TaxTMI 
TaxTMI 
2019 (12) TMI 392
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Customs, Excise and Service Tax Appellate Tribunal ("Tribunal"). The Division Bench has referred to the Full Bench, the following questions of law for consideration:- "(a) Whether the question of taxability or excisability of goods is an issue of rate of duty arising from orders of the Tribunal which are appealable only to the Supreme Court in terms of Section 35L(2) of the Act applies even to appeals from order of the Tribunal passed prior to 6th August, 2014 (i.e. the date of insertion of Sub-section (2) to Section 35L of the Act)? (b) Whether the amendment made to Section 35L of the Act on 6th August, 2014 by insertion of sub-section (2) therein, is clarificatory or prospective in nature?" 2. The Division Bench while hearing the appeal from the impugned order dated 12th November, 2013 of the Tribunal holding that certain goods were not marketable (not excisable) and therefore not classifiable under Chapter 37 heading 3707 of the Central Excise Tariff Act, 1985, was confronted with the issue whether such an order is appealable to this Court or the Hon'ble Supreme Court under the Act. The above issue has to be decided on the interpretation of Sections 35G(1) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uestion of taxability or excisability of goods for the purpose of assessment would not be an issue of rate of duty. Therefore, an appeal from the order of the Tribunal on the issue of taxability / excisability would be maintainable before this Court and not before the Hon'ble Supreme Court. On the other hand, in Bajaj Auto Ltd. (supra) this Court held that in view of Section 35G(1) and 35L(1)(b) of the Act, an appeal on the issue of taxability / excisability would lie to the Hon'ble Supreme Court and cannot be entertained by this Court. Further, this Court in Bajaj Auto Ltd. (supra) also held that Section 35L(2) of the Act which was inserted into the Act w.e.f. 6th August, 2014 was only clarificatory in nature. This as the issue of excisability / taxability was a rate of duty issue at all times. 4. Briefly the facts leading to this reference are as under : (a) On 20th November, 2013, the Tribunal passed the impugned order allowing the respondent's appeal. This by holding that chemical preparations for photographic use are not marketable, therefore, not goods. Thus, not classifiable under chapter 37 heading 3707 of the Central Excise Tariff Act, 1985. (b) Being ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1994. (e) The Division Bench which referred the above question to this Court, noted the fact that although Global Vectra Helicorp Ltd. (supra) did in terms refer to Section 35L(2) of the Act, it did not express any view on it. Moreover, it also noted that the binding decision of the Apex Court in Navin Chemicals Mfg. & Trading Co. Ltd. Vs. Collec tor of Customs, 1993 (68) E.L.T. 3 and the decision of this Court were also not considered. Moreover, before the referring Division Bench, the parties did not dispute that post insertion of subsection (2) to Section 35L of the Act, w.e.f. 6th August, 2014, orders of the Tribunal relating to taxability of services and excisability of goods would be appealable to the Hon'ble Supreme Court. (f) It is in view of the aforesaid conflict between the two views of this Court, as indicated in Global Vectra Helicorp Ltd. (supra) and Bajaj Auto Ltd. (supra), that the aforesaid questions have been referred by the Division Bench to the Full Bench. 5. We have heard Mr. Bangur, for the appellant Revenue and Mr. Sridharan, learned Senior Counsel who appears for the appellant in Central Excise Appeal No. 33 of 2018 where he states an i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Tribunal, as culled out from Navin Chemicals (supra), were as follows :- (i) determination of a question relating to the rate of duty (ii) determination of a question relating to valuation of the goods for the purpose of assessment (iii) determination of question relating to classification of goods under the tariff and whether or not they are covered by an exemption notification, and (iv) whether the value of goods for the purpose of assessment could be enhanced or reduced having regard with certain matters that the Act provides for. (d) The insertion of sub-section (2) to Section 35L of the Act w.e.f. 6th August, 2014 is itself evidence of the fact that prior thereto, appeals in respect of taxability and excisability were to the High Court. It is thus submitted that the issue of taxability or excisability being a rate of duty issue has only come into force w.e.f. 6th August, 2014, when sub-Section (2) of Section 35L of the Act was inserted. Thus, prior to the insertion thereof, it is submitted that the orders of the Tribunal relating to issue of taxability and excisability were to be entertained only by the High Court. (II) On th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st 