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TMI Blog2011 (4) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... of the declared final product as no more manufacturing is being done, the officers of the DRI took up further investigation in the matter. The assessee was called upon to submit the list of such unutilised items which are imported under Customs Notification No. 30/97-Cus., dated 1-4-1997 and lying unutilised in the manufacture of pagers. The assessee submitted a list of such unutilised items along with details of the part number, their quantity and their value and sought for further time to link unutilised items to the bill of entry and the relevant assessable value. On 23-5-2001 they submitted a complete list of all unutilised items totally identified at American dollars. The assessee also submitted that they have ceased manufacturing pagers and the said materials have become obsolete as far as they are concerned. 3. After the enquiry a show-cause notice was issued to the assessee requiring them to show-cause as to why customs duty amounting to Rs. 96,17,498/- should not be demanded from them in terms of the notification No. 30/97-Cus., dated 1-4-1997; why the said imported raw materials under the notification and not utilised in terms of the conditions of the said notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty. Aggrieved by the said order, the Revenue is in appeal. 5. This appeal is preferred u/s. 130 of the Customs Act, for short hereinafter referred to as "the Act". The appeal was admitted on 20-6-2007 to consider the three substantial questions of law as set out in the order sheet. "1. Whether "writing off" the imported duty-free materials from the Books of Accounts of the importer is permissible in law and whether the same amounts to "dispose of" within the meaning of Customs Notification No. 30/97-Cus., dated 1-4-1997 under which the goods/materials are imported? 2. Whether, without paying the duty, it is permissible for an importer to "write off" from the Books of Accounts the duty-free imported materials when he violates the norms of "Actual User Condition", "export obligation" and the prohibition "not to dispose of or utilize in any manner except for utilization in discharge of export obligation or for replenishment" prescribed under Customs Notification No. 30/97-Cus., dated 1-4-1997? 3. Whether the confiscation of goods by the Department under Section 111(o) of the Customs Act, 1962, on failure of the importer to pay the duty etc. consequent on hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Section 130E of the Act which reads as under :- 130. Appeal to High Court "(1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the day of July, 2003 (not being on order relating, among other things, to the determination of any question having a relation to the rate of duty of customs 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. 130E. Appeal to Supreme Court An appeal shall lie to the Supreme Court from - (a) any judgment of the High Court delivered - (i) in an appeal made under section 130; or (ii) on a reference made under section 130 by the Appellate Tribunal before the 1st day of July, 2003; (iii) on a reference made under section 130A, in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or (b) any order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order referred to therein is an order passed in the course of assessment. Therefore, ail orders passed in the course of assessment involving the determination of any question having a relation to the rate of duty of customs or to the value of goods, cannot be the subject matter of appeal before the High Court. By the use of the word 'among other things' it is made clear, even order which may not be directly related to the rate of duty or the value of goods, however which are intermingled with those matters are also excluded. In other words those are not the only orders contemplated by the legislation. In order to understand the width and depth of the orders covered under these words, it is necessary to know the meaning of "assessment". What is assessment? 13. The word "assessment" is used as meaning sometimes the computation of rate of duty, sometimes the assessable value of goods and sometimes the whole procedure laid down under the Act for imposing duty liability upon the exporter or importer. The word assessment is, thus, capable of bearing a very comprehensive meaning; in the context, it can comprehend the whole procedure for ascertaining and imposing duty liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proceedings for assessment of escaped income or under-assessed income...........In its normal sense, "to assess" means "to fix the amount of tax or to determine such amount". The process of re-assessment is to the same purpose and is included in the connotation of the term "assessment". The reasons which led us to give a comprehensive meaning to the word "assessment" in section 13(1) of the Finance Act, 1950, operate equally with regard to the saving provisions under present consideration." 17. The Supreme court in the case of C.A. Abraham v. Income Tax Officer, Kottayam and Another explaining the meaning of the word assessment in the context of the Income Tax Act held as under :- "A review of the provisions of Chapter IV of the Act sufficiently discloses that the word "assessment" has been used in its widest connotation in that chapter. The title of the chapter is "Deductions and Assessment." The section which deals with assessment merely as computation of income is section 23; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18A deals with advance payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se administrative or executive powers i.e. character of the power conferred upon this Court original or appellate, by its constitution being judicial, the determination or order sought to be appealed from must have the character of a judicial adjudication. Goods : 19. Yet another word which also assumes importance is the meaning of the word "Goods". In the case of Union of India and Another v. Delhi Cloth and General Mills Co. Ltd. and Others reported in AIR 1963 SC 791 = 1977 (1) E.L.T. (J199) (S.C.), the Constitution Bench of the Supreme Court while construing the word 'goods' held as under :- "Moreover, the definitions of 'goods' make it clear that to become 'goods' an articles must be something which can ordinarily come to the market to be bought and sold" 20. In South Bihar Sugar Mills Ltd. and Another v. Union of India and Another reported in AIR 1968 SC 922 = 1978 (2) E.L.T. (J336) (S.C.) has held as under :- "The Act charges duty on the manufacture of goods. The word 'manufacture' implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are produced or manufactured by the person on whom duty is sought to be levied. The expression production or manufacture has further been explained by this Court to mean that the goods so produced must satisfy the test of marketability. Consequently, it is always open to the assessee to prove that even though goods in which he was