;st HI6H COURT OF CHHATTISGARH AX BILASP DIVISION BENCH: Hon ble Shri Ohirendra Mishra <& Hon'ble Shri R.N. J^handrakgr, JJ, W.P. No.486/2001 (Petition under Article 226/227 of Constitution of India) PETITIONERS Vs RESPONDENTS M/s Orissa Concrete & Industries Ltd. & another » Union of India <& others OR&ER FOR CONSIDERATION Allied Sd/- Dbireadra Mishra ,. .ludge HON'BLE SHRI JUSTICE R.N. CHANbRAKAR ^) G<j^l->-e-fi 'ff Sd/- R.N. CHANDRAKAR. Judge / \j-J I C.V1U POST FOR ORDER ON o2^/03/2010 L _ Sd/- J U£) (5 E ^/03/2010 HIGH COURT OF CHH/\TnS6ARH AT BILASPUR &IVISION BENCH: Hon'bte Shri bhirendra Mishra <& Hon'ble Shri R.N. Chandra.km·, JJ. W.P. No.486/2001 (Petition under Article 226/227 of Constitution of India) PETITIONERS Vs RESPONtSENTS l.M/s Orissa Concrete <& Allied Industries Ltd., A company duly incorporated under the possession of Indian Companies Act, 1956 having its factory at R.S.C). Station Colony, P.0. Kapa, Raipur, Chhattisgarh, 492 005 2.Bhagvati Prasad Agrawal, S/o Shri Sajanand Agarwal Shareholder and Director, M/s Orissa Concrete & Allied Industries Ltd., R.S.D. Station Colony, P.0. Kapa, Raipur, Chhattisgarh. 1. Union of India through the Secreta'ry Ministry of Finance, Sover'nment of India, New Delhi. 2. Customs Excise and Gold (Control) /\ppellate Tribunat, West Block No.2, R.K. Puram, New Delhi 110 066. 3. Asst. Commissioner, Central Excise, Raipur. 4. Commissioner (Appeal) Central Excise, Bhopal. Present; Mr. B.P. Sharma, Advocate with Mr. Vivek Chopda, /\dvocate. Mr. Bhisma Kingar, Advocate For the petitioners. For the respondents OR D E R (Passed on^'March, 2010) Dhirendra Mishra^Jl 1. The petitioners' manufacture concrete sleeper-s and supply the same to the Indian Railways. The petitioners availed modvat credit of duty paid on cement used in concrete mix, Page 2 of 11 (^' out of which load testing cubes are cast and also sleepers are manufactured. He was served with three show cause notices proposing therein to disallow modvat credit of duty availed by the petitioners against the cement consumed in the concrete mix used for manufacturing of load testing cubes.'.After receiving reply from the petitioners, the Assistant Commissioner, Central Excise, Raipur- dropped the show-cause notices vide Annexure P-6. The Commissioner of Appeals vide order of Annexure P- 8 dismissed the appeal preferred by the department holding that testing of concrete cubes makes the concrete sleepers marketable, therefore, it is a technical requirement for the completion of manufactur'ing process of sleepers. Their use for testing cannot be treated as removal of different excisable goods. Since the activity of concrete cube casting is a part of the manufacturing process of concrete sleepers, it cannot be treated as a separ-ate commodity cleared without payment of duty for captive consumption. Since the cohcrete cubes are destroyed during testing and it become waste, therefore provisions of Rule 57t) of the Central Excise Rules (for short 'the Rutes') are applicable as held by the adjudicating author-ity. • However, the Customs, Excise & &old (Controt) Appellate Tribunal (for short 'the tribunal') vide order of Annexure P-1 allowed the appeal of the department and held that the concrete cubes being not dutiable and consequently hav.ing not paid any duty thereon, the petitioners herein are legally bound to reverse the proportionate modvat credit taken on the inputs used for manufacturing the same. Rule 57D of the Rules has no application to the case of the petitioners herein as the cubes are manufactured by them out of the same concrete mixture from which they manufacture concrete Page 3 of 11 ft, sleepers for supply to the railways. These cubes are distinct and identifiable goods and are utilized by them for determining the strength of the main sleepers as they are subjected to load test in comprehensive testing machi'ne till such time the cubes fail to take further load. The cost of these cubes which during the test are crushed, is also considered and taken into consideration by the petitioners while quoting the price of the sleepers and therefore having included the price/expenditure incurred on the manufacture of the cubes and having not paid duty on those cubes, they cannot be legally permitted to avail modvat credit for cement used in casting of cubes. The cubes cannot be described as by-products arising during the manufacture of final products i.e. concrete sleepers. 2. The instant writ petition is directed against the aforesaid order. 4 . 