AIT-2012-288-HC
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION No. 1667 of 2012
With
SPECIAL CIVIL APPLICATION No. 2997 of 2012
With
SPECIAL CIVIL APPLICATION No. 1625 of 2012
Darshan Boardlam Ltd. & 1 - Petitioner(s)
Versus
Union of India Thro Secretary & 3 - Respondent(s)
MR PM DAVE and MR DK TRIVEDI for Petitioner(s) : 1 - 2.
NOTICE UNSERVED for Respondent(s) : 1,
MR RJ OZA for Respondent(s) : 2 - 4.
MR HRIDAY BUCH for Respondent(s) : 2 - 4.
Coram : The Acting Chief Justice Mr.Bhaskar Bhattacharya and Mr.Justice J.B.Pardiwala
Date of Judgment : 03/08/2012
AIT Head Note: Bagasse based plain and pre-laminated particle boards falling under
chapter Heading No.4410 of the Central Excise Tariffs Act, 1985 are eligible for full
exemption under Notification No.6/2006-CE dated 1st March 2006 (Serial No.82).
J U D G M E N T
(Per : Mr. Justice J.B.Pardiwala)
As common questions of fact and law are involved in the above captioned batch of petitions,
they were all heard together and are being disposed of by this common judgment and order.
The question of law which falls for our consideration is as to whether the Bagasse based
plain and pre-laminated particle boards falling under chapter Heading No.4410 of the
Central Excise Tariffs Act, 1985 are liable for payment of excise duty @ 8% ad-valorem as
provided under Notification No.4/2006-CE dated 1st March 2006 (Serial No.87) or eligible
for full exemption under Notification No.6/2006-CE dated 1st March 2006 (Serial No.82).
INTRODUCTORY FACTS OF SCA NO.1625 OF 2012
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By way of this petition, the petitioner, a private limited company engaged in the business of
manufacturing of plain particle boards and pre-laminated particle boards popularly known as
'Bagasse boards' which are goods falling under Chapter 44 of the First Schedule to the
Central Excise Tariffs Act, 1985, has prayed for a writ upon the respondents, quashing and
setting aside the order dated 21st December 2011 passed by the Commissioner of Central
Excise, Customs and Service Tax, Surat-II and has also prayed for a further relief to
declare that the goods manufactured by the petitioner, namely, Bagasse boards were
chargeable to nil rate of duty under Serial No.82(vi) of Table to Notification No.6/2006CE.
INTRODUCTORY FACTS OF SCA NO.2997 OF 2012
By way of this petition, the petitioner, a private limited company engaged in the business of
manufacturing of plain particle boards and pre-laminated particle boards popularly known as
'Bagasse boards' which are goods falling under Chapter 44 of the First Schedule to the
Central Excise Tariffs Act, 1985, has prayed for a writ upon the respondents, quashing and
setting aside the order dated 28th December 2011 passed by the Commissioner of Central
Excise, Customs and Service Tax, Surat-II and has also prayed for a further relief to
declare that the goods manufactured by the petitioner, namely, Bagasse boards were
chargeable to nil rate of duty under Serial No.82(vi) of Table to Notification No.6/2006CE.
INTRODUCTORY FACTS OF SCA NO.1667 OF 2012
By way of this petition, the petitioner, a private limited company engaged in the business of
manufacturing of plain particle boards and pre-laminated particle boards popularly known as
'Bagasse boards' which are goods falling under Chapter 44 of the First Schedule to the
Central Excise Tariffs Act, 1985, has prayed for a writ upon the respondents, quashing and
setting aside the panchnama and the detention memo dated 21st May 2012 and has further
prayed for a writ upon the respondents directing them to release the goods and the
documents detained and seized respectively vide detention memo and panchnama dated 21st
May 2012.
I. Case of the Petitioners :
The petitioners are engaged in the business of manufacturing of plain particle boards and
pre-laminated particle boards popularly known as 'Bagasse boards', which are goods falling
under Chapter 44 of the First Schedule to the Central Excise Tariffs Act, 1985. According
to the petitioners, Bagasse is remains of sugarcane after the juice has been extracted by
pressure between rolls of a mill.
Particle boards falling under Heading 4410 are, however, a flat product manufactured in
various lengths, widths and thicknesses by pressing or extrusion, and it is usually made from
wood chips or particles obtained by the mechanical reduction of round-wood or wood
residues, and also from other ligneous materials such as fragments obtained from Bagasse,
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bamboo, cereal straw, or from flax or hamp shives. The Central Government issued a
notification under Section 5A of the Central Excise Act being Notification No.6/2006-CE
dated 1st March 2006, thereby granting exemption as well as concessional rate of duties
for various goods. At Serial No.82 of the Table of this Notification “Bagasse boards” are
classified at clause (vi) and rate of duty prescribed for these goods is nil.
The petition company is a member of All India Agro Boards Association and the company
came to know from the Association that the goods in question were chargeable to nil rate of
duty and that other members of the Association at Kolhapur, State of Maharashtra, were
allowed to clear these goods at nil rate of duty. Petitioner wrote a letter dated 1st June
2006 requesting the Assistant Commissioner for clarification whether Bagasse boards
manufactured by the petitioner were chargeable to nil rate of duty or not.
The petitioner did not receive any response from the excise authorities and, therefore, one
more letter dated 26th June 2006 was addressed to the Assistant Commissioner showing
therein names and details of five manufacturers of similar goods who were not paying any
excise duty and clarification was once again sought by the petitioner from the Assistant
Commissioner.
As there was no reply at the end of the Assistant Commissioner or from any other excise
authorities, the petitioner started clearing their goods, namely, Bagasse boards at nil rate
of duty.
It is the case of the petitioner that, however, they have been issuing central excise invoices
for each of the clearances and the petitioner has also been submitting monthly reports as
prescribed under the Central Excise Rules, 2002 showing therein the details of all the
quantities of Bagasse boards cleared by the petitioner.
In response to the letters dated 1st June 2006 and 26th June 2006 as referred to above,
the Superintendent of Central Excise ultimately wrote two letters dated 12th December
2006 and 21st December 2006 asking the petitioner to provide with the details of rawmaterial used in the product in question and also the manufacturing process.
The petitioner submitted a detailed letter dated 26th December 2006 furnishing the
requested information as sought for to the Range Superintendent.
The petitioner did not receive any further letter or communication from the Central Excise
authorities, and at the same time, the petitioner was not asked that he should not clear
Bagasse boards at nil rate of duty and, therefore, the petitioner continued clearing the
goods at nil rate of duty.
Ultimately, the Additional Commissioner of Central Excise issued a show-cause notice
F.No.V (CH.44) 15-07/Dem/07 dated 20 th June 2007, proposing to recover a sum of
Rs.28,75,624=00 as excise duty on the quantities of Bagasse boards cleared by the
petitioner company from June 2006 to March 2007 on the ground that the goods were
covered under another Notification No.4/2006 dated 1st March 2006 whereunder
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concessional rate of 8% duty was prescribed for such goods under Serial No.87 and,
accordingly, the petitioner was liable to pay excise duty at concessional rate of 8% ad
valorem.
Thereafter, the Range Superintendent, once again addressed a letter dated 7th August
2007 and requested the petitioner to submit details of plant and machinery, raw-material
and process of manufacture in brief for the goods in question.
The petitioner, once again, addressed a letter dated 23rd August 2007 enclosing a copy of
its previous letter dated 26th December 2006 by which all informations and details were
submitted.
In the meanwhile, samples of goods manufactured by the petitioner were also taken by the
department and were sent for analysis to the Chemical Examiner, Central Excise
department.
The report of the departmental Chemical Examiner came to be communicated to the
petitioner by the Range Superintendent vide letter dated 14th September 2007 suggesting
that the goods were made of Bagasse and Bagasse board is chargeable to nil rate of duty
under Serial No.82 of Notification No.6/2006-CE. However, it was suggested by the Range
Superintendent under his letter dated 14 th September 2007 that the petitioner should pay
duty at concessional rate of 8% under another Notification No.4/2006-CE. A detailed
representation was submitted by the petitioner dated 20th September 2007 to the Range
Superintendent explaining as to how the goods in question being Bagasse boards were
chargeable to nil rate of duty.
The petitioner also submitted that the directions to pay duty @ 8% ad valorem was not legal
and the petitioner also requested for a copy of the complete report of the Chemical
Examiner.
On 7th/8th February 2008, the Preventive Officers of the Central Excise Department, all
of a sudden, came down at the factory premises of the petitioner and seized not only the
books and registers maintained by the petitioner but also the goods valued at
Rs.25,94,000=00 on the ground that they were liable for confiscation.
The goods were handed over to the petitioner for safe custody with a direction not to
dispose of or deal with the same without an order in writing from the Central Excise
Officer.