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. In the context of the above, we have to consider that when the order of the Tribunal decides a dispute that the service is not covered by the Finance Act or goods not being covered by the Act for the purposes of determining the rate of duty for the purpose of assessment, would be appealable to this Court or not. (b) The contention of the appellant - Revenue is that deciding of excisability or taxability is not connected to the rate of duty. Therefore, an order of the Tribunal deciding excisability / taxability are appealable to the High court and not the Hon'ble Supreme Court. In support reliance is placed upon the decision of the Supreme Court in Motorola India Ltd. (supra), while dealing with pari materia provisions under the Customs Act, 1962. We note that the issue in the above case was not with regard to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the issue before it does not have an all India impact. This as it does not deal with issue of taxability / excisability for the purpose of assessment. (c) The appellant Revenue also relies upon the decision of this Court in Greatship (India) Ltd. (supra) and of the Supreme Court in Navin Chemicals (supra) to contend that an appeal arising from an order dealing with taxability / excisability would only be before this High Court and not the Hon'ble Supreme Court. We find that the decision in Greatship (India) Ltd. (supra) of this Court is not applicable to the present facts, as it itself records in paragraph 24 and 28 thereof that there was no dispute before it that the services are taxable. Thus, the objection of the Revenue (respondent before it) that this Court does not have jurisdiction, was negatived. So far as reliance upon the decision of the Apex Court in Navin Chemicals (supra) is concerned, we note that in paragraph 11 thereof, the Supreme Court has observed as under :- "11. 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 purposes of asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll issues relating to rate of duty. Thus, holding that an appeal on the issue of excisability / taxability from the orders of the Tribunal would be to the Hon'ble Supreme Court. In fact, the Kerala High Court in Kerala State Beverages (supra) has held that whether any goods are excisable or not, will fall within the exclusion provided under Section 35G(1) of the Act. It further noted that this distinction between Hon'ble Supreme Court and the High Court seems to be clearly intended to avoid conflict of views between High Courts on a question having all India impact. It is pointed out to us that except in the decision rendered by the Andra Pradesh High Court in Sriram Refrigeration (supra), from which an appeal to the Supreme Court has been admitted on 11th March, 2011 (362 ELT A 108), all the other decisions are final. We find that this Court in Greatship (India) Ltd. (supra) has observed in para 20 thereof that this Court in Commissioner of Central Excise and Service Tax Vs. M/s. Credit Suisse Services (I) Pvt. Ltd. (2015) 38 STR 473 had held the issue of the taxability of the services and the rate at which such services would be taxed was required to be considered by the Hon'ble ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t to the question of rate of tax. In case Service Tax is not to be levied or imposed and cannot be imposed under the charging Section, no tax would be payable. The said determination would be direct or proximate to the issue of rate of tax, which will include nil tax, when no tax is chargeable. 19. If the reasoning given by the Revenue is to be accepted, it will lead to anomaly and substantial confusion. All assessments necessarily have to determine and decide the rate of tax after determining and deciding whether or not activity is chargeable or tax can be levied. Assessments against the assessee would decide the rate of tax applicable once it is held that the activity is chargeable to tax under the F. Act. The words 'rate of tax' in relation to rate of tax would include the question whether or not the activity is exigible to tax under a particular or specific provision. This will be a reasonable and appropriate interpretation and will not cause or result in confusion or ambiguity regarding the appellate forum. Line between exigibility and rate of tax as propounded can be rather thin and superfluous in the present statutory context." (emphasis supplied) It further r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt for this view in the decision of the Supreme Court in W.P.I.L. Ltd. Vs. Commissioner of Central Excise, 181 ELT 359. We also note that Punjab & Haryana High Court Commissioner of S.T. Vs. DLF Golf Resort Ltd. (2018) 56 GSTR 247 has held that insertion of subsection (2) to Section 35L of the Act was clarificatory. Therefore, insertion of sub-section (2) to Section 35L of the Act w.e.f. 6th August, 2014 would not justify the contention