3. Mr. Sharma, learned counsel for the petitioners vehemently argued that sleepers are sold to the Railways under the contract agreement (Annexure P-4). Concrete sleepers are cast simultaneously with the same concrete mixture which is also used for casting concrete testing cubes to maT<e the concrete sleepers marketable and to become excisable goods. It is necessary that they should have compressive strength as per standard specifications of the Indian Railways prescribed under the agreement. To verify the strength of concrete mixture used in manufactur-e of sleepers, concrete testing cubes are subjected to load test and only on the basis of load test report, sleepers became marketable. After the load test, the concrete test cubes are crushed and it become waste and thus manufacture of concrete cubes and its wastage after crushing arises in the course of manufacture of '.Q- Page 4 of 11 final product i.e. sleepers, is not dutiable as laid down in sub- rule (1) of Rule 57 & of the Rules. In reply to the objection regarding maintainability of the writ petition, it was argued that though the order- impugned is appealable under Section 35L of the Central Excise Act, 1944 (for short 'Act of 1944') before the Hon'ble Supreme Cour-t or before the Division Bench of thte High Court, however, in view of the law laid down in the matter of L. Chandra Kumar Vs. Union of India reported in 1997 (92) E.L.T. 318 (SC), the writ petition against the order of the tribunal passed under Section 35C (1) is maintginable. Reliance is also placed on the judgment of Indore Bench of M.P. High Court in the matter of Neo Sacks Limited Vs. CEGAT. New Delhi reported in 1999 (114) E.L.T. 826(M.P.). 4. On the hand, Mr. Kingar, learned counsel for the respondents has raised preliminary objection that the instant writ petition under Article 226/227 is not maintainable in view of specific provisions under Section 356 of the Act of 1944 which empowers the tribunal to refer to the High Court any question of law arising out of such order on application of the Commissioner of the Central Excise or other party. Section 35H of the Act of 1944 further provides that any party can approach the High Court against an order under Section 35C for direction to the tribunal to refer to the High Court any question of law arising from such order of the tribunal. In view of the aforesaid specific statutory provisions under the Act of 1944, the instant writ petition is not maintainable. It was further argued that the tribunal has correctly held that the cement cubes are manufactured independently from ^ Page 5 of 11 the same concrete mix, which we.re subjected to load bearing test, till cubes are crushed and become waste and as such, they do not arise during the cour'se of manufacture of sleepers and the same is not an ancillary process of manufacture of sleepers as it is entirely different happening and has no direct correlation with the manufacture of v concrete sleepers. Rule 57D of the Rules has no application in the present case. 5. We have heard learned counsel for the parties. We have also perused the material available on record including the.orders passed by the tribunal and other two forums below. 6. In the light of the arguments advanced by the respective parties, we propose to examine maintainability of the instant writ petition. » 7. Chapter-VI A of the Act of 1944 deals with the appeals. Any person aggrieved by any decision or order passed under the Act by the Central Excise Officer lower in rank than the Commissioner of Central Excise may prefer an appea[ under Section 35 of the /\ct of 1944 to the Commissioner (Appeals). Any person aggrieved by an order passed by the Commissioner (Appeals) under Section 35A can prefer appeal under Section 35B to the tribunal. The appellate tribunal after affording opportunity of hearing to the parties may confirm/modify or annul the decision or order appealed against or may refer the case back to the authority which passed such decision or order for fresh adjudication under Section 35C (1) of the Act of 1944. An appeal lies to the High Court from ever^'order passed in appeal by the tribunal on or after 1s day of July, 2003, if the High Court is satisfied that the case involves a substantial question of law. Page 6 of 11 Present Section 35(5 was substituted by the Act No.32 of 2003 w.e.f. 14.5.2003. Pn'or to above substitution of Section 356, a party aggrieved by an order passed under Section 35C (1) of the tribunal could apply to the tribunal for referring to the High Court any question of law arising out of such order and on receipt of such application, the tribunal could draw statement of case and refer it to the High Court. In case where the tribunal refuses to state a case on the ground that no question of law arises, the aggrievej party could approach the High Court within six months and the High Court, if satisfied, require the appellate tribunal to state the case and refer to the High Court. 