Due to such action on the part of the authorities, the petitioner submitted a representation
dated 8th February 2008 to the Commissioner, Surat-II and also requested the Assistant
Commissioner, Ankleshwar vide order dated 12th February 2008 to release the seized
goods. However, a communication dated 13 th February 2008 was received from the
Superintendent by which the petitioner was directed to clear the goods on payment of duty
under Notification No.4/2006-CE as amended from time to time on the basis that the goods
were “100% wood-free plain or pre-laminated particle or fiber board made from sugarcane
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Bagasse or other agro-waste” attracting excise duty @ 8% ad valorem under Notification
No.4/2006- CE.
The petitioner was left with no other option but to approach their Association and brought
the above actions taken against them by the Central Excise authorities, to the notice of the
Association and thereupon the petitioner received a letter dated 14th February 2008 from
the Association confirming that no such action was being taken against any of the members
manufacturing similar goods in other States, and all such similarly situated manufacturers
were allowed to clear the same goods at nil rate of duty without any objection.
The petitioner, therefore, approach this Court by filing Special Civil Application No.3540 of
2008 on 21st February 2008. A Division Bench of this Court (Coram : M.S.Shah and Ravi
R.Tripathi, JJ.), after hearing both the sides, passed the following order dated 28th
February 2008:
“RULE.
Heard Mr Paresh Dave for the petitioners and Mr Harin Raval, learned Assistant
Solicitor General for the respondents on the question of interim relief.
Having regard to notification No.6/2006-C.E, dated 1.3.2006 bearing General
Exemption No.52C wherein item No.82 specifically provides for Nil rate of duty for
Bagasse Board and having regard to the fact that the other notification No.4/2006C.E., dated 1.3.2006 wherein item No,87 referring to 100% wood free plain or prelaminated particle or fiber-board, made from sugarcane Bagasse or other agrowaste, providing for 8% rate of duty is substituted by the entry “all goods” and
more particularly having regard to the fact that manufacturers of the same product
in the State of Maharashtra are subjected to Nil rate of duty, which fact the
petitioner has been pointing out since June 2006 and having regard to the decisions
of this Court in (i) Ralli Engine Ltd. Vs. Union of India & others, reported in 2004
(62) RLT 607(Guj.); (ii) Ralli Engine Ltd. Vs. Union of India & others, reported in
2006 (72) RLT 721 (Guj.); (iii) Ambica Meta Yarn Mfg. Co. Vs. Superintendent,
Central Excise & others, reported in 1982 (2) GLR 155; and J.D. Patel Vs. Union of
India, reported in 1978 (2) ELT (J540) (Guj.). , we direct the respondents to release
the goods seized under panchnama dated 7/8.2.2008, subject to the condition that
the petitioner Company furnishes the bond for the amount of duty which may be
leviable as per the Department's case at the rate of 8%, meaning thereby, the
petitioners will be required to furnish the bond for the amount of duty (which may
be leviable according to the Department) on the stock being cleared from time to
time till the matter is decided pursuant to the show cause notice dated 20.6.2007
at Annexure-J to the petition.
It is clarified that there is no interim stay against proceeding with the show cause
notice and the adjudication thereon.”
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Despite the fact that vide order dated 28th February 2008 passed by the Division Bench of
this Court the goods seized were ordered to be released, the authorities did not deem fit
to adjudicate the issue and decided once and for all as to whether the petitioner was liable
to pay the excise duty @ 8% ad valorem or not but, instead, kept on issuing periodical showcause notices to the petitioner for the goods cleared from April 2007 to May 2011 in
addition to the show-cause notice dated 20th June 2007 issued for the period from June
2006 to March 2007.
It is the case of the petitioner that show-cause notices were issued to few of other
manufacturers located in other States also for denying exemption of Notification
No.6/2006-CE on the same ground that the goods manufactured by them were made of
Bagasse but they were in the nature of laminated particle boards, pre-laminated particle
boards, MDF and HDF Bagasse boards and Bagasse boards with surface covered with
melamine impregnated paper and were therefore covered under another Notification
No.4/2006-CE as amended. However, the Commissioner in charge of one of the largest
manufactures of similar goods, namely, Bajaj Eco-Tech Product Private Limited being the
Commissioner of Central Excise, Lucknow, adjudicated the issue and held vide order dated
28th November 2009 that all the varieties of goods as referred to above were Bagasse
boards chargeable to nil rate of duty under Notification No.6/2006-CE.
Accordingly, the Commissioner, Lucknow dropped the proceedings against Bajaj Eco-Tech
Product Private Limited by virtue of the order dated 28th November 2009.
The Commissioner of Central Excise, Pune also followed the same order and dropped
proceedings of similar nature initiated against one M/s.Eco Board Industries Limited,
District Sholapur, by holding that such goods were nothing but Bagasse boards chargeable
to nil rate of duty.
In the case of one another manufacturer, namely, Jolly Board Limited, District Sangli,
similar proceedings were initiated but the Commissioner of Central Excise (Appeals), Pune,
decided the appeals in favour of the assessee vide order dated 30th April 2010 and allowed
exemption of Notification No.6/2006-CE to M/s.Jolly Board and the committee of
Commissioners of the Excise department also accepted the order of the Commissioner
(Appeals).
In case of another manufacturer M/s.Vilson Particle Boards Industries Limited, District
Kolhapur, the Joint Commissioner of Central Excise, Kolhapur passed an order dated 21st
September 2009 relying upon the order of the Commissioner (Appeals), Pune referred to
above, and dropped the proceedings by withdrawing 32 show cause-cum-demand notices.
It is the case of the petitioner that all the orders referred to above passed by the
Commissioner, Lucknow in case of Bajaj Eco-Tech Private Limited, Commissioner of Central
Excise, Pune-III in case of Eco Board Industries Limited, and the order passed by the Joint
Commissioner of Central Excise, Kolhapur in case of Vilson Particle Boards Industries
Limited have been accepted by the Central Excise department and all these manufacturers
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are allowed to clear similar goods at nil rate of duty under Notification No.6/2006-CE even
as on today.
It is the case of the petitioner that the above referred orders were brought to the notice
of respondent no.2 herein but still respondent no.2, vide order dated 21st December 2011,
confirmed the demand of duty raised under all the eight show-cause notices with interest
and penalty for each of the show-cause notices. The respondent no.2 held that the goods in
question were particle board, though made of sugarcane Bagasse and classifiable under
S.H.44103210 and 44109090 of the Tariff, but were not chargeable to nil rate of duty
because the petitioner had not discharged the burden to prove that the exemption of
Notification No.6/2006-CE was admissible and that Bagasse board was different from plain
or prelaminated particle or fiber board made from sugarcane Bagasse.
Hence, this petition challenging the order OIO No.01- 09/Dem/Surat/2011 dated 21st
December 2011 passed by respondent no.2.
II. Case of the Respondents :
On notice being served upon the respondents, they have appeared and have opposed this
petition by filing an affidavit-in-reply.
In the affidavit-in-reply filed by respondent no.3, a preliminary objection with regard to
maintainability of the present petition has been raised, as according to the respondents, the
impugned order is appellable before the Appellate Tribunal under Section 35B of the
Central Excise Act, 1944. Such being the position, it is the case of the respondents that
this petition could not be entertained and the petitioner should be asked to prefer an
appeal under Section 35B of the Central Excise Act, 1944.
It is also the case of the respondents that since the issue is with regard to determination
of rate of duty and to the value of goods for the purpose of assessment, no appeal would lie
before this Court even against the order of the Appellate Tribunal passed under Section
35B of the Act but straightway the appeal would lie before the Supreme Court. Under such
circumstances, when High Court has no jurisdiction to even entertain an appeal against the
order passed by the Appellate Tribunal under Section 35B of the Act, then a writ petition
under Article 226 of the Constitution of India could not be entertained at any rate.
The petition raises disputed questions of facts which are incapable of being determined in
the proceedings of writ petition filed under Article 226/227 of the Constitution of India.
Petitioners are holding Central Excise Registration and are engaged in manufacturing of
excisable goods viz. plain and prelaminated particle boards falling under Chapter 44103210
of the Central Excise Tariff Act, 1985. Under the self-assessment scheme, the petitioner
is required to determine liability of duty in respect of excisable goods manufactured by it
as per the Central Excise Law and pay the Central Excise duty at the applicable rate.
According to the respondents, the petitioner is obliged to pay the duty within time at
applicable rates availing correct exemption. However, on going through the ER-1 returns, it
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was found that the petitioner deliberately cleared their finished goods such as plain and
pre-laminated particle boards without payment of central excise duty and upon claiming
exemption under Notification No.6/2006-CE dated 1st March 2006 after crossing the SSI
exemption limit of Rs.1 crore. According to the respondents, the petitioner cleared the final
product without payment of central excise duty by way of wrong availment of Notification
No.6/2006-CE dated 1st March 2006 (Serial No.82) instead of making payment of duty as
per Notification No.4/2006-CE dated 1st March 2006 (Serial No.87), which is in
contravention to Rule 11 and Rule 4 of the Central Excise Rules, 1944.
