Case Note & Summary
The case involves a reference to a Full Bench of the Bombay High Court to determine the appealability of a Tribunal order regarding excisability of goods. The Commissioner of Central Excise appealed against an order of the Customs, Excise and Service Tax Appellate Tribunal (Tribunal) dated 12th November, 2013, which held that certain goods were not marketable and thus not excisable under Chapter 37 heading 3707 of the Central Excise Tariff Act, 1985. During the hearing of the appeal under Section 35G of the Central Excise Act, 1944 (the Act), the Division Bench was confronted with the issue of whether such an order is appealable to the High Court or only to the Supreme Court. The Division Bench referred two questions of law to the Full Bench: (a) whether the question of taxability or excisability of goods is an issue of rate of duty under Section 35L(2) of the Act, applicable even to orders passed prior to the insertion of sub-section (2) on 6th August, 2014; and (b) whether the amendment inserting sub-section (2) is clarificatory or prospective. The Full Bench analyzed Sections 35G(1) and 35L(1) and (2) of the Act. It held that the question of excisability or marketability of goods is intrinsically linked to classification and rate of duty, and thus falls within the ambit of 'rate of duty' under Section 35L(2). Consequently, such orders are appealable only to the Supreme Court, not the High Court. The Full Bench further held that the amendment inserting Section 35L(2) is clarificatory in nature, as it merely codifies the existing legal position that questions relating to rate of duty are exclusively appealable to the Supreme Court. Therefore, the amendment applies retrospectively to all pending appeals, including those from orders passed before 6th August, 2014. The Full Bench answered both questions in the affirmative, holding that the appeal before the Division Bench was not maintainable and should be returned to the appellant for appropriate remedy before the Supreme Court.
Headnote
A) Central Excise - Appeal - Rate of Duty - Section 35G(1) and 35L(1) and (2) of the Central Excise Act, 1944 - The question of excisability or marketability of goods is a question relating to rate of duty, as classification and rate are interdependent. Therefore, an order of the Tribunal on such issue is appealable only to the Supreme Court under Section 35L(2), even if the order was passed before the insertion of sub-section (2) on 6th August, 2014. (Paras 1-30) B) Central Excise - Amendment - Clarificatory or Prospective - Section 35L(2) of the Central Excise Act, 1944 - The amendment inserting sub-section (2) to Section 35L is clarificatory in nature, as it merely clarifies the existing legal position that questions of rate of duty are appealable only to the Supreme Court. It applies to all pending appeals, including those from orders passed prior to the amendment. (Paras 31-40)
Issue of Consideration
Whether the question of taxability or excisability of goods is an issue of rate of duty arising from orders of the Tribunal which are appealable only to the Supreme Court in terms of Section 35L(2) of the Act applies even to appeals from order of the Tribunal passed prior to 6th August, 2014 (i.e. the date of insertion of Sub-section (2) to Section 35L of the Act)? and Whether the amendment made to Section 35L of the Act on 6th August, 2014 by insertion of sub-section (2) therein, is clarificatory or prospective in nature?
Final Decision
The Full Bench answered both questions in the affirmative: (a) The question of excisability of goods is an issue of rate of duty and appealable only to the Supreme Court under Section 35L(2) of the Act, even for orders passed prior to the insertion of sub-section (2); (b) The amendment inserting Section 35L(2) is clarificatory in nature and applies retrospectively. Consequently, the appeal before the Division Bench was held not maintainable and directed to be returned to the appellant for appropriate remedy before the Supreme Court.
Law Points
- Excisability of goods is a question of rate of duty
- Section 35L(2) applies to appeals from orders passed prior to its insertion
- Amendment inserting Section 35L(2) is clarificatory
