a Division Bench of the Andhra Pradesh High Court in the case of Commissioner of C. Ex., Hyderabad-IV v. Shriram Refrigeration Industries reported in 2009 (240) E.L.T. 201 (A.P.) held that the question whether the process if any undertaken in the service centre of the respondent amounts to manufacture of starters by the respondent or not, and if the goods produced during that process are excisable goods or not would fall within the meaning of the expression 'determination of the ....
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....n on the claims for refund of excise duty submitted by the appellant before the Assistant Collector. In our opinion the question of valuation of goods in the context of a refund cannot be regarded as a question having relation to the value of the goods for the purposes of assessment. The assessment had been completed in the present case and the assessment orders had already been passed. It is only when the goods were returned, the question of refund arose. We are therefore, unable to accept the contention Sri Ravindren Narain that the appeals are maintainable under clause (B) of the Section 35L of the Act and the appeals are liable to be dismissed." 32. The Division Bench of this Court in the case of Premier Irrigation Equipment Ltd. v. UOI reported in 1998 (100) E.L.T. 29 (Kar.) interpreting Section 35L of the Act held as under : "From the reading of the above provisions contained in Section 35L of the Act, it seems clear to us that even if one of the questions raised before the Tribunal for determination relate to a rate of duty of excise or to the value of goods for the purposes of assessment, then the remedy by way of appeal against the order of the Tribunal can be o....
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....e context of its use in the said expression in Section 129C, it must be read as meaning a direct and proximate relationship to the rate of duty and to the value of goods for the purpose of assessment." Further at para 11 they held as under : "It will be seen that sub-section (5) uses the said expression 'determination of any question having a relation to the rate of duty or to the value of goods for the purpose of assessment' and the Explanation thereto provides a definition of it for the purposes of this sub-section'. The Explanation says that the expression includes the determination of a question relating to the rate of duty, to the value of goods for the purposes of assessment; to the classification of goods under the Tariff and whether or not they are covered by an exemption notification; and whether the value of goods for the purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. Although this Explanation expressly confines the said definition of the said expression to sub-section (5) of Section 129D, it is proper that the expression used in the other parts of the said Act should be interpreted similarly. Th....
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....thout assigning reasons. The Tribunal found fault with the said action and extended the benefit to the fifth consignment also. Aggrieved by the said order of the Tribunal, the revenue preferred an appeal to the Supreme Court under Section 130E of the Act. 36. In the case of Commissioner of Customs, New Delhi v. Punjab Stainless Steel Industries, reported in 2001 (132) E.L.T. 10 (S.C.), the allegation against the assessee was that the goods exported under the export obligation were mis-declared. Inasmuch as he used the material of inferior grade to the one required in the manufacture of utensils. The said charge was held to be proved on the basis of the report of the expert and therefore the goods were confiscated. The said order was challenged by the assessee before the Tribunal. The Tribunal set aside the said order. Aggrieved by the same, the revenue preferred an appeal under Section 130E of the Act before the Supreme Court and the Supreme Court set aside the order of the Tribunal and restored the order of the Commissioner of Customs. 37. In the case of Jindal Dye Intermediate Limited v. Collector of Customs, Mumbai reported in 2006 (197) E.L.T. 471 (S.C.), the Tr....
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....rpose of assessment might possibly arise is far too remote a contingency to satisfy the test that is laid down. Therefore if. was held that the principle laid down in the said case squarely apply to the facts of this case, where question involved as stated earlier, was whether fish includes Molluscs and Crustaceans and as such the Crustaceans would otherwise mean and include Prawns/shrimps and hence Prawns and Shrimps should be regarded as a fish for the purpose of assessment and such meaning should be given to the expression "fish" incorporated as Item No. 7 to the Schedule to the Act. 40. In the case of Commissioner of Customs, New Delhi v. Sony India Limited, reported in 2008 (231) E.L.T. 385 (S.C.), the question involved was whether the assessee had committed breach of Exim Policy. Ultimately, the Tribunal held that there is no breach of Exim Policy and consequently, no duty was paid. The revenue aggrieved by the said judgment preferred an appeal to the Supreme Court under Section 130E of the Act. The Supreme Court upheld the order of the Tribunal. Conclusion 41. Therefore, the expression 'rate' is often used in the sense of standared or measure. 'Rate' gener....
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....produced during that process are excisable goods or not would fall within the meaning of the expression 'determination of the rate of duty of excise or the value of the goods for the purposes of assessment of duty' used in Section 35G(1) and Section 35L(b) of the Act. Therefore, the phrase 'rate of tax' does not mean fraction of tax payable because what is the tax payable i.e. fraction payable is decided by the legislature. Once that is prescribed by the legislature in the Act, the Court cannot sit in judgment and alter or modify the said rate of tax. The Court has no jurisdiction to go into the correctness or otherwise of the rate of tax payable in the sense the rate prescribed by the legislature. Therefore, the argument that the rate of tax means only the rate at which tax is payable or a fraction is unsustainable. 42. Broadly the following disputes do not fall within the jurisdiction of High Court under Section 35(g) of the Act :- (a) Dispute relating to the duty of excise payable on any goods. (b) The value of the goods for the purposes of assessment. (c) A dispute as to the classification ....
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....ic mention of the item, the duty payable, the description of goods and interpreting those entries while the Apex Court has already laid down the law, the question of again the courts determining the said dispute would not arise in this case and in respect of cases which are already before the Court and pending for years, there is no necessity to approach the Apex Court even in such matters. It is a case of applying the law declared by the Apex Court which is binding on all Courts under Article 141 of the Constitution of India. We do not see any merit in the said contention. It is now well settled that no one has a right of appeal. Right of an appeal is a creature of a statute. Therefore, the right of appeal has to be worked out under a statute within the parameters prescribed expressly under the Statute. If under a statute appeal is provided and then in some matters the jurisdiction of one Appellate Court is ousted and the same is conferred in yet another Appellate Court, the party who wants to exercise the right of appeal can only exercise the same in accordance with the statute. The question of applying the law of the land with reference to the decisions rendered by the Apex Cour....
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....hority has the jurisdiction to decide whether it has jurisdiction or not to decide a matter which is before it. Unless a finding is recorded on the said question, the question of such an order passed on merits without deciding the question of jurisdiction would neither operate as a binding precedent or by implication the said jurisdictional issue has been held against the assessee. Even if such construction is to be placed, it is only in respect of the said assessee is concerned and it is open for the assessee to approach the superior court contending firstly that, the court which passed the order has no jurisdiction and in which event, the Appellate Authority has to decide whether the court has jurisdiction to pass order or not. Therefore, the said judgment is of no assistance in deciding the controversy in this case. On facts 48. The assessee contends though the impugned goods are manufactured, it is not marketable and therefore, they are consuming the said manufactured goods for the purpose of manufacturing steam. From the steam so manufactured, they are producing electricity. The said electricity so produced is used in-house in running the industry which again makes ....