It is also the case of the respondents that as the petitioners were clearing the final
product without payment of central excise duty by wrongly availing Notification No.6/2006CE dated 1st March 2006 (Serial No.82) instead of Notification No.4/2006-CE dated 1st
March 2006 (Serial No.87), which is in contravention to Rule 11 and Rule 4 of the Central
Excise Rules, 1944, separate show-cause notices for different period were issued. The said
show-cause notices were adjudicated by the adjudicating Commissioner by following due
process of law after giving opportunity of hearing to the petitioner and taking into
consideration all relevant materials and evidence on record including manufacturing process.
According to the respondents, the petitioner is engaged in the manufacturing of excisable
goods i.e. plain and pre-laminated particle boards falling under Chapter 4410. Plain particle
board and prelaminated particle board are goods which have distinct commercial identity
and are known as such in common trade parlance. The petitioners, with a malafide intention,
have used the term “Bagasse board” instead of “plain particle board and pre-laminated
particle board” to wrongly avail the benefit of exemption Notification No.6/2006-CE dated
1st March 2006. The petitioner's contention regarding the product name as “Bagasse board”
is, therefore, incorrect.
According to the respondents, the unit is manufacturing plain particle boards and prelaminated particle boards which, in the first place are not found to be “Bagasse board”. Even
if it is laminated, it cannot be considered as a pre-laminated Bagasse board. The product is
manufactured using Bagasse and synthetic resins. The initial product is plain particle board
which is also cleared in the same form and also used for manufacturing of pre-laminated
board (both as one sided and both as pre-lamination) for which they will be using melamine
treated decorative paper. Accordingly, these boards are correctly chargeable to duty @ 8%
(4% and 10% at relevant time) under Notification No.4/2006-CE dated 1st March 2006
(Serial No.87) as it is more specific than Serial No.82 of Notification No.6/2006-CE dated
1st March 2006.
According to the respondents, the products such as plain particle board and pre-laminated
particle board whose main rawmaterial is sugarcane Bagasse is not the same goods but have
different and distinct physical and chemical properties as well as commercial perception.
Further the process which plain particle board is subjected to, leading to emergence of prelaminated particle board amounts to “manufacture” under Section 2(f) of the Act, 1944 and,
therefore, the said goods rightly attract duty under Notification No.4/2006-CE dated 1st
March 2006 (Serial No.87) and it is more specific than Serial No.82 of Notification
No.6/2006-CE dated 1st March 2006 and not chargeable to nil rate of duty.
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According to the respondents, the say of the petitioner that the adjudicating Commissioner
(respondent no.2 herein) had no jurisdiction to take a different view than the one taken by
the Commissioners at Sholapur, Pune, Lucknow, is devoid of any merit.
Respondent no.2, while passing the impugned order, has in detail discussed the procedure of
manufacturing the final product by the petitioner. A specific reference to the dictionary
meaning to the product as well as prescription of Law and precedent is made in the impugned
order. All these elements are absent in the cases decided by the adjudicating
Commissioners which are relied upon by the petitioners. According to the respondents, the
decision rendered by a Commissioner has no precedent value. The adjudicating Commissioner
is bound by a decision of the Tribunal or Hon'ble High Court or Hon'ble Supreme Court but,
in any case, not bound by a decision rendered by a Commissioner of any other State. It is
also not correct to contend that except in the State of Gujarat in all other regions of the
country Bagasse boards are permitted to be cleared at nil rate of duty by applying
exemption Notification No.6/2006-CE.
In case of Bharat Pre-Lam Industries Limited, Commissioner of Central Excise, Bhopal,
declined to extend exemption benefit of Notification No.6/2006-CE and demanded duty
with interest by applying Notification No.4/2006-CE from the assessee manufacturing plain
particle board and pre-laminated particle board falling under Chapter Heading No.44103190
and 44103290 of the Central Excise Tariff Act, 1985.
According to the respondents, the petitioner is not entitled to any relief and the petition
deserves to be dismissed.
III. Legal Contentions on behalf of the Petitioner :
Mr.P.M.Dave, learned counsel appearing for the petitioner vehemently submitted that under
Article 226 of the Constitution of India, the High Court, having regard to the facts of the
case, has a discretion to entertain or not to entertain a writ petition. According to Mr.Dave,
the High Court has imposed upon itself certain restrictions, one of which is that, if an
effective and efficacious remedy is available, the High Court would not normally exercise its
jurisdiction.
But, the alternative remedy has been consistently held by the Supreme Court as well as by
this Court not to operate as a bar in atleast three contingencies, namely, (i) where the writ
petition has been filed for the enforcement of fundamental rights, or (ii) where there has
been a violation of the principles of natural justice, or (iii) where the order or proceedings
are wholly without jurisdiction.
Mr.Dave vehemently submitted that in the present case the petitioner is seeking
enforcement of his fundamental right to carry on trade or business. He is engaged in
manufacturing of plain particle board and pre-laminated particle board made out of Bagasse
on which no duty is being charged in other States except in the State of Gujarat.
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According to Mr.Dave, if in other States the goods in question are chargeable to nil rate of
duty and on the same goods if the petitioner has to pay a duty of 8% ad valorem, then it is
very difficult for the petitioner to compete in the business.
Under such circumstances, according to Mr.Dave this is a fit case wherein this Court may
exercise its writ jurisdiction under Article 226 of the Constitution of India without
relegating the petitioner to exhaust the alternative remedy of appeal before the Tribunal.
Mr.Dave submitted that if the goods are Bagasse boards then they are specifically covered
under Serial No.82(vi) of Notification No.6/2006-CE and hence are chargeable to nil rate
of duty. If the goods of the petitioner are similar to the goods of other manufacturers of
different States to whom benefit of Notification No.6/2006-CE is allowed and decisions
allowing such benefits are accepted by the CBEC as well as by the committees of Chief
Commissioner and Commissioners, then under such circumstances the Commissioner in
charge of one particular area i.e. Surat Commissionerate could not have taken a different
view in the matter.
According to Mr.Dave, the goods are admittedly manufactured using sugarcane Bagasse and
this fact is confirmed by the Chemical Examiner of the department itself. In the showcause notice as well as in the impugned order passed by the Commissioner, the goods are
described as plain particle board and pre-laminated particle board made of sugarcane
Bagasse. The raw-material is, thus, admittedly sugarcane Bagasse and other materials like
synthetic resins and decorative paper are also used because sugarcane Bagasse being agrowaste could not be converted into Bagasse board without using any binder and, therefore, it
is clarified under HSN also that particle board is normally agglomerated by means of an
added organic binder, usually a thermosetting resin. According to Mr.Dave, use of resin is a
must for producing a particle board, be it of wood chip or Bagasse or bamboo or cereal
straw or flax or hemp shives.
Mr.Dave further submitted that it is not clearly stated anywhere in the order passed by
the Commissioner nor in the affidavit-in-reply that the goods are not Bagasse board. The
only observation in this regard in the order as well as in the affidavit-in-reply is that the
product was plain or pre-laminated particle board made of sugarcane Bagasse. Even, when
the first petition being Special Civil Application No.3540 of 2008 was filed, an interim
order dated 28th February 2008 was passed after a bi-parte hearing. The goods in question
were considered and accepted to be Bagasse board by all the parties concerned. Thus,
according to Mr.Dave, the goods manufactured by the petitioner are “Bagasse boards” is an
indisputable fact in the present case.
The orders passed by the Commissioner of Pune, Joint Commissioner of Kolhapur and
Commissioner of Lucknow have been produced on record and the fact that these orders are
passed by the concerned Excise authorities and have been accepted by the Board as well as
by the committees is not disputed by the respondents.
Mr.Dave submitted that the goods manufactured by Eco Board Industries Ltd., District
Sholapur are described as “Plain Particle Board, Pre-laminated Particle Board and Veneered
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Particle Board, and the inputs for the manufacture of these goods are recorded as
sugarcane Bagasse, imported paper/melamine, veneer sheets, urea based glue and melamine
based glue and other chemicals in the order passed by the Commissioner of Central Excise,
Pune. It is also recorded in the order that the manufacturer had declared the goods as
“Pre-laminated Particle Board/Plain and Pre-laminated scrap board” in invoices and excise
duty at 8% was also paid by the manufacturer before claiming exemption of Notification
No.6/2006 [Serial No.82(vi)] by describing the product in the invoices as “Bagasse Board”
from 17th April 2006 onwards. Thus, the goods manufactured by Eco Board Industries Ltd.
were also admittedly Plain Particle Board and Prelaminated Particle Board made of sugarcane
Bagasse, and various materials in addition to sugarcane Bagasse were admittedly used by
this manufacturer; and thus the goods as well as their description have been absolutely
similar to the goods manufactured by the petitioners.
