TMI Blog2019 (12) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... ders of the Tribunal relating to taxability / excisability passed prior to 6th August, 2014 i.e. the date of insertion of sub-section (2) to Section 35L of the Act being a rate of duty issue, would be appealable only to the Hon ble Supreme Court and not the High Court. Scope of amendment made to Section 35L of the Act on 6th August, 2014 by insertion of sub-section (2) therein - clarificatory or prospective in nature? - HELD THAT:- The amendment / insertion of sub-Section (2) to Section 35 of the Act became necessary to set at rest all doubts as to where appeals arising out 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 wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation of Sections 35G(1) and 35L(1)and(2) of the Act, which are as follows :- Section 35G(1) Appeal to High Court An Appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after 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 the purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. (2) to (9) Section 35L (1) Appeal to the 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 35G; or (ii) on a reference made under section 35G by the Appellate Tribunal before the 1st day of July, 2003; (iii) On a reference made under section 35H 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading 3707 of the Central Excise Tariff Act, 1985. (b) Being aggrieved by order dated 20th November, 2013, the Revenue filed an appeal under Section 35G(1) of the Act to this Court. (c) At the hearing of the above appeal before the Division Bench, the respondent assessee raised a preliminary objection, viz. that the appeal filed by the Revenue is not maintainable before this Court as it deals with excisability of goods. In support, it placed reliance upon the decision of this Court in Bajaj Auto Ltd. (supra) which dealt with the question of taxability, viz. whether service tax is at all liable on payment of royalty. The Tribunal had held that the same cannot be a matter of service and, therefore, outside the scope of Finance Act, 1994. In an appeal filed by the Revenue, the respondent in the appeal, namely, Bajaj Auto Ltd., objected to the jurisdiction of this Court to entertain an appeal under Section 83 of the Finance Act, 1994 read with Section 35G of the Act. The Court held that the issue of taxability is a question relating to rate of duty and, therefore, an appeal against such an order in terms of Section 35G(1) of the Act would lie only before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel who appears for the appellant in Central Excise Appeal No. 33 of 2018 where he states an identical question would arise in an appeal filed by M/s. Shoppers Stop Ltd. Both of them support the proposition that appeals from orders of the Tribunal in respect of excisability / taxability will lie to this Court. We have also heard Mr. Desai, learned Senior Counsel, who appears for the respondent-assessee to contend that the appeal from orders of the Tribunal in respect of excisability / taxability will be to the Hon ble Supreme Court. 6. Regarding issue no.(A) :- (I) Mr. Bangur and Mr. Sridharan in support of the contention that prior to 6th August, 2014, appeals on the issues of taxability / excisability would be before this Court, made the following submissions :- (a) Prior to insertion of Section 35L(2) of the Act, appeals to this Court were governed by Section 35G(1) and 35L(1)(b) of the Act. In terms of Section 35G(1) and 35L(1)(b) of the Act, issue of excisability of goods and / or taxability of services which has no nexus / relationship with rate of duty, would only be appealable to this Court and not the Hon ble Supreme Court. (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the Tribunal relating to issue of taxability and excisability were to be entertained only by the High Court. (II) On the other hand, Mr. Desai, learned Counsel appearing for the respondent submits that even prior to 6th August, 2014 when sub-section (2) to Section 35L of the Act was introduced, appeals under Section 35G(1) r/w Section 35L(1) of the Act were appealable only to the Hon ble Supreme Court and in support made the following submissions :- (a) Consistently various Courts in the country have held in the context of Section 35G(1) r/w Section 35L(1) of the Act (even before the insertion of sub-Section (2) of Section 35L of the Act) that the issue of taxability of services and excisability of goods is a rate of duty issue for purpose of assessment and appealable only to the Hon ble Supreme Court. (b) In support, reliance was placed upon the following decisions of various High Courts holding that issue of excisability is not appealable to the High Court :- (1) Commissioner of Central Excise Vs. Pawan Kumar Bansal, (2015) 315 ELT 529, (Del.) (2) Commissioner of Central Excise, Hyderabad-IV Vs. Shriram Refrigerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 excisability or taxability or importability in the context of Customs Act, 1962 but with regard to eligibility of an exemption notification for non-satisfaction of post import conditions therein. In the above case, there was no issue relating to the rate of duty in respect of the goods imported but the issue was application of an exemption after importation and clearance for home consumption, subject to satisfying the conditions of the notification, viz. utilization of imported material for specific purpose such as manufacture of final product. The Supreme Court, while holding that the above issue is not a rate of duty issue, observed that the dispute is inter se between the parties and the decision is not applicable to a separate class or category of assessees as a whole. The above decision will not apply to a decision of the Tribunal dealing with taxability / excisability which necessarily would require determining the rate of duty for the purpose of assessment. It is only on deciding the taxabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r :- 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 purpose 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 the purposes of assessment are questions that squarely fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Supreme Court and not by this Court. It is noteworthy that the Revenue has not been able to show a single decision of any Court (including this Court) except