Collector of Central Excise Vs. Kashmir Vanaspati - Court Judgment

Excerpt:
1. the issue involved in the two appeals relates to the eligibility of the respondents for benefit under notification no. 201/79-c.e., dated 4-6-1979. when the appeals came up before special bench-c for hearing, shri a.s. sunder rajan, appearing for the department, raised an objection that the appeals will have to be heard by the concerned regional bench and not by a special bench. the bench took note of the fact (as mentioned in its order dated 19-8-1986) that appeals involving the question of eligibility for benefit under notification no.201/79-ce have been dealt with by regional benches as well as by special benches details of such appeals being given in the order dated 19-8-1986. on a request of the said bench the president has directed that this bench of five members may go into the question regarding jurisdiction as a-preliminary issue and that if this bench holds that the appeals fall within the jurisdiction of a special bench it may proceed further and hear the appeals on merits and that in case the bench holds that the matter falls within the jurisdiction of a regional bench this bench may record its finding on that issue and the matter may then be referred back to the president for further directions. it is in accordance with the said directions of the president that we have heard submissions on the question of jurisdiction of this special bench to hear the appeals.2. we have heard shri sunder rajan for the department and shri b.k.gupta, advocate for the respondents.3. shri sunder rajan submitted that though in the hearing on 19-8-1986 it was his submission that the appeals lay within the jurisidction of a regional bench he is now, on further consideration, of the view that the appeals lie within the jurisdiction of a special bench but that he would not like to take a firm stand on the said matter and would leave it to us to give a ruling and that he would make his submissions on that footing. we may note at this stage itself that in his turn shri b.k. gupta submitted that the appeals lie within the jurisidction of a special bench only. thus at present the revenue as well as the assessee are of the view that the appeals lie within the jurisdiction of a special bench. but since jurisdiction could not be conferred by consent of parties we have heard submissions of both sides and have bestowed our careful consideration on the issue.4. the issue before us revolves round the words of section 35d(2) of the central excises and salt act. the same reads as follows: "every appeal against a decision or 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 the goods for purposes of assessment, shall be heard by a special bench constituted by the president for hearing such appeals and such bench shall consist of not less than three members and shall include at least one judicial member and one technical member." 5. under the provisions thereof any appeal against a decision or order which relates amongst other things (and need not necessarily exclusively) to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purpose of assessment shall be heard by a special bench. admittedly no dispute as to value of goods for purpose of assessment is involved in these appeals. it has therefore to be seen whether the decision or order in appeal before us related, among other things, to the determination of any question having a relation to the rate of duty of excise for purpose of assessment. shri sunder rajan's submission (with which shri gupta also concurs) is that the world "assessment" is of wide import and therefore the process leading to ascertainment of entitlement to benefit under the exemption notification would be a step in the process of assessment relating to the rate at which duty is payable and hence the present appeals will have to be heard by a special bench. it was put to him whether the dispute in the present appeals does not in the end relate to the quantum of duty to be deducted in terms of the benefit under notification, rate of duty on the goods manufactured, as well as the rate of duty on the inputs used, being the normal effective rates only and, therefore, there would be no dispute relating to the rate of duty of excise for purposes of assessment. it was enquired whether in the above view the dispute in these appeals (or the dispute in the proceedings before the lower authorities leading to the orders under appeal) would in any manner be a dispute regarding the rate of duty of excise. the submission of both sides was that in so far as the process of assessment led to the determination of the quantum of duty payable and that, in turn, depended upon the applicability of the exemption notification, the process of assessment involved determination of the effective rate at which the duty was payable under the notification for purpose of assessment and hence the appeals lie within the jurisdiction of a special bench.6. the provisions of rule 8 of the central excise rules (under which the exemption notification had been issued) were also referred to by the bench during the arguments and submissions were heard whether the words of rule 8 would furnish an indication as to the nature of the dispute that may arise on the applicability of the notification being questioned and whether that dispute would not be one relating to the rate of duty of excise for purpose of assessment.7. notification no. 201/79 had been issued by the central government in exercise of its powers under rule 8 of the central excise rules, the said rule reads as follows: 1) the central government may from time to time, by notification in the official gazette, exempt (subject to such conditions as may be specified in the notification) any excisable goods from the whole or any part of duty leviable on such goods. 2) the (central board of excise & customs) may by special order in each case exempt from the payment of duty, under circumstances of an exceptional nature, any excisable goods. 