TMI Blog2020 (3) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... or labelling of goods not amounting to the process of 'manufacture' - It is quite obvious that clause (iii) was inserted in the definition of manufacture in Section 2(f) of the Act by Finance Act, 2003 with effect from 01.03.2003 which clearly by a deeming fiction included in III Schedule the activities which only involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers etc. In view of such extended definition now incorporated in the Statute itself, we do not find any justification for the Revenue to raise a question on this as to whether the activity carried out by the Assessee will amount to manufacture or not. Since the question of excisability under Central Excise Act and dutiability under the Customs Act are the basic questions at the root of the matter, before deciding the questions of rate of duty and valuation of goods, which as per expanded scope of 35L of the Act, should naturally now lie before the Hon'ble Supreme Court of India. Even before the said amendment in law took place, the Division Bench of Karnataka High Court in two decisions dealing with both the enactments viz., Excise Law and Customs Law ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the assessee being both a manufacturer and a trader, mere filing of a Return under Rule 12 of Central Excise Rules, 2002 would amount to disclosure of all the details of CENVAT Credit and therefore, extended period of limitation is not invocable? 2.When the matter was taken up for hearing, the learned Senior Counsel appearing for the Respondent/Assessee Mr.N.Venkataraman raised a preliminary objection of the maintainability of the present Appeals filed by the Revenue under Section 35G of the Central Excise Act, 1944 in this Court and submitted that as per the provisions of Section 35L, particularly Section 35L(2) of the Central Excise Act, 1944 (in short 'the Act') the question of excisability also is within the jurisdiction of the Hon'ble Supreme Court and not of the High Court as per Section 35G of the Act and therefore, the present Appeals filed by the Revenue are not maintainable and the same deserves to be dismissed on the said preliminary objection. On the said preliminary objection, he relied upon the following judgments:- (i) Commissioner of C. Ex. Pondicherry Vs. CESTAT, Chennai, (2016) 44 S.T.R. 576 (Mad.) (ii) Commissioner of Customs, Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of this Chapter , the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment.] 6.We find considerable force in the preliminary objection of the learned counsel for the Respondent/Assessee, particularly after insertion of sub-section (2) in Section 35L of the Act by Finance Act, 2014 with effect from 06.08.2014 whereby for the purposes of Chapter VI-A comprising from Sections 35 to 36 including clause 35A to 35R which provide for the mechanism of appeals under Chapter VI-A of the Central Excise Act, 1944 to the aggrieved persons in the said Chapter and sub-section (2) of Section 35L of the Act clearly now provides with effect from 06.08.2014 that for the purpose of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability to goods for the purpose of assessment. This sub-section (2) of Section 35L, in our opinion, as rightly contended by the learned counsel for the Respondent/Assessee, is merely of a clarificatory nature, because without first determining the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tamount to deemed manufacture as per Section 2(f)(iii) of the Central Excise Act, 1944. For better appreciation, the relevant section is reproduced:- Section 2 (f) manufacture includes any process,- (i) ....... (ii) ...... (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,] and the word manufacturer shall be construed accordingly and shall include not only a person who employer hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account . [Emphasis supplied] 9.Undisputedly, the parts/components and assemblies of vehicles exported by the appellants fall under Chapter Heading 8712, 8713, 8715 and 8716 and are covered under the Third Schedule of CETA, 1985. Therefore, the first ingredient in sub-clause (iii) of Section 2(f) is satisfied. 10.Now let us proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the picking ticket before closing the packing box. The picking ticket will be scanned for generating the shipping mark sheet. After ensuring the details, the picking ticket will be affixed on the packed box. Thus, after packing, the shipping mark label is affixed on the box. This shipping mark label contains customer name, customer destination, customer order description, customer order number, case number, case dimensions, date of packing, manufacturer name. The packing list is also provided at the time of export which contains customer's order number, part number, party name and quantity. 13.Three types of packing are undertaken depending on the type of automobile parts. They are: (a) carton box packing, (b) wooden box packing and (c) metal pallet packing. The packed carton box is stuffed inside the container for export. 14.The above process of labeling and packing explained by the learned Senior Advocate, in our view would satisfy the ingredients of deemed manufacture under Section 2(f)(iii) of Central Excise Act, 1944. The submission of learned AR that such packing is only for the purpose of transportation and that the labelling is only for the purpose of id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any goods in the section or Chapter notes of [the Fourth Schedule] as amounting to [manufacture; or] (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,] and the word manufacturer shall be construed accordingly and shall include not only a person who employer hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;] 11.It is quite obvious that clause (iii) was inserted in the definition of manufacture in Section 2(f) of the Act by Finance Act, 2003 with effect from 01.03.2003 which clearly by a deeming fiction included in III Schedule the activities which only involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers etc. In view of such extended definition now incorporated in the Statute itself, we do not find any justification for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 35E of the Central Excise Act, 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 the purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in a Judgment authored by the same Hon'ble Judge [Justice Mr.N.Kumar, J.] in the case of Commissioner of Customs, Bangalore V. Motorola India Limited, (2012) 275 E.L.T. 53 (Kar.), delivered about a year after the previous judgment, reiterated the similar position in para 40 and 41 as under: 40. Therefore, the expression rate is often used in the sense of a standard or measure. Rate generally is an impost, usually for current or recurrent expenditure, spread over a district or other local area and is distinct from an amount payable for work done upon or in respect of particular premises. Rate is defined by Webster to be the price or amount stated or fixed 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the argument that the rate of tax means only the rate at which tax is payable or a fraction is unsustainable. 41. Broadly the following disputes do not fall within the jurisdiction of High Court under Section 130 of the Act:- (a) Dispute relating to the duty of customs payable on any goods. (b) The value of the goods for the purposes of assessment. (c) A dispute as to the classification of goods. (d) Whether those goods are covered by an exemption notification or not. (e) Whether the value of goods for the purposes of assessment is required to be increased or decreased. (f) Whether what is imported or exported is goods which attracts customs duty. 14.In the previous judgment, while the eight categories of dispute were in the exclusion category of jurisdiction of High Court, were reduced to six in the later judgment under Customs Act for the obvious reasons that the last two categories in the previous judgment about the 'manufacturing' concept and Tariff Item or the description of goods as mentioned in column No.3 of the Central Excise Tariff Act, 1985, were not relevant under the Customs Act, 1962. We respectfully agree w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion expressly confines the definition of the said expression to Sub-section 5 of Section 129-D, 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. 12. This, then, is the test for the purposes of determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court. 18.On a demur, we feel that the issues in the restricted scope of Appeals maintainable before the High Court under Section 35G of the Central Excise Act and Section 130 of the Customs Act would be limited to questions like:- (a)Extended period of limitation invoked for underpayment of duty or erroneous refunds; (b) Refunds made to Assessee are denied; (c) Imposition of Penalty (d) Interest claimed by Revenue or by Assessee on refund; (e) Confiscation of goods and redemption fines; (f) Clandestine Removal without payment of duty; (g) Cenvat or Modvat issues (in case of Central Excise); (h) Redemption fine and Penalty (in case of Customs); (i) All Customs Broker License matters under the Regulations (CBLR); (j) Issues relating to Rebate, Drawback etc. 19.These issues giving rise to question of law can be considered by High Court under Section 35G of the Act. The issues of rate of duty or valuation or the root questions whether the taxable event in the form of 'manufacture' for attracting levy of duty or not are the questions which lie within the domain jurisdiction of Hon'ble Supreme Court of India. 20.Therefore, under thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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