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 For Approval and Signature:
HONOURABLE THE ACTING CHIEF JUSTICE MR.BHASKAR BHATTACHARYA HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= DARSHAN BOARDLAM LTD & 1 - Petitioner(s) Versus UNION OF INDIA THRO SECRETARY & 3 - Respondent(s) ========================================================= Appearance :
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.
========================================================= HONOURABLE THE ACTING CHIEF JUSTICE CORAM :
MR.BHASKAR BHATTACHARYA and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 03/08/2012 COMMON CAV JUDGMENT (Per : HONOURABLE 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
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.6/2006-CE.
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.6/2006-CE.
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, 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 raw-material 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 20th 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 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 14th 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 13th 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 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.4/2006- C.E., dated 1.3.2006 wherein item No,87 referring to 100% wood free plain or pre-laminated particle or fiber-board, made from sugarcane Bagasse or other agro-waste, 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.”
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 show-cause 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 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 pre- laminated 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 pre- laminated 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 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.6/2006-CE 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 pre- laminated 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 pre-laminated 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 raw- material 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 pre-laminated 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.
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.
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 show-cause 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 agro-waste 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 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 Pre- laminated 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 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 Pre- laminated 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 Pre-laminated 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-a-viz 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.
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) 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 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)]
(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 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 pre- eminently 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.
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 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.
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 mis-declaring 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 three-Judge 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. 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 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 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 eco-friendly 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 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 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 22nd 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.
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 (manufacturer-Greaves 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.
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.
(Bhaskar Bhattacharya, Acting C.J.)
(J.B.Pardiwala, J.)
/moin