IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.E.A. No.86 of 2007 DATE OF DECISION: FEBRUARY 18, 2008 The Commissioner, Central Excise Commissionerate,Ludhiana .....APPELLANT Versus M/s A.S.T. Paper Mills Ltd., Ludhiana ....RESPONDENT CORAM: HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present: Mr. Sanjeev Kaushik, Advocate, for the appellant-revenue. Mr.Vishwanath Shukla, Advocate, for the respondent. .. SATISH KUMAR MITTAL, J. The instant appeal filed by the revenue under Section 35-G of the Central Excise Act, 1944 (hereinafter referred to as `the Act') is directed against the order dated 27.9.2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as `the Tribunal') by raising the following substantial question of law:- Whether a plant which is entirely dependent on another unit for its operation having common power connection, common boiler, common storage for raw material, common water treatment plant, common entrance and sharing common financial status and when the capital goods were purchased in the name of the old unit who had also availed credit of duty paid thereon, can be treated as an independent factory for allowing the benefit of the exemption notification Nos.6/2000-CE dated 1.3.2000, 3/2001-CE dated 1.3.2001 and 6/2002-CE dated 1.3.2002? (Emphasis added) After notice of motion, Mr.Vishwanath Shukla, Advocate, puts in appearance on behalf of the respondent and at the very outset C.E.A. No.86 of 2007 -2- raised the objection about the maintainability of this appeal filed by the appellant in this Court under Section 35-G of the Act. Learned counsel submitted that in this appeal the appellant is raising the issue that the respondent-assessee was not entitled for the benefit of the exemption granted vide notification Nos.6/2000-CE dated 1.3.2000, 3/2001-CE dated 1.3.2001 and 6/2002-CE dated 1.3.2002 and the said benefit has been wrongly granted to the assessee by the Tribunal while observing that after approval of the demerger scheme by this Court M/s. B.K. Kraft Ltd. applied for separate registration under the Factories Act, therefore, the two entities are separate and are entitled for the benefit of the notifications separately if the conditions of notifications are fulfilled. While referring to Section 35-G of the Act which provides for an appeal to the High Court, learned counsel submitted that an appeal shall lie to the High Court from every order passed in appeal by the Tribunal on or after the 1st day of July, 2003 (not being 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), if the High Court is satisfied that the case involves a substantial question of law. Learned counsel submits that no appeal lies to the High Court against the order of the Tribunal when the impugned order relating to the determination of any question having a relation to the rate of duty of excise. He further submits that granting or not to granting the benefit of certain notification is a dispute pertaining to the rate of excise duty. If the benefit is granted under the exemption notification, then less duty will be chargeable, if not, then higher duty will be chargeable. Therefore, in nutshell the dispute in granting or not to granting the benefit of exemption C.E.A. No.86 of 2007 -3- notification is a determination of the question relating to the rate of duty of excise. He submits that in such cases the appeal lies to the Hon'ble Supreme Court under Section 35-L of the Act which provides that “an appeal shall lie to the Supreme Court from ....(b) any 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.” In support of his contention, learned counsel for the respondent relied upon the decision of the Supreme Court in Navin Chemicals Mfg. & Trading Co.Ltd. Versus Collector of Customs, 1993(68) E.L.T. 3 (S.C.) wherein the Supreme Court while interpreting the Explanation to sub-section (5) of Section 129D of Customs Act, 1962 has observed that the expression `determination of any question having a relation to the rate of duty or the value of goods', includes a dispute as to the classification of goods and as to whether they are covered by an exemption notification relates directly and proximately to the value of goods for purposes of assessment. Therefore, the learned counsel submits that in the instant case also the dispute which the appellant is raising in this appeal, is that the case of the respondent is not covered by exemption and the same was wrongly granted to it, therefore, the same is covered by the expression i.e. “order relating to the determination of any question having a relation to the rate of duty of excise.” On the other hand, learned counsel for the appellant submitted that the appellant is questioning the granting of benefit of exemption to the assessee under the notification Nos.6/2000-CE dated 1.3.2000, 3/2001-CE dated 1.3.2001 