3) an exemption under sub-rule (1) or sub-rule (2) in respect of any excisable goods from any part of the duty of excise leviable thereon (the duty of excise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any excisable goods in the manner provided in this sub-rule shall have effect subject to the condition that the duty of excise chargeable on such goods shall in no case exceed the statutory duty. explanation : "form or method", in relation to a rate of duty of excise, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable." 8. in terms of notification no. 201/79 the manufacturer was entitled, in paying duty on the manufactured goods, to calculate the normal effective duty and deduct therefrom the duty of excise paid on the inputs which fell under t.i. 68 cet. thus what was deductible' was the duty at the effective rate on the inputs falling under t.i. 68 cet.this must to be deducted from the duty payable on the final manufactured goods calculated at the normal effective rate. therefore, there would be no question as to the rate at which excise duty would be payable either on the input goods or the finally manufactured goods, so far as the normal effective rate on them is concerned. the question is whether in the process of calculation of the actual duty payable on the final goods in the manner mentioned earlier, a question could be said to arise in relation to the rate of duty of excise on the final goods for purpose of assessment.9. as already mentioned, the duty payable on the final goods would be the normal duty payable on such goods but for this notification, less the duty paid on the input goods falling under t.i. 68. this final effective duty need not be uniform for all persons manufacturing similar goods and may be likely to vary from person to person, depending upon the quantity of the input goods falling under t.i. 68.in fact, it may even be likely that for the same manufacturer the quantum of duty on unit goods may vary from batch to batch. in the circumstances it appears to us that what would be deductible is a particular amount calculated at the effective rate on the input goods falling under t.i. 68 and it would be this amount that would be in dispute in cases where the applicability of benefit under notification no. 201/79 is in issue. since the quantum of this amount is to be calculated at the normal effective rate it appears to us that the resolution of the dispute as to entitlement of benefit under notification no. 201/79 would not involve a determination of any question having relation to the rate of duty of excise payable either on the input goods falling under t.i. 68 or the finally manufactured goods on which duty is to be paid after taking benefit under notification no. 201/79.10. in the circumstances we hold that the two appeals fall within the jurisdiction of a regional bench only and not a special bench.s.d. jha, vice-president for himself and for harish chandra (j) and d.c. mandal (t), members 11. i have carefully gone through the order proposed by brother chari, member (judicial) but i have not been able to persuade myself into agreeing with the order. i, therefore, record my views separately.12. the facts of the case, relevant provisions and the arguments advanced by the parties have been set out by brother chari and their further repetition appears unnecessary. notification no. 201/79 has been issued in exercise of powers vested in the central government under rule 8(1) of central excise rules, 19h (reproduced in toto by brother chari in his order). from sub-rule (1) it would be seen that it empowers the central government to exempt subject to specified conditions any excisable goods from the whole or any part of the duty leviable on such goods. sub-rule (3) inter alia provides that this exemption may be granted in a form or method different from the form or method in which the statutory duty is leviable. the relief granted by the notification in respect of adjustment of duty paid on inputs from duty payable on the finished product would appear relatable to sub-rule (3). nevertheless meaning of sub-rule (3) and exemption granted in a different form in exercise of power under this sub-rule would still be controlled by the power flowing and meaning of sub-rule (1). thus viewed, the notification must be held only to be an exemption to the finished goods from whole or any part of duty leviable on finished goods.13. the above apart, an answer to the present problem lies in the meaning of the expression "to the determination of any question having relation to the rate of duty of excise" occurring in section 35d(2) of central excises and salt act, 1944 reproduced by brother chari in his order. it is to be remembered that the expression is riot "determination of any question as to the rate of duty of excise" but "having relation to the rate of duty of excise". in t.p. mukherjee's law lexicon vol. 2, 1982 edition, the meaning of the words "relating to or in relation to" on the authority of a madras high court decision is given as follows - "such words as "relating to or in relation to" are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context. they are not words of restrictive content and ought not to be so construed. - state wakf board, madras v. abdul azees sahib, air 1968 mad 79 at 81 (1967) 1 madras i.j. 190 : mad l.w. 170"..in view of this meaning, even though the notification may have no direct significance as to determination of any question as to rate of duty, it does have an indirect significance because ultimately the question would be what is the rate of duty on the finished excisable goods. thus viewed i have no doubt that regard being had to the expression used in section 35d(2) of the act, the matter would squarely fall within the jurisdiction of special bench and not regional bench.sd/- sd/- sd/-(d.c. mandal) (harish chander) (s.d. jha)member member vice-president 14. in accordance with the decision of the majority of members constituting the bench, the question of eligibility of respondents to benefit of notification no. 201/79-ce dated 4-6-1979 is held as a matter falling within the jurisdiction of special bench of the tribunal and not regional bench. in view of this finding, registry shall fix a suitable date for hearing of the appeal before this bench.