of the Revenue that prior to 6th August, 2014, the appeals were maintainable before the High Court. (f) Therefore, in view of the above, we are of the view that even prior to the insertion of sub-section (2) to section 35L of the Act, the issue of taxability and excisability would be an issue relating to the rate duty of excise / services for the purpose of assessment. Therefore, the appeal from the orders of the Tribunal deciding issue of excisability / taxability, cannot be entertained by this Court in terms of Section 35G(1) and 35L(1)(b) of the Act dehors Section 35L(2) of the Act. Thus, question No. (A) as referred, is answered as under :- Appeals from orders of the Tribunal relating to taxability / excisability passed prio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....High Court. In support, reliance is placed upon the decision of the Apex Court in Navin Chemicals (supra) and the decision of this Court in M/s. Greatship (India) Ltd. (supra). Therefore, the insertion of sub-section (2) to Section 35L of the Act has to be read as prospective. (d) Introduction of a new category, which changes the forum where an appeal would lie, cannot be held to be retrospective. In support, reliance is placed upon the decision of the Supreme Court in the case of Videocon International Ltd. Vs. SEBI (2015) 53 taxmann.com 245 wherein it has been held that altering of the appellate forum from the High Court to the Supreme Court, curtailed one right of the appeal in respect of an aggrieved person. Therefore, such change of forum could not be considered to be only a procedural change but was a substantive change and, therefore, has to be understood to be prospective in nature. In the above view, it was submitted that the insertion of Sub-Section (2) to Section 35L of the Act ought to be construed as prospective w.e.f. 6th August, 2014. (II) On the other hand, Mr. Desai, learned Counsel appearing for the respondent, in support of his contention tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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. This is also supported by the plain reading of sub-section (2) of Section 35L of the Act which merely clarifies / states "having relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment". In case, it was a new category, then, all that the Parliament had to do was to state that the question of excisability and taxability arising in of an order of the Tribunal would be appealable to the Supreme Court....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... retrospective. It may be pointed out that G.P. Singh's in his seminal work, "Principles of Statutory Interpretation" 14th Edn., has observed that amending Act which is declaratory of the previous law has retrospective operation. (b) Next submission on behalf of the appellant was that even if there has been an intent on the part of the Government while introducing the amendment to Section 35L of the Act by insertion of sub-Section (2) thereof, yet the same does not find mention in the amended Act as passed by the Parliament. This submission in the present facts would not be correct. This for the reason that the Act was passed in the same form as it was introduced along with notes on clauses to the Bill in the Parliament. Thus, the Parliamentarians were aware while passing the bill and making it into an Act that this provision was intended to be clarificatory in nature. Therefore, insertion of sub-section (2) to Section 35L of the Act is retrospective in nature and not prospective. (c) It was next contended that an appeal to Hon'ble Supreme Court from the orders of the Tribunal in respect of excisability / taxability is a new class / category of orders. Therefore, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lobal Vectra Helicorp Ltd. (supra) and Bajaj Auto Ltd. (supra) (a) This Court in Global Vectra Helicorp Ltd. (supra) entertained an appeal from the order of the Tribunal holding that the question of interpretation of sub-section (zzzzj) of Section 65(105) of the Act, is not an issue of rate of duty of service tax and, therefore, appealable to the High Court and not the Hon'ble Supreme Court. This on the ground that no rate of duty dispute arises in such a case. It held that Section 35G(1) and 35L(2) of the Act to the extent they oust the jurisdiction of the High Court will only have application where the issue decided by the Tribunal, which was the subject matter of appeal, is whether the services rendered or goods manufactured fall under category (x) or category (y). In the above circumstances alone this Court held that it becomes a rate of duty issue on account of classification. Thus, raising a question having relation to the determination of rate of duty for the purpose of assessment. It is to be noted that in Global Vectra Helicorp Ltd. (supra) even though Revenue objected to the jurisdiction of this Court to entertain the appeal, it had not urged it on the ground tha....