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M/s. SRF Ltd. Versus Customs, Excise & Service Tax, Appellate Tribunal Commissioner of Central Excise

2016 (9) TMI 618 - MADRAS HIGH COURT

Maintainability of appeal - Section 35G of the Central Excise Act, 1944 - Demand of differential duty - denial of Exemption Notification No.08/1996 dated 23.07.1996 - tenacity with 14% variance - Nylon Filament Yarn - Chapter 54 of the Central Excise Tariff Act, 1985 - test of samples - denier range of yarn above permissible limit - Whether the appeal filed by the appellant under Section 35G of the Central Excise Act 1944, is maintainable when the same relates to the rate of duty of excise, as r .....

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otification for the tolerance limit of nylon yarn have not been fulfilled by the appellant. Any dispute relating to rate of duty, cannot be decided under Section 35G of the Act - appeal not maintainable. - Maintainability - appeal pending for a period of 10 years - want of jurisdiction - Held that: - where there is a lack of inherent jurisdiction of the Court, the decree is then said to be a 'nullity'. Just because the case pending for a period of 10 years, it cannot be made maintainable as .....

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mited, represented by its Associate Vice President has filed this Appeal against the final order of Customs, Excise and Service Tax Appellate Tribunal, Chennai dated 06.04.2005 in No.558/2005. 2. The facts of the case as narrated in the appeal, are as follows :- The appellant SRF Limited is engaged in the manufacture of Nylon Filament Yarn, falling under Chapter 54 of the Central Excise Tariff Act, 1985. During the relevant period, the appellant, manufacturing and clearing Nylon Filament Yarn, w .....

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od and that the samples were subjected to test, by the Chemical Examiner, Custom House, Chennai. The following are the details of the test results :- Sl. No. Test Memo No. Date of Drawal of Sample Batch No. Chemical Examiner's Test Result in Denier 1. 1/96-97 07.06.1996 C6P 008-0525 224.8 2. 2/96-97 26.07.1996 C6G056-3239 228.6 3. 3/96-97 29.08.1996 R6H189-4230 224.1 4. 4/96-97 01.10.1996 C6K 001-0137 225 5. 5/96-97 31.12.1996 C6M 080-5791 212.1 3. When the test reports revealed that the den .....

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efore, the 2nd respondent issued show cause notices dated 04.02.1997, 03.03.1997 and 25.03.1997, respectively, demanding differential duty, on the ground that all the test reports had shown denierage of yarn, beyond the permissible limit, prescribed under the notification. 4. The appellant has filed reply to all the three show cause notices issued by the 2nd respondent. It is the case of the appellant that without considering the said explanation/ reply, the Assistant Commissioner of Central Exc .....

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ising the following grounds : i. that in view of the deposition of the Chemical Examiner during the cross examination before the Assistant Commissioner, the test reports cannot be sustained. ii. The test result of any batch is relevant only for the particular batch. iii. Modvat credit for Nylon chips cannot be denied. iv. No duty could be charged in respect of supplies made under deemed exports scheme. v. Re-determination of value of the final product (Nylon Filament Yarn) has to be allowed in t .....

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ant. Being aggrieved by the order of CESTAT, the appellant has filed the instant appeal and this Court admitted the appeal, framing the following substantial questions of Law :- i.Whether the Tribunal was correct in relying on test reports of the samples drawn with reference to one batch for subsequent batches, until the next sample was drawn ? ii.Whether the Tribunal was right in relying on test reports which only show marginal variation from the tolerance allowed and rejecting the substantive .....

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rallel proceedings ? 6. It is the contention of the appellant that the test reports of the samples taken for one particular batch, cannot be applied for the yarn of the next batch, as the process parameters may vary for each batch. Denier of the yarn is controlled by varying parameters, namely, i.The type of chips which has a bearing on the relative viscosity, directly influences the denierage. ii.The temperature of extrusion iii.Metering pump frequency iv.Draw ratio in draw twisters/SPU system. .....

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ounsel for the appellant further contended that the respondent has denied the benefit of export, on the ground that the appellant has not been able to prove that the twine exported is made out of the quantity of yarn produced during the relevant. He, therefore submitted that rejection of the appellant's plea by the Tribunal, without considering the first in and first out method, is incorrect, as per the principles laid down, by the Hon'ble Supreme Court, in the case of TELCO vs. Municipa .....

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er submitted that mere perusal of the substantial questions of law, would clearly show that the appellant has raised questions of law pertaining to the claim of exemption, under the Exemption Notification. However, as per Section 35G of the Act, an appeal to High Court shall lie, provided it is not an order relating among other things, to the determination of any question relating to the rate of duty of excise or to the value of goods for purposes of assessment and therefore, instant appeal is n .....