Mr.Dave further submitted that the goods manufactured by Vilson Particle Board
Industries Ltd., District Kolhapur are described as “Bagasse based Plain and Pre-laminated
Particle Boards” falling under Chapter Heading No.4410 in the order passed by the Joint
Commissioner of Central Excise, Kolhapur. It is recorded in the order that this
manufacturer was also paying excise duty prior to 1st May 2006 under Notification
No.4/2006 (Serial No.87) and thereafter the exemption of “Bagasse Board” under Serial
No.82 of Notification No.6/2006 was claimed for the products “Plain or Pre-laminated
Particle Board”. At para 2.1 of the order also, the goods are described as Bagasse Boards
commonly known as Particle Boards. Thus goods manufactured by this manufacturer of the
State of Maharashtra have also been absolutely similar to the goods of the petitioners
herein, and the goods were described also by this manufacturer of Maharashtra as Plain and
Pre-laminated Particle Boards made of sugarcane Bagasse.
Mr.Dave also submitted that the largest manufacturer of all i.e. Bajaj Eco-Tech Pvt. Ltd. of
Uttar Pradesh has also described their goods as “Bagasse based Particle Board, Bagasse
Board MDF and HDF”. In the order of the Commissioner of Central Excise, Lucknow, the
goods are described as above, and detailed description of the goods in the order also shows
that they were “Bagasse Board Particle Board” and “Bagasse Board MDF and HDF”, and the
issue was Bagasse based Particle Board and Bagasse Board MDF and HDF were “Bagasse
Board” within the meaning of Notification No.6/2006 dated 1st March 2006. This detailed
order also takes the same view that Bagasse based Particle Board and Bagasse based MDF
and HDF were exempt under Notification No.6/2006 and the assessee cannot be compelled
to pay duty on these goods under Notification No.6/2006.
Thus, the goods manufactured by this Uttar Pradesh based manufacturer have also been
absolutely similar to the goods manufactured by the petitioners.
Mr.Dave submitted that, therefore, the case of the respondents that the petitioner's
goods were different from those manufactured by the manufacturers situated in other
States is without any basis, and it is for the reason that the goods of all manufacturers
have been similar because all have used Bagasse with resins and paper or veneer for
decoration that the Commissioner, Surat has also not specifically shown in the impugned
order as to how the goods of the petitioners were not similar to the goods of other
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manufacturers. On the contrary, it is stated in the reply affidavit that the decision
rendered by a Commissioner had no precedent value, and thus the orders passed in cases
like Bajaj Eco Tech Products Ltd., Vilson Particle Board Industries Ltd., Jolly Board Ltd. are
sought to be bypassed for this reason, and not on the ground that the goods of these
manufacturers were different.
Mr.Dave submitted that it is, therefore, clear that Plain or Prelaminated Particle Board of
sugarcane Bagasse is only a description used with reference to the process of manufacture,
but otherwise the goods are known as Bagasse Board among the people who manufacture
them, the people who purchase them and sell them and the people who use them. All
manufacturers have described the goods as Bagasse Board, and also as Plain or Prelaminated Particle Board of sugarcane Bagasse, and therefore the respondents’ twin
submission that the petitioners’ goods were not Bagasse Board (because in addition to
sugarcane Bagasse, the petitioners use resins and decorative paper) and that the goods of
the petitioners were not similar to the goods manufactured by other manufacturers of
Maharashtra, Uttar Pradesh, Hyderabad etc. is wholly illegal and incorrect.
Mr.Dave further submitted that the Central Excise is a central levy and therefore it has to
be collected uniformly from all similarly situated manufacturers located all throughout the
country. If excise authorities of a particular Commissionerate or State do not allow benefit
of exemption to manufacturers located in that Commissionerate or State but other
manufacturers located elsewhere are allowed such exemption, then there is a violation of
Article 14 of the Constitution and also that of Article 19(1)(g) of the Constitution.
Article 14 forbids discrimination among similarly situated citizens, and Article 19(1)(g)
forbids unreasonable restriction on the fundamental right of doing business. Allowing
exemption for Bagasse Board manufactured by citizens located in the States of
Maharashtra, Uttar Pradesh and Hyderabad but not allowing the exemption to the
petitioners located in Surat Commissionerate results in denial of the right to equality
before the law for the petitioners and payment of excise duty for past period and also for
current period violates the petitioner’s fundamental right of Article 19(1)(g) also. These
actions are without jurisdiction and therefore a citizen has a fundamental right to invoke
Article 226 of the Constitution by filing a writ petition in this situation.
Mr.Dave contended that in view of the fact that manufacturers of similar product, namely,
Bagasse Board, or Plain and Pre-laminated Particle Board of Sugarcane Bagasse are allowed
exemption of notification No.6/2006, the action of the respondents in denying the same
benefit to the petitioners is discriminatory, in violation of Article 14 and also in violation of
Article 19(1)(g), and this action also violates the mandate of Article 265 because no tax
could be levied and collected except with the authority of law by virtue of Article 265 of
the Constitution; and therefore the discriminatory treatment given to the petitioners viz-aviz manufacturers of other States is without jurisdiction and unconstitutional. When the
excise authorities have thus acted without jurisdiction, a writ petition under Article 226 of
the Constitution is very well maintainable.
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Mr.Dave also contended that without seriously disputing that the goods manufactured by
Bajaj Ecotec Products Pvt. Ltd., Eco Board Industries Ltd., and Jolly Board Ltd. were similar
to the petitioner’s goods, the discriminatory treatment is sought to be justified in the reply
affidavit by referring to the orders passed by the Excise authorities of Bhopal in case of
one Bharat Pre-Lam Industries Ltd.; but the orders of Bhopal Excise Authorities do not
carry the Revenue’s case any further because these order were made on 23rd January 2009
(i.e. the OIO) and 26th May 2009 [i.e. the OIA by Commissioner (Appeals) – Bhopal]
whereas it is decided by the committee of Chief Commissioners and also by individual Chief
Commissioners in-charge of areas like Pune and Hyderabad in April 2009, September 2009
and January 2010 that plain and pre-laminated Bagasse Board was eligible for exemption
under notification No.6/2006. The file numbers of the letters dated 8th April 2009 by
Chief Commissioner, Hyderabad, dated 22nd September 2009 by Chief Commissioner, Pune
and also dated 7th January 2010 by the Chief Commissioner, Pune are referred to in the
order of the Commissioner, Pune – III Commissionerate. The details of the decision of the
committee of Commissioners and the Department taken after April 2010 when the
Commissioner (Appeals), Pune passed orders allowing benefit of the notification for similar
goods to Jolly Board and Eco Board Industries Ltd. are also recorded in the order of the
Joint Commissioner of Central Excise, Kolhapur. Thus, all these developments have taken
place after the Excise authorities of Bhopal Commissionerate denied exemption in January
2009 and May 2009 and, therefore, the respondent’s contention that benefit of
Notification No.6/2006 is denied for similar goods in Bhopal Commissionerate also is also
incorrect and unjustified. The letters issued by various Chief Commissioners and the
decisions taken by the committees of Chief Commissioners in allowing the exemption for
similar goods and in not filing appeals against orders rendered in favour of manufacturers of
Uttar Pradesh, Madhya Pradesh and Hyderabad are based on the clarification issued by the
Government of India as well as CBEC that the benefit of Notification No.6/06-CE would be
available to Pre-laminated Bagasse Board; and thus the clarifications of the Board and the
Government made in June 2007 and thereafter are countenanced and unreservedly followed
by all excise authorities in the above referred States. The action of denying the same
benefit to the petitioners on the ground that such decisions were not binding to another
Commissioner in another State is also without jurisdiction because it smacks of
unreasonable and arbitrary approach resulting in discrimination to the assessee in the State
of Gujarat.
Mr.Dave also contended that under Section 35E(1) of the Central Excise Act, the Board has
power to review orders passed by any Commissioner of Central Excise as an adjudicating
authority. But the adjudication orders passed by Commissioner of Central Excise, Pune and
that by the Commissioner of Central Excise, Lucknow are not reviewed by the Board nor by
the concerned committees of Chief Commissioners. As is recorded in the said orders of
Commissioner, Pune and also in the order of Joint Commissioner, Kolhapur in case of Vilson
Particle Board, conscious decisions have been taken by the Board as well as the committees
of Chief Commissioners for not filing appeals against these orders.