Judgment:
1. The issue involved in the two appeals relates to the eligibility of the respondents for benefit under notification No. 201/79-C.E., dated 4-6-1979. When the appeals came up before Special Bench-C for hearing, Shri A.S. Sunder Rajan, appearing for the Department, raised an objection that the appeals will have to be heard by the concerned Regional Bench and not by a Special Bench. The Bench took note of the fact (as mentioned in its order dated 19-8-1986) that appeals involving the question of eligibility for benefit under notification No.201/79-CE have been dealt with by Regional Benches as well as by Special Benches details of such appeals being given in the order dated 19-8-1986. On a request of the said Bench the President has directed that this Bench of five Members may go into the question regarding jurisdiction as a-preliminary issue and that if this Bench holds that the appeals fall within the jurisdiction of a Special Bench it may proceed further and hear the appeals on merits and that in case the Bench holds that the matter falls within the jurisdiction of a Regional Bench this Bench may record its finding on that issue and the matter may then be referred back to the President for further directions. It is in accordance with the said directions of the President that we have heard submissions on the question of jurisdiction of this Special Bench to hear the appeals.

2. We have heard Shri Sunder Rajan for the Department and Shri B.K.Gupta, Advocate for the respondents.

3. Shri Sunder Rajan submitted that though in the hearing on 19-8-1986 it was his submission that the appeals lay within the jurisidction of a Regional Bench he is now, on further consideration, of the view that the appeals lie within the jurisdiction of a Special Bench but that he would not like to take a firm stand on the said matter and would leave it to us to give a ruling and that he would make his submissions on that footing. We may note at this stage itself that in his turn Shri B.K. Gupta submitted that the appeals lie within the jurisidction of a Special Bench only. Thus at present the Revenue as well as the assessee are of the view that the appeals lie within the jurisdiction of a Special Bench. But since jurisdiction could not be conferred by consent of parties we have heard submissions of both sides and have bestowed our careful consideration on the issue.

4. The issue before us revolves round the words of Section 35D(2) of the Central Excises and Salt Act. The same reads as follows: "Every appeal against a decision or 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 the goods for purposes of assessment, shall be heard by a Special Bench constituted by the President for hearing such appeals and such Bench shall consist of not less than three members and shall include at least one judicial member and one technical member." 5. Under the provisions thereof any appeal against a decision or order which relates amongst other things (and need not necessarily exclusively) to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purpose of assessment shall be heard by a Special Bench. Admittedly no dispute as to value of goods for purpose of assessment is involved in these appeals. It has therefore to be seen whether the decision or order in appeal before us related, among other things, to the determination of any question having a relation to the rate of duty of excise for purpose of assessment. Shri Sunder Rajan's submission (with which Shri Gupta also concurs) is that the world "assessment" is of wide import and therefore the process leading to ascertainment of entitlement to benefit under the exemption notification would be a step in the process of assessment relating to the rate at which duty is payable and hence the present appeals will have to be heard by a Special Bench. It was put to him whether the dispute in the present appeals does not in the end relate to the quantum of duty to be deducted in terms of the benefit under notification, rate of duty on the goods manufactured, as well as the rate of duty on the inputs used, being the normal effective rates only and, therefore, there would be no dispute relating to the rate of duty of excise for purposes of assessment. It was enquired whether in the above view the dispute in these appeals (or the dispute in the proceedings before the lower authorities leading to the orders under appeal) would in any manner be a dispute regarding the rate of duty of excise. The submission of both sides was that in so far as the process of assessment led to the determination of the quantum of duty payable and that, in turn, depended upon the applicability of the exemption notification, the process of assessment involved determination of the effective rate at which the duty was payable under the notification for purpose of assessment and hence the appeals lie within the jurisdiction of a Special Bench.

6. The provisions of rule 8 of the Central Excise Rules (under which the exemption notification had been issued) were also referred to by the Bench during the arguments and submissions were heard whether the words of rule 8 would furnish an indication as to the nature of the dispute that may arise on the applicability of the notification being questioned and whether that dispute would not be one relating to the rate of duty of excise for purpose of assessment.

7. Notification No. 201/79 had been issued by the Central Government in exercise of its powers under Rule 8 of the Central Excise Rules, the said rule reads as follows: 1) The Central Government may from time to time, by notification in the Official Gazette, exempt (subject to such conditions as may be specified in the notification) any excisable goods from the whole or any part of duty leviable on such goods.

2) The (Central Board of Excise & Customs) may by special order in each case exempt from the payment of duty, under circumstances of an exceptional nature, any excisable goods.

3) An exemption under Sub-rule (1) or Sub-rule (2) in respect of any excisable goods from any part of the duty of excise leviable thereon (the duty of excise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any excisable goods in the manner provided in this sub-rule shall have effect subject to the condition that the duty of excise chargeable on such goods shall in no case exceed the statutory duty.

