Commissioner of Central Excise And Service Tax Vs S C Johnson Products Private Limited (Guwahati High Court)
The Guwahati High Court delivered a judgment on two appeals filed by the Commissioner of Central Excise and Service Tax against the common order of the CESTAT, Kolkata, concerning Excise Appeal Nos. 71476/2013 and 71477/2013. The appeals pertained to the determination of whether S.C. Johnson Products Private Limited, a manufacturer of mosquito repellents and cleaning preparations with units in Bamunimaidam Industrial Area, Guwahati, was eligible for a special rate of value addition under the Area-Based Exemption Notifications (Notification Nos. 32/99-CE, 17/2008-CE, and 31/2008-CE) for the financial year 2010-2011.
The CESTAT had allowed the respondent’s appeals, holding that the methodology used by the company to calculate sale value from audited financial statements and apportion it to respective units based on stock transfer ratios was correct and consistent with the Exemption Notifications. The Commissioner had earlier rejected the respondent’s application, arguing that the actual value addition could not be determined without unit-wise sale data, and therefore the conditions for fixation of the special rate of value addition were not fulfilled.
The Commissioner raised three substantial questions of law: whether the CESTAT erred in accepting the apportionment method without actual unit-wise sale data, whether the issue was no longer res-integra due to precedent in Hindustan Unilever Ltd. vs. Commissioner of Central Excise & Service Tax, and whether the methodology used by the respondent for calculating sale value was legally acceptable. The respondent argued that separate applications had indeed been submitted for the two units, and the appeals were not maintainable under Section 35G of the Central Excise Act, 1944, since the matter concerned the valuation of goods and quantum of exemption, which fell within the exclusive jurisdiction of the Supreme Court under Section 35L.
Sections 35G and 35L of the Central Excise Act, 1944, were highlighted by the High Court. Section 35G allows appeals to the High Court from Appellate Tribunal orders except when the order relates to questions concerning the rate of duty or value of goods for assessment, which are reserved for the Supreme Court. Section 35L permits direct appeals to the Supreme Court in such cases. The Court noted that the present appeals fell under these provisions as they directly concerned the rate of value addition and the quantum of exemption, which relate to the valuation of goods for assessment purposes.
The Court referred to precedent cases including Commissioner of Customs, Bangalore-I vs. Motorola India Limited (2019), Commissioner of Central Excise, Siliguri vs. Zydus Healthcare (2025), and Commissioner of Central GST & Central Excise, Jammu vs. Sun Pharma Laboratories Limited (2019), which consistently held that disputes regarding valuation for assessment or exemptions directly related to duty rates fall exclusively within the Supreme Court’s jurisdiction, and the High Court cannot entertain such appeals.
In this context, the Guwahati High Court observed that the appeals challenged CESTAT’s order on whether the respondent could claim the special rate of value addition under the Exemption Notifications. As the issue related directly to the value of goods for assessment, it was non-maintainable before the High Court. The Court further noted that the respondent had previously been granted exemptions using the same methodology for the year 2009-2010, but the exemption was denied for 2010-2011. Substantial Question of Law Nos.1 and 3, raised by the appellant, were directly connected to valuation and thus fell under Sections 35G and 35L. Substantial Question of Law No.2 could not be addressed due to the appellant’s failure to provide the cited CESTAT judgment.
The High Court concluded that the appeals were not maintainable under the statutory provisions and dismissed them accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF GUWAHATI HIGH COURT
1. Heard Mr. S.C. Keyal, learned counsel for the appellants in both the appeals. Also heard Mr. D. Sen, learned counsel for the respondents in both the appeals.
2. The 2 (two) appeals are being decided by this common order.
3. The two appeals have been filed by the Commissioner of Central Excise & Service Tax against the impugned common judgment and order passed by the Hon’ble CESTAT, Kolkata, vide Final orders No. 76556-76557 of 2024 dated 06/08/2024 concerning Excise Appeal No. 71476/2013 and 71477/2013.