Any order passed by an Officer subordinate to the Commissioner of Central Excise can be
reviewed under Section 35E(2) by the Commissioner of Central Excise having jurisdiction
over such subordinate adjudicating authority. An order passed by a Commissioner (Appeals)
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as a First Appellate Authority can be reviewed by the committee of Commissioners under
Section 35B(2) of the Act. The order passed by the Joint Commissioner of Central Excise,
Kolhapur is accepted by the concerned Commissioner, and the orders passed by the
Commissioner (Appeals), Pune are accepted by the committee of Commissioners. Thus, the
Board, the committees of Chief Commissioners and the committees of Commissioners have
consciously decided not to file any appeal against any of these orders, and thus none of
these orders is reviewed by the Board or the competent committees.
Mr.Dave lastly contended that on the ground of discrimination, on the ground of violation of
Article 19(1)(g) and also on the ground of the conscious decisions of higher authorities like
the Board and the committees of Chief Commissioners and Commissioners not having been
followed; the order of the Commissioner, Surat is without jurisdiction and without any
authority in law, and therefore a writ petition under Article 226 of the Constitution of
India against such unauthorized action resulting in violation of the petitioner’s fundamental
rights is maintainable.
In support of the aforesaid contentions, Mr.Dave relied upon the following case-law :(i) Ralli Engine Limited v/s. Union of India and others [2004(62) RLT 607 (Gujarat)]
(ii) Ralli Engine Limited v/s. Union of India and others [2006(72) RLT 721 (Gujarat)]
(iii)Ambica Meta Yarn Manufacturing Company v/s. Superintendent, Central Excise,
and others [1982(2) GLR 155]
(iv)J.D.Patel v/s. Union of India [1978(2) ELT 450 (Gujarat)] (v)Paper Products
Limited v/s. Commissioner of Central Excise [1999(112) ELT 765 (SC)]
(vi)Union of India v/s. Aravali Mining and Chem (India) Pvt. Ltd. [2000(115) ELT 279
(SC)]
(vii)Whirlpool Corporation v/s. Registrar of Trade Marks [(1998)8 SCC 1]
IV. Legal Contentions on behalf of the Respondents :Mr.R.J.Oza, learned senior counsel appearing for the Revenue vehemently contended that
this petition may not be entertained as the impugned order under challenge is appellable
under Section 35G of the Act before the Appellate Tribunal. Mr.Oza vehemently contended
that there is one more reason as to why this petition should not be entertained. According
to Mr.Oza, against the order passed by the Appellate Tribunal under Section 35G of the
Act even an appeal before this Court would not lie and an appeal would directly lie before
the Supreme Court. This is suggestive of the fact that the Legislature has thought fit not
to provide for appeal before the High Court against the order passed by the Appellate
Tribunal, and if such is the position, then no writ petition under Article 226 of the
Constitution of India would be maintainable directly against the order passed by the
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Commissioner. Mr.Oza, therefore, urged that this Court may not entertain this petition and
relegate the petitioner to avail of the alternative remedy of appeal.
Mr.Oza further contended that there are highly disputed questions of fact involve in the
present petition and one of the disputed questions of fact is as to whether the goods in
question can be said to be Bagasse board. Mr.Oza invited our attention to form RC (annexed
at page 197 of the paper-book). Mr.Oza also invited our attention to part-4 of the form,
wherein the petitioner itself has written “plain and pre-laminated particle boards” as major
excisable goods manufactured, ware-housed or traded, whereas Bagasse from sugarcane has
been shown as major excisable goods used in the manufacture of final product. According to
Mr.Oza, it is a final product which is to be seen, which is plain and pre-laminated particle
board and not the goods or raw-material used in the manufacture of the final product.
Mr.Oza further submitted that the contention of the petitioner that the adjudicating
Commissioner (respondent no.2) could not have taken a different view than the one taken by
the Commissioners of different States, is devoid of any merit. Mr.Oza submitted that the
decision rendered by a Commissioner has no precedent value. The adjudicating Commissioner
is bound only by the decisions of the Tribunal or High Court or Supreme Court. Mr.Oza
submitted that the product manufactured by the petitioner company is plain particle board
and pre-laminated particle board which have distinct commercial identity and are known as
such in common trade parlance and, therefore, the petitioner's contention regarding the
product known as “Bagasse board” is incorrect. Mr.Oza submitted that, therefore, their
product is not entitled for exemption under Notification No.6/2006-CE dated 1st March
2006 (Serial No.82) at nil rate of duty, but it attracts 8% effective rate of duty under
Notification No.4/2006-CE dated 1st March 2006 (Serial No.87) as it is more specific than
Serial No.82 of Notification No.6/2006-CE dated 1st March 2006. Mr.Oza further
submitted that clarification dated 25th June 2007 made by the Board could not be
construed as an order under Section 37B of the Act and, therefore, it only being a letter
written by the Board to the Chief Commissioner of Patna, the clarification made thereunder
was not binding to the Central Excise officers. Mr.Oza, during the course of his
submissions, relied upon specimen orders issued by the Board under Section 37B of the Act
to substantiate that a reference to Section 37B of the Act is always made in the order
passed by the Board if it was under that section and only such order passed under Section
37B of the Act was binding to the Central Excise officers but, in any event, clarifications
issued by way of letters addressed to one or the other Central Excise Commissioners were
not binding. Mr.Oza lastly submitted that the contentions of the petitioner on the point of
discrimination can be canvassed before the CESTAT who would be in a better position to
examine the facts of the case, nature of the case and issue of admissibility of Notification.
Mr.Oza, therefore, urged that this petition deserves to be rejected. In support of the
aforesaid contentions, Mr.Oza, learned senior counsel relied on the following case-laws :
(i) Commissioner of Central Excise v/s. JBP Industries Limited [2011 (264) ELT 162
(Gujarat)]
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(ii) Commissioner of Customs, Bangalore v/s. Motorola India Limited [2012 (275) ELT
53 (Karnataka)]
(iii)Commissioner of Central Excise, Bangalore-III v/s. Personality Limited [2012
(276) ELT 297 (Karnataka)]
(iv)Union of India v/s. Guwahati Carbon Limited [2012 (278) ELT 26 (SC)]
(v)Commissioner of Customs, Bangalore v/s. BBS Pens (India) Pvt. Ltd. [2012 (278)
ELT 171 (Karnataka)]
(vi)Sadhana Lodh v/s. National Insurance Co. Ltd. [AIR 2003 SC 1561]
(vii)Bijoy Kumar Dugar v/s. Bidyadhar Dutta and others [AIR 2006 SC 1255]
(viii)Union of India v/s. Mangal Textile Mills (I) Pvt. Ltd. [2011 (269) ELT 3 (SC)]
(ix)Alembic Glass Industries Limited v/s. Union of India [1989 (97) ELT 28 (SC)]
(x)Union of India v/s. Zalcon Electronics [2010 (255) ELT 490 (SC)]
(xi)Maritime Collector v/s. Madura Coats Limited [2010 (259) ELT 37 (Madras)]
(xii)Commissioner of Customs and CEX v/s. Charminar Non-woven Limited [2004
(167) ELT 372 (SC)]
(xiii)V.V.Iyer of Bombay v/s. Jasjit Singh, Collector of Customs and others [AIR
1973 SC 194]
Having heard learned counsel for the respective parties and having gone through the
materials on record, the only question which falls for our consideration in this petition is as
to whether the Bagasse based plain and pre-laminated particle boards falling under chapter
Heading No.4410 of the Central Excise Tariff Act, 1985 are liable for payment of excise
duty @ 8% ad-valorem as provided under Notification No.4/2006-CE dated 1st March 2006
(Serial No.87) or eligible for full exemption under Notification No.6/2006-CE dated 1st
March 2006 (Serial No.82).
Before entering into the merits of the main issue, we propose to deal with the preliminary
contention of Mr.Oza, learned senior counsel appearing for the Revenue as regards the
maintainability of this petition on the ground of alternative efficacious remedy available to
the petitioner in the form of an appeal under Section 35G of the Act before the Appellate
Tribunal.
It is true that power of the High Court to issue prerogative writs under Article 226 of the
Constitution of India is plenary in nature and cannot be curtailed by other provision of the
Constitution of India or a Statute but the High Courts have imposed upon themselves
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certain restrictions on the exercise of such power. One of such restrictions is that if an
effective and efficacious remedy is available, the High Court would not normally exercise its
jurisdiction under Article 226 of the Constitution of India. But again, this rule of exclusion
of writ jurisdiction on account of availability of an alternative remedy does not operate as
an absolute bar to entertain a writ petition but is a rule of discretion to be exercised
depending on the facts of each case. On this aspect, the following observations by the
Constitution Bench of the Supreme Court in A.V. Venkateswaran, Collector of Customs v.