carrying on business were excisable goods being mentioned in the schedule, but they could not be subjected to duty as they were not goods either because they were not produced or manufactured by it or if they had been produced or manufactured, they were not marketed or capable of being marketed." Meaning of "Rate of Duty" 24. It is in this background we have to interpret the word rate of duty. The question is, what is the meaning attached to the 'rate of duty' as mentioned under these provisions. In order to understand the word 'rate of duty' and the dispute relating to that, it is useful to refer to the meaning assigned to the said word by the Parliament by way of an explanation to sub-section (5) to Section 129D by amendment Act 29/1988. The said amendment was intended to be brought into force from the date to be notified. However, it was not br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted to the aforesaid phrase for the purpose of this section only. It is because the said explanation is added to Section 129D which deals with the power of revision of Board or Commissioner of Central Excise in certain case. In other words what is sought to be conveyed by the explanation is that the authorities while exercising the revisional jurisdiction shall not go into those questions. That in no way comes in the way of understanding the meaning of the phrases 'rate of duty'. On the contrary it clearly sets out the intention of the legislature in so far as the meaning to be attributed to the said phrase. Therefore, the said meaning could be read into the phrase wherever it is used in the other parts of the statute, as held by the Apex Court in Navin Chemicals case [1993 (68) E.L.T. 3 (S.C.)]. It also would be in conformity with the interpretation placed on the said phrase by the Apex Court as well as the High Court, as is clear from the following decisions. 25. The Supreme Court had an occasion to interpret the said Section 130 and 130E in a number of decisions. However, though not in an identical matter, but almost near to the said matter, interpreting the powers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. 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 indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 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 directly 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. 29. In the case of Jindal Dye Intermediate Limited v. Collector of Customs, Mumbai, reported in 2006 (197) E.L.T. 471 (S.C.) the Tribunal had upheld the order of the authorities and denied the exemptions. The assessee preferred an appeal under Section 130E of the Act to the Supreme Court. The Supreme Court set aside the order of the Tribunal and held that the assessee is entitled to the benefit of exemption. 30. In the case of Commissioner of Customs, New Delhi v. Phoenix International Limited, reported in 2007 (216) E.L.T. 503 (S.C.), the question involved was whether the assessee has imported in violation of the Exim Policy and consequently liable to pay customs duty. The Tribunal held that there is violation of Exim Policy. In an appeal preferred against the order of the Tribunal under Section 130E of the Act, the Supreme Court rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. 33. The Supreme Court had an occasion to consider the meaning of the word 'rate' in Sundaram and Company (Private) Limited v. Commissioner of Income Tax, Madras [1967 VOL. 66 ITR 604] where it was held as under :- "The assumption that the expression "rate" has been used in Section 34(1) as weaning a fraction of total income is, in our judgment not warranted. By the use of the expression "rate" in the context in which it occurs, undoubtedly a relation between the taxable income and the tax charged is intended, but the relation need not be of the nature of proportion of fraction. The 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 ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would lie to the Supreme Court. It is, thus, clear from the aforesaid proviso that an appeal against an 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 would lie to the Supreme Court and not the High Court." 37. The Apex Court in the case of I.T.C. Ltd. v. Collector of Central Excise, Patna reported in 1997 (94) E.L.T. 456 (S.C.) dealing with Section 35L(b) of the Central Excise Act, 1944 has held as under :- "A perusal of the said clause shows that an appeal lies to this Court against an order passed by the Tribunal relating to the determination of any question relating to the rate of duty of excise or to the value of goods for the purposes of assessment Sri. Ravinder Narain as submitted that the impugned order passed by the tribunal relates to the value of goods. The said question relating to value of goods has however, arisen on the claims for refund of excise duty su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for anything. The word 'rate' includes any toll, due, rent, rate or charge. It means the scale or amount of any other charges. The word 'rate' is used with reference both to a percentage or proportion of taxes, and to a valuation of property. 'Rate' is used in an Act declaring that the Legislative Assembly shall provide by law for a uniform and equal rate of taxation and assessment, applies to the percentage of fixation, as used in connection with 'taxation' and to the valuation of the property, as used in connection with 'assessment'. It is a valuation of every man's estate or setting down how every one shall pay, or be charged with, to any tax. By the use of the expression 'rate' a relation between the taxable income and the tax charged is intended, but the relation need not be of the nature of proportion of fraction. The Explanation to sub-section (5) of Section 129D of the Customs Act, 1962, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased. (f) Whether what is imported or exported is goods which attracts customs duty. 42. From the aforesaid discussion, it is clear that an order passed by the Appellate Tribunal relating to the determination of any question having relation to the rate of duty of customs or to the value of goods for the purposes of assessment lies to the Supreme Court under Section 130 of the Act and not to the High Court under Section 130. 43. The intention behind this bifurcation of jurisdiction between the Apex Court and the High Court seems to be that more often than not, any decision on these aforesaid aspects not only affects the interest of the manufacturers who are parties thereto, but also to the manufacturers of those products throughout the country. In a country governed by Parliamentary legislation because of the territorial bifurcation in forming states and because of the divergent opinion which is possible, the customs duty payable would vary from place to place. In order to bring uniformity in the levy of customs duty throughout the country and consequently to see that the country's finance is not affected, the Parliament has vested the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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