4. The issue is with regard to whether the respondents are eligible to be given the special rate of value addition for their manufactured products, in terms of the Area Based Exemption granted under Notification No. 32/99-CE dated 08/07/1999, as amended by Notification No. 17/2008-CE dated 27/03/2008 and Notification No. 31/2008-CE dated 10/06/2008 (hereinafter referred to as the Exemption Notifications).
5. The respondent, in both cases is M/S. S.C. Johnson Products Private Limited, a manufacturer of ‘Mosquito Repellents’ and ‘Cleaning Preparations’ having Unit-IV and Unit-VI in Dag No. 13KA, Bamunimaidam Industrial Area, Guwahati, Assam.
6. The appellant’s contention revolves around the issue of fixation of the special value addition rate for the financial year 2010-2011, inasmuch as, the learned CESTAT, vide the above impugned order, had held that the methodology for arriving at the sale value from the audited Financial Statements of the respondent company, by apportioning the same to the respective Units on the basis of stock transfer ratio had been correctly done and the special rate of value addition had been fixed as per the Exemption Notifications.
7. The learned CESTAT, Kolkata thereafter set aside the original orders of the Commissioner dated 20.06.2013 in relation to Unit-IV and Unit-VI. The learned Commissioner had rejected the respondent’s application for fixation of special rate representing the actual value addition under the Exemption Notifications.
8. The respondent’s Unit-IV and Unit-VI thereafter filed two separate appeals before the Hon’ble CESTAT, Kolkata. Excise Appeal No. 71476/2013 pertained to Unit-IV and Excise Appeal No.71477/2013 pertained to Unit-VI.
9. The learned counsel for the appellants submits that the special rate of value addition, as provided in the Exemption Notifications, required separate applications to be made by the respondent company. Instead, the respondent company had submitted a consolidated application for the two different Units, for availing the exemption benefits provided in the Exemption Notifications.
10. The learned counsel for the appellants has also raised three Substantial Questions of Law, which are as follows :
1. Whether the Appellate Tribunal was legally correct, in holding that the issue involved in these appeal is as to whether fixation of special rate can be rejected merely because the sale value is arrived at from the audited financial statements of the company by appropriating the same to respective units in the basis of their stock transfer ratio or not?
2. Whether the appellate Tribunal was legally correct, in holding that the issue is no longer res-integra as this Tribunal has decided the same issue in the case of M/s Hindustan Unilever Ltd. V Commissioner of Central Excise & Service Tax, Dibrugarh (2023 (10) TMI-CESTAT, Kolkata?
3. Whether the Appellate Tribunal was legally correct, under the facts and circumstances of the case, in holding that the methodology for arriving at the sale value from the audited financial statements of the company by appropriating the same to the respective units on the basis of stock transfer ratio has been accepted and special rate has been fixed accordingly?
11. The learned counsel for the respondent company, on the other hand submits that a bare perusal of the orders of the Commissioner dated 20.06.2013 relating to Unit-IV and Unit-VI clearly shows that separate applications had been submitted by the respondent, for grant of special rate of value addition in terms of the Exemption Notifications.
12. The learned counsel for the respondent further submits that the present two appeals are not maintainable, on account of Section 35G of the Central Excise Act, 1944, (hereinafter referred to as “the CEA 1944”), as the issue pertains to a question having a relation to the value of goods for the purpose of assessment. He thus submits that the issue raised in the present appeals will have to be agitated/lie directly to the Hon’ble Supreme Court under Section 35L of the CEA, 1944, as the issue pertains to the quantum of exemption available to the respondent company under the Exemption Notifications.
13. The learned counsel for the respondent further submits that the proposed Substantial Question of Law Nos.1 & 3, have a relation to the issue of the quantum of exemption available to the respondent company under the Exemption Notifications and as such, Section 35G and 35L of the CEA, 1944 would apply. With respect to the Substantial Question of Law No.2, he submits that when the appellant has not annexed a copy of the said order or produced the same in the Court today, he has got no comments to make on the same. However, there does not appear to be any infirmity with the Hon’ble CESTAT following a covered matter, as it is bound by judicial discipline to follow a decision of a Coordinate Bench. He however submits that the earlier decision of the Ld. CESTAT, as provided in Substantial Question of Law No.2, cannot override the provisions of Section 35G and 35L of the CEA, 1944.