Ramchand Sobhraj Wadhwani and another, reported in AIR 1961 SC, which still holds the
field, are quite apposite :
“The passages in the judgment of this Court we have extracted would indicate (1)
that the two exceptions which the learned Solicitor General formulated to the
normal rule as to the effect of the existence of an adequate alternative remedy
were by no means exhaustive, and (2) that even beyond them a discretion vested in
the High Court to have entertained the petition and granted the petitioner relief
notwithstanding the existence of an alternative remedy. We need only add that the
broad lines of the general principles on which the Court should act having been
clearly laid down, their application to the facts of each particular case must
necessarily be dependent on a variety of individual facts which must govern the
proper exercise of the discretion of the Court, and that in a matter which is thus
preeminently one of the discretion, it is not possible or even if it were, it would not
be desirable to lay down inflexible rules which should be applied with rigidity in
every case which comes up before the Court.”
In Harbanslal Sahnia and another v/s. Indian Oil Corporation Limited and others, reported
in (2003)2 SCC 107, enumerating the contingencies in which the High Court could exercise
its writ jurisdiction in spite of availability of the alternative remedy, the Supreme Court
observed thus :
“...that the rule of exclusion of writ jurisdiction by availability of an alternative
remedy is a rule of discretion and not one of compulsion. In an appropriate case, in
spite of availability of the alternative remedy, the High Court may still exercise its
writ jurisdiction in at least three contingencies; (i) where the writ petition seeks
enforcement of any of the fundamental rights; (ii) where there is failure of
principles of natural justice or, (iii) where the orders or proceedings are wholly
without jurisdiction or the vires of an Act is challenged.”
We are of the view that on the facts of the present case, the preliminary contention or
objection as raised by the Revenue deserves to be rejected as it cannot be said that
exercise of writ jurisdiction in the present case is unwarranted. As rightly pointed out by
the learned counsel appearing for the petitioner that the controversy in the instant case
centers around the issue, that if the goods in question are chargeable to nil duty in other
States of the country and if such a decision has been accepted by the department, then
whether the petitioner who is a businessman carrying on business within the State of
Gujarat could be asked to pay duty @ 8% ad valorem on the same goods.
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We find substance and merit in the contention of Mr.Dave that in this country of stiff
competition it would be virtually very difficult for the petitioner to survive in the business.
Companies manufacturing pre-laminated plain particle board made of Bagasse in other
States of the country have not to pay any duty, whereas for the same product the
petitioner in this particular State is being asked to pay duty of 8% ad valorem. It is for this
reason that we are of the view that this writ petition seeks enforcement of fundamental
right to carry on trade or business without any discrimination of any nature. The present
petition is not the one in which the controversy centers around the issues which are
primarily questions of fact.
In Union of India v/s. T.R.Varma, reported in AIR 1957 SC 882, the Supreme Court held
that it is well-settled that when an alternative and equally efficacious remedy is open to
litigant, he should be required to pursue that remedy and not invoke the special jurisdiction
of the High Court to issue a prerogative writ. The Bench proceeded further to observe that
it will be a sound exercise of discretion to refuse to interfere in a petition under Article
226 of the Constitution of India unless there are good grounds to do otherwise.
We hold that there are good grounds in the present case so as to entertain this petition
despite the fact that there is a remedy of appeal available under Section 35G of the Act.
We shall now look into the case-law relied upon by both the sides on the issue of alternative
remedy and under what circumstances High Court may exercise jurisdiction under Article
226 of the Constitution of India despite there being an alternative remedy of appeal
available to the petitioner.
V. We shall now look into the case-laws relied upon by the Petitioner :
In Whirlpool Corporation (supra), the Supreme Court held :
“15. Under Article 226 of the Constitution, the High Court, having regard to the
facts of the case, has a discretion to entertain or not to entertain a writ petition.
But the High Court has imposed upon itself certain restrictions one of which is that
if an effective and efficacious remedy is available, the High Court would not
normally exercise its jurisdiction. But the alternative remedy has been consistently
held by this Court not to operate as a bar in at least three contingencies, namely,
where the writ petition has been filed for the enforcement of any of the
Fundamental Rights or where there has been a violation of the principle of natural
justice or where the order of proceedings are wholly without jurisdiction or the
vires of an Act is challenged.....”
In Ambica Meta Yarn Manufacturing Company (supra), a Division Bench of this High Court
made the following observations :
“...The High Court will not therefore ordinarily interfere in exercise of the power
under Article 227. 'Not ordinarily' of course does not mean 'never'. In some cases
the High Court might consider it expedient in the interest of justice to do so. For
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instance, in two types of cases the High Court might interfere (unless the Revenue
is prepared to stay the recovery during the pendency of proceedings before the
appellate or revisional authority), viz :
(1)Where the excise authorities of other States are accepting the
interpretation canvassed by the assessee. In such cases the assessee will
not be able to withstand the competition in the market and the industry in
the State will suffer serious handicap and may even get mauled:
(2)In a case where a product is forbeing assessed under one entry several
years in the past and the department has accepted the position for all these
years but abruptly changes its stance without there being any legislative
change.”
“Only in such rare cases the Court might possibly entertain a petition made without
recourse to the machinery provided by the Act.”
VI. We shall now look into the case-law relied upon by the Revenue on the point of
alternative remedy :
In Union of India v/s. Guwahati Carbon Limited (supra), the Supreme Court, in the facts of
the case, made the following observations :
“We reiterate that the High Court, under Article 226 of the Constitution of India,
has vast powers as this Court has under Article 32 of the Constitution of India, but
such powers can only be exercised in those cases where the statutory authority has
not acted in accordance with the provisions of the enactment in question, or in
defiance of the fundamental principles of judicial procedure, or has resorted to
invoke the provisions which are replaced, or when an order has been passed in total
violation of the principles of natural justice.”
“In our opinion, the assessee ought not to have filed a writ petition before the High
Court questioning the correctness or otherwise of the orders passed by the
Tribunal. The Excise Law is a complete code in order to seek redress in excise
matters and hence may not be appropriate for the writ court to entertain a petition
under Article 226 of the Constitution. Therefore, the learned Single Judge was
justified in observing that since the assessee has a remedy in the form of a right of
appeal under the statute, that remedy must be exhausted first, the order passed by
the learned Single Judge, in our opinion, ought not to have been interfered with by
the Division Bench of the High Court in the appeal filed by the
respondent/assessee.”
In the aforesaid decision of the Supreme Court, the Bench, in the peculiar facts of the
case, took the view that the Excise Law is a complete code in order to seek redress in
excise matters and, hence, may not be appropriate for a writ court to entertain a petition
under Article 226 of the Constitution of India.
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We have noticed that in the said case, the adjudicating authority had passed an order
holding that the assessee had inflated the assessable value of their product by misdeclaring the actual place of removal and further included the element of transportation
cost to the assessable value of the goods cleared for delivery from the place of removal i.e.
factory premises to the buyer's premises. The said case was not the one wherein it could be
said that the assessee was enforcing a fundamental right. This judgment of the Supreme
Court would not help the Revenue in making good the contention that in view of the
alternative remedy petition deserves to be rejected. In Sadhana Lodh (supra), a threeJudge Bench, in paragraphs 7 and 8 of the judgment, made the following observations as
under :
“7. The supervisory jurisdiction conferred on the High Courts under Article 227 of
the Constitution is confined only to see whether an inferior Court or Tribunal has
proceeded within its parameters and not to correct an error apparent on the face of
the record, much less of an error of law. In exercising the supervisory power under
Article 227 of the Constitution, the High Court does not act as an Appellate Court
or the Tribunal. It is also not permissible to a High Court on a petition filed under
Article 227 of the Constitution to review or re-weigh the evidence upon which the
inferior Court or Tribunal purports to have passed the order or to correct errors of
law in the decision.
8. For the aforesaid reasons, we are of the view that since the insurer has a remedy
by filing an appeal before the High Court, the High Court ought not to have
entertained the petition under Article 226/227 of the Constitution and for that
reason, the judgment and order under challenge deserves to be set aside. We,
accordingly, set aside the judgment and order under appeal. The appeal is allowed.
There shall be no order as to costs. However, it would be open to the insurer to file
an appeal if it is permissible under the law.”
In the aforesaid decision of the Supreme Court, the contention before the Bench was that
under Section 173 of the Motor Vehicles Act, 1988 a remedy by way of appeal to the High
Court was available to the insurer against an award given by the tribunal and, therefore, the
filing of a petition under Article 227 of the Constitution of India was misconceived. While
accepting the contention of the appellant, the Bench observed that under Section 173 of
the Motor Vehicles Act the insurer has a right to file an appeal before the High Court on
limited grounds available under Section 149(2) of the Act, and where the law provides
remedy by filing an appeal on limited grounds, the grounds of challenge cannot be enlarged
by filing a petition under Article 226/227 of the Constitution of India on the premises that
the insurer has limited grounds available for challenging the award given by the Tribunal. It
is under such set of circumstances that the Supreme Court took the view that a petition
could not have been preferred under Article 227 of the Constitution of India. There was no
issue of enforcement of any fundamental right in the said matter.