8. In the instant case, the order of the tribunal was passed on 16.10.2000 when the relevant statutory remedy against the order of the tribunal under Section 356 was as under:- "356. Statement of case to High Court.-(l) The Commissioner of Central Excise or the other party may, within sixty days of the date upon which he is served with notice of an order under Section 35-C [passed before the 1st day of July, 1999] 4 (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), by application in the prescribed form, accompanied, where the application is made by the other party, by a fee of two hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the other provisions contained in this section, the A . Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court: Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the pen'od hereinbefore specified, allow it to be presented within a further period not exceeding thirty days. Page 7 of 11 ^/ (2) On receipt of notice that an application has been made under sub-section (1), the person against whom such application has been made, may, notwithstanding that he may not have filed such an application, file, within forty-five days of the receipt of the notice, a memorandum of cross-objections verified in the prescribed manner against any part of the order in relation to which an application for reference has been made and such memorandum shall be disposed of by the ^ppellate Tribunal as if * , it we.re an application presented within the time specified in sub-section (1). (3) If, on an application made under sub-section (1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the Commissioner of Central Excise, or, as the case may be, the other party may, within six months from the date on which he is served with notice of such refusal, apply to the High Court and the 1-ligh Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appe'llate Tribunal shall state the case and refer it accordingly. (4) Where in the exercise of its powers under sub-section (3), the Appellate Tribunal refuses to state a case which it has been required by an applicant to state, the applicant may, w/ithin thirty days from the date on which he receives notice of «such refusal, withdraw his application and, if he does so, the fee, if any, paid by him shall be refunded, 9. Any party aggrieved by the order of the tribunal passed under Section 35C could also approach the High Court directly under Section 35H within a period of 180 days of the date upon which he was served with the notice of an order under Section 35C and apply for direction to the appellate tribunal to refer- to the High Court any question of law arising from such order- of the tribunal and where the HigH Court directs the tribunal to refer thequestion of law raised in the application, the tribunal was duty bound to draw the statement of case and refer it to the High Court. .S^-^- Page 8 of 11 10.5ection 35L (a), as existed prior to the amendment in the year 2003, provided for appeal to the Supreme Court against the judgment of the High Court delivered in a reference under Section 356 or 35H where the High Court certifies its order to be fit one for appeal to the Supreme Court. Section 35L (b) of the Act of 1944 also provided for direct appeal to the Supreme Court against the order of the tribunal. ll.Argument of Mr. Sharma, learned counsel for the petitioners that in view of the decision of the Hon'ble Supreme Court in L. Chandra Kumar's case (supra) writ petition against the order of the tribunal would be maintainable in the High Court and the petitioners could not approach the Supreme Court directly under Section 35L of the Act of 1944, is misconceived. », l2.In the matter- of State of Soa Vs. Leukoplast (India) Ltd. reported in 1997 (92) E.L.T. (SC) the Hon'ble Supreme Court following its earlier judgment in the matter" of Titaghur Paper Mitls Co. Ltd. Vs. State of Orissa reported in (1983) 142 ITR 363 (SC) held that writ jurisdiction not exercisable to decide disputed questions of fact such as whether sur9ical dressings and bandages were "drugs or medicines" for the purposes of assessment of sales tax. It was held that the High Court should not have allowed the assessees to by-pass statutory appellate remedies and enter-tained their writ petition. Setting aside the order of the High Court, six weeks time was altowed to the assessees to file statutory appeal against the assessment or-der. l3.In the matter of Sharma Trolly Manufacturers Vs. Customs, Central Excise and 6old (Control) Appellate Tribunal reported in 1987 (30) E.L.T. 317 (ALL) while considering maintainability of writ petition against the order of the tribunal, the Division Bench of the High Court of Allahabad Page 9 of 11 held that where specific pr'ovision of reference to 1-figh