and 6/2002-CE dated 1.3.2002, but C.E.A. No.86 of 2007 -4- that itself does not amount that the question involved in this appeal is with regard to the determination of the rate of excise duty. However, learned counsel for the appellant could not cite any contrary judgment to the judgment cited by the counsel for the respondent. After considering the preliminary objections raised by the learned counsel for the respondent, we are of the opinion that the same deserve to be accepted. If we peruse the substantial question of law formulated by the appellant, it is clear that the appellant has raised the question that the assessee is not entitled for the benefit of exemption under notification Nos.6/2000-CE dated 1.3.2000, 3/2001-CE dated 1.3.2001 and 6/2002-CE dated 1.3.2002. If the contention of the appellant is accepted then it will result into increase of the excise duty to be levied on the paper and paper board. Undisputedly, no appeal shall lie to this court on the substantial question of law under Section 35G of the Act if the order passed by the Tribunal after July, 2003 is relating 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 and to such an order an appeal to the Supreme Court under Section 35L of the Act. The Supreme Court in Navin Chemicals Mfg. & Trading Co.Ltd.'s case (supra) while interpreting the words `determination of a rate of duty in relation to any goods or valuation of any goods for purposes of assessment of duty' used under the explanation to sub-section (5) of Section 129D of the Customs Act, 1962, has observed 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 purposes of assessment' and the Explanation thereto provides a definition C.E.A. No.86 of 2007 -5- 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 valuation of goods for 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 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 definition of the said expression to sub-section (5) of Section 129D, it is proper that the said expression used in the other parts of the said Act should be interpreted similarly. The statutory definition accords with the meaning we have given to the said expression above. Questions relating to the rate of duty and to the value of goods for purposes of assessment are questions that squarely fall within the meaning of the said expression. A dispute as to the classification of goods and as to whether or not they are covered by an exemption notification relates directly and proximately to the rate of duty applicable thereto for purposes of assessment. Whether the value of goods for purposes of assessment is required to be increased or decreased is a question that relates directly and proximately to the value of goods for purposes of assessment. The statutory definition of the said expression indicates that it has to be read to limit its application to cases where, for the purposes of assessment, questions arise directly and proximately as to the rate of duty or the value of the goods.” In the aforesaid judgment, it has been categorically held that the expression `determination of any question having a relation to the rate of duty or to the value of goods for the purposes of assessment' used in the other part should be interpreted similarly. Further, it has been observed that a dispute as to whether or not the assessee is covered by an C.E.A. No.86 of 2007 -6- exemption notification relates directly and proximately to the rate of duty applicable thereto for the purpose of assessment. This Court in Commissioner of Central Excise, Chandigarh-I Versus Suraj Udyog Ltd., 2003(158) E.L.T. 684 (P&H) has held that if the substantial question of law raised in the appeal pertains to the valuation of the goods for the purpose of levying excise duty, the only remedy available to the Department is to file an appeal before the Supreme Court under Section 35L of the Act. In view of this legal position, the substantial question of law raised in this appeal, which is stated to have been arising from the Tribunal, is relating to the determination of a question having relation to the rate of duty of excise, therefore, in our opinion, for determination of such question the appeal does not lie to this court and the same has to be filed before the Supreme Court under Section 35L of the Act. In view of the above and on a conjoint reading of the provisions of Sections 35H and 35L of the Act, we are of the view that the present appeal is not maintainable and the only remedy which is available to the Department is to file an appeal before the Supreme Court under Clause (b) of Section 35L of the Act. Hence, the Registry is directed to return this appeal to be presented before the appropriate court of competent jurisdiction. Disposed of accordingly. (SATISH KUMAR MITTAL) JUDGE February 18, 2008 (RAKESH KUMAR GARG) vkg JUDGE