the decision in Global Vectra Helicorp (supra) to support the contention that the issue of excisability / taxability can be entertained by the High Court. We shall deal with the above decision of this Court in Global Vectra Helicorp (supra) separately a little later. During the course of hearing, our attention was also drawn to the decision of the Delhi High Court in Commissioner of Sales Tax Vs. Ernst Young Pvt. Ltd. 34 STR 3. In the above case, the Court was concerned with the issue whether the services rendered by the assessee therein were chargeable to tax under the Finance Act, 1994. The assessee therein raised a preliminary objection about the jurisdiction of the High Court to entertain the Revenue s appeal on the above dispute. The Delhi High Court, while following the decision of the Hon ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 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 records the fact that the Hon ble Supreme Court has been entertaining and deciding the appeals under the Act relating to excisability of the goods and in that regard made specific reference to the following decisions of the Supreme Court :- (a) Maltex (I) Pvt. Ltd. Vs. Commissioner of C.Ex. (2004) 165 ELT 129. (b) Commissioner of Central Excise Vs. Mahavir Aluminum, 212 ELT 3 (c) Nestle India Ltd. Vs. Commissioner of Central Excise, 235 ELT 577. We are in complete agreement with the reasons of the above Delhi High Court decision in Ernst Young Pvt. Ltd. (supra) to conclude that issues of taxability and excisability from the orders of the Tribunal are appealable to the Hon ble Supreme Court. (e) It was also contended by the appellant Revenue that insertion of sub-Section (2) to Section 35L of the Act that taxability / excisability would be a rate of duty issue w.e.f. 6th Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot 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 prior to 6th August, 2014 i.e. the date of insertion of sub-section (2) to Section 35L of the Act being a rate of duty issue, would be appealable only to the Hon ble Supreme Court and not the High Court. 7. Regarding issue no.(B) :- In view of our answer in the affirmative to issue no.(A), this issue becomes academic as it also stands covered in favour of the respondent assessee and against the appellant Revenue. However, as submissions were advanced by the parties on this issue, we are examining the same although almost all facets of these submissions have been ruled upon while deciding issue (A) above. (I) Mr. Bangur, for the appellant Revenue and Mr. Sridharan, learned Senior Counsel appearing in support of the contention that the provision of appeal under sub-section (2) of Section 35L of the Act relating to taxability and excisability of goods would only have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstood 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 that the amendment by insertion of sub-section (2) to Section 35L of the Act is retrospective in effect, makes the following submissions:- (a) Consistent view of various Courts in the pre-amendment era has been that appeals in respect of taxability / excisability from orders of the Tribunal lie only to the Hon ble Supreme Court. Thus, the amendment made in 2014 was only clarificatory as is evident from notes on clauses, which, while introducing the Finance (No.2) Bill, 2014, states that sub-Section (2) of Section 35L of the Act is being introduced with a view to clarify the position. (b) Reliance is also placed on another Instruction issued on 10th July, 2014 by the Tax Research Unit, Ministry of Finance wherein it was specifically stated that the amendment made in Section 35L of the Act by insertion of Sub-Section (2) was only to clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. Further, our interpretation that the amendment of Section 35L of the Act by insertion of sub-Section (2) thereof was clarificatory in nature, is supported by notes on clauses to Finance (No.2) Bill, 2014. In fact, clause 99 thereof states that :- Clause 99 of the Bill seeks to insert a new sub-section (2) in section 35L of the Central Excise Act so as to clarify that determination of disputes relating to taxability or excisability is covered under the expression determination of any question having a relation to rate of duty . These notes on clauses are used to interpret the statutory provisions. The Hon ble Supreme Court in CIT Vs. Vatika Township Pvt. Ltd. 367 ITR 466 placed reliance upon the notes on clauses appended to the Finance Bill, 2002 to hold that the provision, viz. Proviso to Section 113 of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, it has to be prospective. This submission cannot be accepted as consistently the Courts have held that appeals in respect of excisability / taxability are appealable to the Hon ble Supreme Court even before insertion of sub-section (2) to Section 35L of the Act. Moreover, on a interpretation of the words assessment of duty we have already held in the exclusion provided in Section 35G(1) of the Act, would also cover the issue of excisability / taxability being applicable to the Hon ble Supreme Court. Therefore, it is not a new category or class of orders of the Tribunal for which special provision is made for the first time by virtue of the amendment. (d) Lastly, it was submitted that the amendment takes away a right of appeal available to the parties. Before the amendment, the parties, be it the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the issue involves taxability. As can be seen from para 7 of the order, the submission of the Revenue was it is a rate of duty issue as the appeal involves classification of the services rendered by the assessee therein under one entry or the other. The issue of taxability was not on the table for the Court to rule on it. Thus, when on facts this Court found that there was only one entry for consideration, it held that it cannot be a rate of duty issue. There was no submission made by the Revenue, while objecting to the jurisdiction of this Court, that in respect of the order of the Tribunal dealing with the taxability / excisability of services / goods was necessary for determining the rate of duty for the purpose of assessment. In the aforesaid circumstances, this Court had no occ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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