In Bijoy Kumar Dugar (supra), the Supreme Court reiterated the same principle of law as
the one referred in Sadhana Lodh's case.
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Therefore, this decision would also not help the Revenue in any manner.
In Union of India v/s. Mangal Textile Mills (supra), a three-Judge Bench made the following
observations :
“We are of the opinion that on the facts of the present case, exercise of writ
jurisdiction by the High Court was unwarranted. As rightly pointed out by learned
counsel appearing on behalf of the Revenue, the controversy in the instant case
centered around valuation of plant and machinery as also inclusion or non-inclusion of
certain machines, in use or not or in working condition or not, which are primarily
questions of fact.”
In the aforesaid decision of the Supreme Court as it is apparent from paragraph 10 itself
that the Bench took the view on the facts of the case so far as entertaining a writ petition
was concerned. In the aforesaid decision, the controversy centered around valuation of
plant and machinery as also inclusion or non-inclusion of certain machines, in use or not or in
working condition or not, which are primarily questions of fact as observed by the Supreme
Court.
In Alembic Glass Industries Limited (supra), the Supreme Court, while dismissing SLP
preferred by the assessee against the judgment of this High Court in a writ petition, made
the following observations :
“This special leave petition is filed against the judgment of the Delhi High Court
dismissing the writ petition. The writ petition was filed against the show cause
notice issued by the Central Excise department to the petitioner. The High Court
has dismissed the writ petition mainly on the ground that it does not wish to
entertain the writ petition against the show cause notice. We cannot say that the
High Court was not right in doing so. The High Court took note of the fact that the
adjudication order has already been passed in the matter, against which the
petitioner had a right of appeal which he did, in fact, avail of. The petitioner shall
pursue the remedy of appeal before the Tribunal. The special leave petition is
accordingly dismissed. No costs.”
This judgment would also not help the Revenue as in the facts of the case the Supreme
Court took the view that petitioner should pursue the remedy of appeal before the Tribunal.
As a matter of fact, no facts have been discussed in the judgment, more particularly, as to
what was the actual issue involved.
In Union of India v/s. Zalcon Electronics (supra), the Supreme Court in a very short order
made the following observations :
“In our view, writ petition was not maintainable before the High Court. The facts
required detailed adjudication. Adjudication was done by the competent authority.
Assessee did not carry the matter in appeal to the Commissioner. Assessee
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straightway proceeded with the writ petition which was allowed by the High Court.
In the facts of this case, the approach of the High Court was wrong. The High Court
should not have interfered with the order. It should have directed the assessee to
exhaust the statutory remedy.”
It appears that the facts in the said case required some detailed adjudication and in the
facts of the case, the Supreme Court held that the approach of the High Court was wrong.
In Maritime Collector (supra), a Division Bench of Madras High Court made the following
observations :
“Insofar as the rebate claim for Rs.49,330.51, being the subject matter of the
order in C.No. V/55/18/89-E-C dated 11.7.1991, as against the said order, under
Section 35 of Central Excise Act, appeal lies to the Commissioner of Central Excise
(Appeals). When there is a statutory remedy of Appeal, resort must be had to that
statutory remedy. In the main Writ Petition, the Respondent has averred that the
authorities concerned have already taken a view rejecting the rebate claim on the
duty paid on the yarn, and therefore, no useful purpose would be served by
preferring appeal before the same authorities. The contention of the Respondent is
untenable. When an efficacious statutory remedy by way of appeal is available, the
Respondent ought to have exhausted the remedy.”
In the said case before the Division Bench of the Madras High Court, the issue was with
regard to rebate claimed on the duty paid on the yarn. Under such circumstances and
considering the nature of issue involved, the Bench took the view that the issue ought to
have exhausted the alternative remedy.
Bearing in mind the aforesaid principles of law as explained by the Supreme Court and other
High Courts on the question of entertaining a writ petition under Article 226 of the
Constitution of India in a case where an alternative remedy by way of an appeal is available,
we hold that the present case is one where there are good grounds to overrule the
preliminary objection of the Revenue in this regard and proceed to decide the main issue in
question by entertaining the petition.
VII. Analysis of the two notifications :
When Notification No.4/2006 (relied upon by the Revenue) and Notification No.6/2006
(claimed by the petitioners) are considered, it becomes clear on plain reading of these
Notifications that Notification No.6/2006 is specific for Bagasse Board because these
goods are specifically covered at Serial No.82(vi) of table to this Notification.
Therefore, Bagasse Board is most specifically covered under this Notification and is
chargeable to nil rate of duty.
Notification No.4/2006 is a general Notification for “all goods” covered under Heading 4410
or 4411. Since various types of boards are covered under these two headings, all goods
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covered under these two headings are allowed concessional/reduced rate of duty at Serial
No.87 of table to this Notification No.4/2006. Bagasse Board are also goods covered under
heading No.4410 and therefore they may also qualify for concessional rate of duty under
this Notification, but a manufacturer manufacturing Bagasse Board cannot be denied nil
rate of duty specifically provided by the Central Government for Bagasse Board under
another Notification i.e. 6/2006.
It is a matter of choice of the manufacturer to opt for a particular exemption Notification
and therefore, as is also held by the Commissioner of Central Excise, Lucknow in case of
Bajaj Eco Tech Product Pvt. Ltd., an assessee cannot be compelled to pay duty on the
clearance of Bagasse Board under Notification No.4/2006 because the assessee was well
within their right to avail exemption under Notification No.6/2006.
Heading 4410 covers different varieties of particle board and similar board, which may be
manufactured out of wood or out of other ligneous materials like Bagasse, Bamboo, Cereal
Straw etc. as explained under Heading 4410 of HSN. Similarly, Heading 4411 also covers
various varieties of boards like fire board of wood or other ligneous materials. Notification
No.4/2006 initially used expression “100% wood-free plain or pre-laminated particle or
fiber board, made from sugarcane Bagasse or other agro-waste” with reference to Heading
4410 or 4411, but the Central Government has deleted this description and substituted the
word “all goods” in this Notification thereby making it clear that all goods of heading 4410
or 4411 were chargeable to concessional/reduced rate of duty under this Notification
No.4/2006. Thus, Notification No.4/2006 relied upon by the Revenue is a general
notification meant for “all goods” of these two headings.
On the other hand, only one variety of board namely “Bagasse Board” is covered under
Notification No.6/2006 and thus it is clear that out of “all goods” of heading 4410 or 4411,
only one commodity namely, Bagasse Board is specifically carved out for allowing nil rate of
duty by virtue of a separate Notification, namely, 6/2006. Since Bagasse Board is ecofriendly and use of Bagasse Board for furniture and such other application would reduce use
of wood thereby again reducing wood cutting and tree felling thereby saving the
environment and the earth, the Central Government has prescribed nil rate of duty for
making Bagasse Board cheaper in the market so that its use would be more compared to
other expensive varieties of boards including those made of wood. When the goods in
question are admittedly Bagasse Board because they are admittedly manufactured out of
sugarcane Bagasse, it is on face of it plain and clear that these goods are chargeable to nil
rate of duty under Notification No.6/2006-CE. In view of this clear scheme of exemption
available to Bagasse Board, the Commissioner, Surat has no jurisdiction to deny this
exemption by holding that these goods were covered under the other Notification
No.4/2006 and hence excise duty at reduced rate was available.
The only finding recorded by the Commissioner in the impugned order is that Entry 82 of
Notification No.6/2006 is specific and covers only “Bagasse Board”, and Entry No.87 of
Notification No.4/2006-CE dated 1.3.2006 covers “Plain or Pre-laminated Particle or Fiber
Board made from sugarcane Bagasse or other agro-waste”. On this basis, the Commissioner
has held that the goods in question were covered under the above long description against
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Entry No.87 of Notification No.4/2006, but this finding is perverse because the above
description has been deleted by the Central Government by substituting an expression “all
goods”, and therefore the Commissioner had no jurisdiction to still decide the case against
the petitioners relying on an expression in the Notification which has already been deleted
and substituted by the Central Government, more so when the deletion and substitution
were for making it abundantly clear that Notification No.4/2006 was for “all goods” of
heading 4410 or 4411 whereas the Notification No.6/2006 was for some of the specific
varieties of such boards including Bagasse board. The Commissioner, Surat has thus acted
illegally and without jurisdiction in relying on already deleted and substituted expression of
the Notification whereas it is very clear from a plain reading of Notification No.6/2006
that it prescribes nil rate of duty for Bagasse Board and the petitioners goods admittedly
being Bagasse Board, this exemption could not have been denied. Learned counsel for the
petitioners, during the course of submissions, very strenuously submitted that the
respondents have not placed on record the clarification issued by the Government of India
and the Board, though three such clarifications are referred to at paragraph 18 of the
order of the Commissioner, Pune. It was submitted that copy of only one clarification dated
25th June 2007 was being shown to the Court during the course of hearing of the
petitioner. The other two clarification F.No.129/1/2007-CX3 dated 2nd September 2008
and No.341/80/2008-TRU dated 8th April 2009 have not been placed on record by the
respondents or shown to the Court though the two letters of the CBEC addressed to the
Chief Commissioner, Hyderabad and the Chief Commissioner, Pune are specifically relied
upon by the Commissioner, Central Excise, Pune while allowing benefit to M/s.Eco Board
Industries Limited. The Commissioner has recorded in paragraph 18 of his order that the
CBEC confirmed through the aforesaid two letters that pre-laminated bagasse board was
eligible for exemption under Notification No.6/2006 and the benefit of the exemption was
also allowed to the said assessee of Sholapur in view of the two letters as well as the third
letter dated 25th June 2007 addressed to the Chief Commissioner of Central Excise, Patna.