Court is provided Section 356 (3) of the Central Excise <& Salt Act, writ petition is not maintainable. l4.In the matter of Basheer Ahammed Vs. Collector of Cus. & C. Ex. reported in 1992 (61) E.LT. 583 (Ker) al-so the Kerala High Court held that whe.re efficacious alternative remedy provided against order of tribunal in the form of reference under Sections 130 and 130E of the Customs Act, 1962 and where reference application dismissed bothby the tribunal as well as High Court, the writ petition against the tribunal's order of confiscation and levy of penalty not maintainable under Article 226 of the Constitution, efficacious remedy being provided under the statute. ^; l5.In the Neo Sacks Ltd. (supra) the Division Bench of M.P. High Court relying upon the decision in L. Chandra Kumar's case (supra) held that though the appeal under Section 35L of the Act lies to the Supreme Court but the Apex Court itself had made it redundant by providing that no appeal would directly lie to it against any decision of the tribunal save otherwise under Article 136 by special leave from the decision or the judgment of the Division Bench of the High Court. However, in the aforesaid judgment provisions of statutory reference under Sections 356 & 351-1 of the Act of 1944 have not been considered and even otherwise the decision of the Supreme Court in L. Chandra Kumar's case (supra) must be confined only to the constitutionat tribunals constituted under Articte 3Z3A <& 323B. It will not apply to the statutory tribunals like CE6AT orITAT. l6.In the matters of Premier Irrigation Equipment Limited Vs. Union of India reported in 1998 (100) E.L.T. 29 (Karnataka), the Division Bench of Karnataka High Court referring to the judgment of the Delhi High Court delivered Page 10 of 11 in Civil Writ Petition No.1885/97 (Shalimaar Rubber Industries Vs. Union of India) held that the Parliament in its wisdom has provided an appeal to the highest Court of the land by incorporating Section 35L in the Act. The vali^dity of this provision has neither been assailed nor it is assailable on any valid gr-ound and therefore, the appellant has a n'9ht of appeal to the Supreme Court. Since there is no provision under the Act of 1944 ousting the jurisdiction of the High Court of judicial review under- Article 226/227 of the Constitution, therefore, the HJ9h Court always was possessed of power of judicial review under Article 226/227 of the Constitution against order passed by the appellate tribunal. However, it is well settled that jurisdiction can be exercised by the High Court only to ensure the procedural fairness and not to sit in appeal over the order- of the tribunal and therefore, a writ petition against the order of the tribunal cannot be entertained on merits. l7.In the instarit case, a writ petition has been filed on 16.10.2000 against the order of ths tribunal passed under Section 35C of the Act of 1944. The petitioner had statutory remedy of applying for reference under $ection 35G to the tribunal for submitting the statement of case on the question of law arising out of the order- within the limitation prescribed under the Act and the application lies to the High Cour-t, within the prescribed limitation, if the tribunal refuses to state a case which it has been required by an applicant. That apart, a party aggrieved by the order of the tribunal passed under Section 35C canalso apply to the High Court directly under Section 35H within the prescribed period of limitation and pray for direction to the trib'unal to refer to the High Court any question of law arising from such order of the tribunal. The order of the tribunal is also fc:.'\ S|IS5l^''13J %. '^".F' "^itaKt'-"' Page 11 of 11 appellable under Section 35L of the Act of 1944 to the Supreme Court. The petitioner instead of proceeding under the statutory provisions, as provided under" the Act of 1944, filed the instant writ petition on 19.3.2001 and impugned the order of the tribunal on merits. 18. Therefore, in our considered opinion the disputed questions of fact whether cement cubes cast simultaneously wi.th the concrete sleepers from the same concrete mixture for ascertaining compressive strength of the concrete cubes is a distinct and identifiable goods and whether the cost of these cubes was also taken into consideration by the petitioner while quoting the price of sleepers, cannot be gone into in a writ petition as the petitioner had an efficacious and alternative statutory remedy against the order of the tribunal. 19.Thus, we decline to entertain the present writ petition and accordingly, it is dismissed. We make it clear that rights and contentions of the parties on merits will remain open. Sd/- DhirendraMisbra Sd/- R.N. CHANDRAKAR. Judge »Z^-3-2010 Roshan/-