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and Ors., reported in 2015 (318) ELT 607 SC, wherein, the appellant itself agitated the non-grant of benefit of an exemption notification before the Hon'ble Supreme Court, by invoking Section 35L of the Central Excise Act, 1944. In the light of the above said decisions of this Court and the Hon'ble Supreme Court, learned counsel for the 2nd respondent contended that the appeal filed by the appellant, under Section 35G, is not maintainable in this High Court. 11. Without prejudice to the .....

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test reports cannot be questioned, and what is now contested by the appellant, is that the last of the test reports was on 31.12.1996 i.e., sample was drawn on 31.12.1996 and the report was dated 18.09.1997. The appellant claims that the period between Test No.4 dated 01.10.1996 and Test No.5 dated 31.12.1996, should be considered as the period, where the process of manufacture has been changed, and the Nylon Filament Yarn meets the standard of 210 denier with 14 variance, as the last test repor .....

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therefore, the tenacity / denierage was reduced well within the limits of the exemption notification. It is further stated by the learned counsel for the 2nd respondent that the appellant had admitted that they had not intimated any process change to the department, whereby such reduction of denierage was recorded, when it is the case of the appellant that denierage is based on various factors, including the inputs used by them. It is the submission of the learned counsel for the 2nd respondent .....

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ty and denier and that they have to repeat the test done, so as to claim the benefits of the exemption notification. 12. Heard learned counsel for the appellant and the learned Central Government Standing Counsel for the 2nd respondent. 13. At the outset, the preliminary objection raised by the 2nd respondent regarding the maintainability of the appeal, in view of the power under Section 35G of the Central Excise Act, 1944 has to be considered. As per the powers conferred under the proviso to su .....

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ing additional substantial question of law. Whether the appeal filed by the appellant under Section 35G of the Central Excise Act 1944, is maintainable when the same relates to the rate of duty of excise, as raised in the substantial question of law by the appellant. 14. Section 35G of the Central Excise Act 1944, reads as follows :- SECTION 35G. 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 1st day of .....

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hin one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party; (b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party; (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appe .....

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aw so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which - (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). 15. Therefore, Section 35G makes it clear that an appeal to High Court shall lie, provided it not .....

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not be decided under Section 35G of the Act. 16. As stated supra, in the case of the Commissioner of Central Excise vs. Vadapalani Press, reported in [2014-TIOL-2208-HC-MAD-CX], at paragraph 4, this Court has followed the decision of the Hon'ble Supreme Court in the case of Naveen Chemicals Manufacturing and Trading Co.Ltd. vs. Collector of Customs, MANU/SC/0571/1993 : 1993 (68) ELT 3 (SC), wherein it is held as follows: - 4. At the outset, the learned counsel for the first respondent object .....

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ector of Customs, 1993 (68) ELT 3 (SC), wherein it is held 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 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 valuation of goods for purpo .....

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reted 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. Whethe .....

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her or not an appeal should be heard by a Special Bench of CEGAT, whether or not a reference by CEGAT lies to the High Court and whether or not an appeal lies directly to the Supreme Court from a decision of CEGAT: does the question that requires determination have a direct and proximate relation, for the purposes of assessment, to the rate of duty applicable to the goods or to the value of the goods. (emphasis supplied) 5. The present appeal is filed under Section 35G of the Central Excise Act, .....

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fied that the case involves a substantial question of law. (emphasis supplied) 6. In the present case, the issue that arises for consideration is what will be the rate of duty that is payable by the first respondent, but for the notification in question. Therefore, the objection of the learned counsel for the first respondent is sustained. 7. The above said view of this Court is fortified by a decision of the Gujarat High Court in Commissioner of Central Excise v. JBF Industries Ltd., 2011 (264) .....

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ates directly to the determination of rate of duty for the purpose of assessment and as such, in the light of the provisions of Section 35G read with Section 35L of the Act, this Court has no jurisdiction to entertain the appeal. (emphasis supplied) For the foregoing reasons, we hold that this appeal is not maintainable and accordingly, the same is dismissed. Since the appeal is held not maintainable, we do not propose to go into the merits of the questions of law raised for consideration. No co .....

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esult, is not the same as that of the previous four test reports. Therefore, according to him, the relief sought for, ought to have been granted, by following the decision of the Hon'ble Supreme Court in the case of Tata Engineering & Locomotive Company Ltd. vs. Municipal Corporation of the City of Thane and Other, reported in 1993 Supp (1) SCC 361. Further, he has also contended that the appeal is pending for more than ten years, and at this distance point of time, the stand taken by th .....

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for want of jurisdiction now. If we proceed with the merits of the case, having no jurisdiction to entertain an appeal, then the judgment passed by this Court, would amount to nullity. At this juncture, it is useful to refer to the principles of law laid down by this Court and the Hon'ble Supreme Court, in the following decisions : 1. Chandrabhai K. Bhoir & Ors. vs. Krishna Arjun Bhoir & Ors., relying on Chief Justice of A.P vs. L.V.A Dixitulu, reported in (1979) 2 SCC 34. 2. Union .....

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