According to Mr.Dave, when it has been clarified by the Government of India through the
Board that benefit of Notification No.6/2006-CE was available to pre-laminated bagasse
board, such clarification is binding to all Central Excise Officers and no officer of central
excise could take a contrary view, more so, when the Central Excise Officers of Patna,
Lucknow, Sholapur, Kolapur, Pune, Hyderabad, etc. have followed the clarifications and
allowed the benefit of exemption for similar products, namely, pre-laminated bagasse board,
to manufacturers within their jurisdiction.
On the other hand, Mr.Oza, learned senior counsel vehemently submitted that the
clarification dated 25th June 2007 was only a letter and was not binding to the Excise
authorities because the same was not issued under Section 37B of the Act. To demonstrate
that format of orders issued under Section 37B of the Act was altogether different,
Mr.Oza made available for perusal of this Court two documents being Circular
No.965/08/12-CX dated 17th April 2012 and F.No.390/Misc/100/2010-JC dated 22nd
September 2011. It was contended that letters issued for the purpose of clarifying
admissibility of benefit of Notification No.6/2006 could not be termed or construed as an
order issued under Section 37B and, therefore, such letters were not binding to the
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Commissioner, Surat who was within his jurisdiction to take an independent view of the
matter.
We are afraid, we are unable to accept the submission of Mr.Oza on this count. First, any
clarification issued by the Board, in our view, is binding to the Central Excise Officers who
are duty-bound to observe and follow such circulars. Whether Section 37B is referred to in
such circular or not is not relevant. In this regard, we may profitably quote observations
made by the Supreme Court in the case of Ranadey Micronutrients v/s. Collector of Central
Excise, reported in 1996 (87) ELT 19 (SC), wherein a circular which was in favour of the
assessee issued by the Board was sought to be repudiated by the Central Excise
Department on the ground that it was only letter and not an order issued under Section
37B.
Repelling the contention, the Apex Court observed in paragraph 13 of the judgment as under
:
“There can be no doubt whatsoever, in the circumstances, that the earlier and later
circulars were issued by the Board under the provisions of Section 37B, and the
fact that they do not so recite does not mean that they do not bind Central Excise
Officers or become advisory in character. There can be no doubt whatsoever that
after 21st November, 1994, Excise duty could be levied upon micronutrients only
under the provisions of Heading 31.05 as "other fertilisers". If the later circular is
contrary to the terms of the statute, it must be withdrawn.
While the later circular remains in operation, the Revenue is bound by it and cannot
be allowed to plead that it is not valid.”
Therefore, the submission that the letters issued by the Board in the present case were
communications answering queries raised by the Commissioners of particular areas and
hence such letters were not binding because they were not issued under Section 37B is not
the correct proposition as canvassed by Mr.Oza appearing for the Revenue.
We have noticed that the Board has clarified a precise issue raised for its consideration
that benefit of the Notification No.6/2006 would be available to pre-laminated bagasse
board and, therefore, all the three letters including the one dated 25th June 2007 can be
termed as circulars issued by the Board for clarifying a particular point to adopt uniform
practice for allowing benefit of Notification No.6/2006 to the goods in question.
We may only say to substantiate our findings recorded in this regard that the two
documents dated 17th April 2012 and 22 nd September 2011 which were relied upon by
Mr.Oza and shown to us also do not refer to Section 37B but still the purpose with which
such circulars were issued were to clarify certain issues for adopting a uniform practice
informing the Excise Officers as to how a particular issue was required to be dealt with.
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We have also noticed that the clarifications in the present case were followed by the
Central Excise Officers in charge of the Commissionerate in Uttar Pradesh, Maharashtra,
Andhra Pradesh, etc.
The communications were issued by the Board to the Chief Commissioner of Patna, Chief
Commissioner of Hyderabad and Chief Commissioner of Pune.
Under such circumstances, when other Central Excise authorities of equal and higher rank
have followed and acted as per the clarifications, the Commissioner, Surat, could not have
taken a contrary view on the assumption that the clarifications were only letters and not
orders under Section 37B. Therefore, in our view, the action on the part of the respondents
in denying the benefit of Notification No.6/2006 being contrary to the Board's circulars
can be termed as without jurisdiction.
Mr.Dave is quite justified in submitting that the Central Excise is a central levy and,
therefore, such a levy has to be collected uniformly from all similarly situated
manufacturers located all throughout the country. If Excise authority of a particular
Commissionerate or State refuses to allow benefit of exemption to manufacturers located
in that Commissionerate or State but other manufacturers located elsewhere are allowed
such exemption, then the same would be in violation of Article 14 of the Constitution of
India and also of Article 19(1)(g) of the Constitution of India. We may, at this stage,
profitably quote judgment delivered by this High Court in the case of Ralli Engine Ltd.
(supra), reported in 2004 (62) RLT 607 (Guj.)
“The petition contains challenge to the discriminatory treatment being given by the
Commissionerates in three different States, i.e., Gujarat, Maharashtra and Tamil
Nadu in respect of the same product. The petitioner-Company is a manufacturer of
agricultural knapsack sprayer engine which is used as a part/component in
mechanical appliances for spraying pesticides in fields and farms. The product is
being classified under Heading No.84.24 in Maharashtra (manufacturer-High Power
Engineering Company Private Limited, Satara) and in Tamil Nadu (manufacturerGreaves Limited, Chennai) whereas in Gujarat it is classified under Heading
No.84.07 in the petitioners' case by the Assistant Commissioner of Central Excise
at Valsad under the Commissionerate of Central Excise, Valsad.”
We may also quote and rely upon the final judgment between the same parties rendered by
a Division Bench of this Court, reported in 2006 (72) RLT 721 (Guj.)
“In the aforesaid set of facts and circumstances which remain uncontroverted, the
petitioner succeeds on the limited ground of discrimination and it is not necessary
for the Court to enter into any discussion on merits of the issue of classification.”
We have also noticed that in Special Civil Application No.3540 of 2008, this Court
protected the petitioners by passing an interim order dated 28th February 2008 on the
ground that the same products in other States were subjected to nil rate of duty which the
petitioner had been pointing out to the department since 2006.
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In the aforesaid view of the matter, the petitions succeed and they are allowed.
(A) Special Civil Application No.1625 of 2012 is allowed. The order dated 21st
December 2011 bearing OIO No.01- 09/Dem/Surat/2011 passed by respondent no.2
i.e. the Commissioner of Central Excise, Customs and Service Tax, Surat-II is
hereby quashed and set-aside. It is declared that the goods manufactured by the
petitioner, namely, Bagasse Board, is chargeable to nil rate of duty under Serial
No.82(vi) of Table to Notification No.6/2006-CE. The bond which was furnished at
the time of release of the goods vide interim order passed by this Court dated 28th
February 2008 for the amount of duty which may be leviable as per the
department's case @ 8% on the stock being cleared from time to time till the
matter is decided finally stands discharged.
(B) Special Civil Application No.2997 of 2012 is allowed. The order passed by
respondent no.2, the Commissioner of Central Excise, Customs and Service Tax,
Surat-II dated 28th December 2011 bearing OIO No.10-12/Dem/Surat/2011 is
hereby quashed and set-aside. It is declared that the goods manufactured by the
petitioner, namely, Bagasse Board, is chargeable to nil rate of duty under Serial
No.82(vi) of Table to Notification No.6/2006- CE.
(C) Special Civil Application No.1667 of 2012 is hereby allowed. The panchnama and
detention memo dated 25th January 2012 under which the goods in question was
seized is hereby quashed and set-aside.
(D) Respondents are hereby directed to release the goods and documents detained
and seized respectively vide the detention memo dated 25th January 2012
(Annexure-A to this petition) forthwith.
However, on the facts and in the circumstances of the case, there shall be no order as to
costs.
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