Explanation : "Form or method", in relation to a rate of duty of excise, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable." 8. In terms of notification No. 201/79 the manufacturer was entitled, in paying duty on the manufactured goods, to calculate the normal effective duty and deduct therefrom the duty of excise paid on the inputs which fell under T.I. 68 CET. Thus what was deductible' was the duty at the effective rate on the inputs falling under T.I. 68 CET.This must to be deducted from the duty payable on the final manufactured goods calculated at the normal effective rate. Therefore, there would be no question as to the rate at which excise duty would be payable either on the input goods or the finally manufactured goods, so far as the normal effective rate on them is concerned. The question is whether in the process of calculation of the actual duty payable on the final goods in the manner mentioned earlier, a question could be said to arise in relation to the rate of duty of excise on the final goods for purpose of assessment.

9. As already mentioned, the duty payable on the final goods would be the normal duty payable on such goods but for this notification, less the duty paid on the input goods falling under T.I. 68. This final effective duty need not be uniform for all persons manufacturing similar goods and may be likely to vary from person to person, depending upon the quantity of the input goods falling under T.I. 68.

In fact, it may even be likely that for the same manufacturer the quantum of duty on unit goods may vary from batch to batch. In the circumstances it appears to us that what would be deductible is a particular amount calculated at the effective rate on the input goods falling under T.I. 68 and it would be this amount that would be in dispute in cases where the applicability of benefit under notification No. 201/79 is in issue. Since the quantum of this amount is to be calculated at the normal effective rate it appears to us that the resolution of the dispute as to entitlement of benefit under notification No. 201/79 would not involve a determination of any question having relation to the rate of duty of excise payable either on the input goods falling under T.I. 68 or the finally manufactured goods on which duty is to be paid after taking benefit under notification No. 201/79.

10. In the circumstances we hold that the two appeals fall within the jurisdiction of a Regional Bench only and not a Special Bench.

S.D. Jha, Vice-President for himself and for Harish Chandra (J) and D.C. Mandal (T), Members 11. I have carefully gone through the order proposed by brother Chari, Member (Judicial) but I have not been able to persuade myself into agreeing with the order. I, therefore, record my views separately.

12. The facts of the case, relevant provisions and the arguments advanced by the parties have been set out by brother Chari and their further repetition appears unnecessary. Notification No. 201/79 has been issued in exercise of powers vested in the Central Government under Rule 8(1) of Central Excise Rules, 19H (reproduced in toto by brother Chari in his order). From Sub-rule (1) it would be seen that it empowers the Central Government to exempt subject to specified conditions any excisable goods from the whole or any part of the duty leviable on such goods. Sub-rule (3) inter alia provides that this exemption may be granted in a form or method different from the form or method in which the statutory duty is leviable. The relief granted by the notification in respect of adjustment of duty paid on inputs from duty payable on the finished product would appear relatable to Sub-rule (3). Nevertheless meaning of Sub-rule (3) and exemption granted in a different form in exercise of power under this sub-rule would still be controlled by the power flowing and meaning of Sub-rule (1). Thus viewed, the notification must be held only to be an exemption to the finished goods from whole or any part of duty leviable on finished goods.

13. The above apart, an answer to the present problem lies in the meaning of the expression "to the determination of any question having relation to the rate of duty of excise" occurring in section 35D(2) of Central Excises and Salt Act, 1944 reproduced by brother Chari in his order. It is to be remembered that the expression is riot "determination of any question as to the rate of duty of excise" but "having relation to the rate of duty of excise". In T.P. Mukherjee's Law Lexicon Vol. 2, 1982 Edition, the meaning of the words "relating to or in relation to" on the authority of a Madras High Court decision is given as follows - "Such words as "relating to or in relation to" are words of comprehensiveness which might both have a direct significance as well as an indirect significance depending on the context. They are not words of restrictive content and ought not to be so construed. - State Wakf Board, Madras v. Abdul Azees Sahib, AIR 1968 Mad 79 at 81 (1967) 1 Madras I.J. 190 : Mad L.W. 170"..

In view of this meaning, even though the notification may have no direct significance as to determination of any question as to rate of duty, it does have an indirect significance because ultimately the question would be what is the rate of duty on the finished excisable goods. Thus viewed I have no doubt that regard being had to the expression used in Section 35D(2) of the Act, the matter would squarely fall within the jurisdiction of Special Bench and not Regional Bench.Sd/- Sd/- Sd/-(D.C. Mandal) (Harish Chander) (S.D. Jha)Member Member Vice-President 14. In accordance with the decision of the majority of Members constituting the Bench, the question of eligibility of respondents to benefit of Notification No. 201/79-CE dated 4-6-1979 is held as a matter falling within the jurisdiction of Special Bench of the Tribunal and not Regional Bench. In view of this finding, Registry shall fix a suitable date for hearing of the appeal before this Bench.