14. We have heard the learned counsels for the parties.
15. Section 35G and 35L of the CEA, 1944 are reproduced hereinbelow as follows:-
“35G. Appeal to High Court. – (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.
(2) The[Principal Commissioner of Central Excise or Commissioner of Central Excise] or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be –
(a) filed within one hundred and eighty days from the date on which the order appealed against is received by the [Principal Commissioner of Central Excise or Commissioner of Central Excise] or the other party;
b. accompanied by a fee of two hundred rupees where such appeal is filed by the other party;
c. in the form of a memorandum of appeal precisely stating therein the substantial question of law involved.
[(2A) The High Court may admit an appeal after the expiry of the period of one hundred and eighty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period.]
(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question :
Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question.
(5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.
(6) The High Court may determine any issue which –
a. has not been determined by the Appellate Tribunal; or
b. has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1).
(7) When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges.
(8) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it.
(9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.]”
“35L. Appeal to the Supreme Court -[(1)]An appeal shall lie to the Supreme Court from –
[(a) any judgment of the High Court delivered –
i. in an appeal made under section 35G; or
ii. on a reference made under section 35G by the Appellate Tribunal before the 1stday of July, 2003;
iii. on a reference made under section 35H,
in any case which, on its own motion or on an oral application made by or on behalf of the party aggrieved, immediately after passing of the judgment, the High Court certifies to be a fit one for appeal to the Supreme Court; or].
(b) any order passed [before the establishment of the National Tax Tribunal] by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment.
[(2) For the purposes of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment.]”
16. As is abundantly clear in the above two provisions of law, an order which is relatable to the determination on the question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment, would have to be decided by the Hon’ble Supreme Court, as an appeal with regard to the said issue cannot be decided by the High Court. The present issue raised by the appellant pertains to grant of rate of exemption in terms of the Exemption Notifications. When the issue at hand relates to an order passed in appeal by the Hon’ble CESTAT in relation to determination of a question having a relation to the value of goods for rate of value addition, we are of the opinion that the said order of the Appellate Tribunal would be governed by Section 35G and 35L of the CEA, 1944. The rejection of the respondent’s application by the Commissioner was on the ground that the sale value used by the respondents for determining the value addition was not actual, but estimated through internal apportionment and that in the absence of actual sale values attributable to individual Units, the real extent of value addition could not be accurately determined. The Commissioner had accordingly concluded that the conditions necessary for fixation of a special rate of value addition had not been fulfilled. The same had been put to challenge before the Hon’ble CESTAT. The learned CESTAT had however opined otherwise in respect of the claim for special rate of value addition by the respondents.
17. The stand of the appellants is that the learned CESTAT had erred in allowing the appeals, despite the lack of actual unit wise sale data, which was essential for calculating the true value addition and determining eligibility under the Exemption Notifications. On a consideration of the issues that have been raised before the Commissioner and the learned CESTAT, we find that the issue pertains to the exemptions pertaining to the rate of value addition, in terms of the Exemption Notifications. As such, we are of the view that the impugned order being a determination of a question having relation to the rate of value of goods for the purpose of assessment, the present appeals are not maintainable before this Court, in terms of Section 35G and 35L of the CEA, 1944.
18. In the case of Commissioner of Customs, Bangalore-I vs. Motorola India Limited, reported in (2019) 9 SCC 563, the Supreme Court, while considering Section 130 and 130E of the Customs Act, 1962 (prior to its amendment by the Finance Act, 2018), which is in pari materia to Section 35G and 35L of the CEA, 1944, has held at paragraph 11 and 18, as follows :
“11. Upon a conjoint reading of the aforesaid provisions, it could thus be seen that an appeal shall lie to the High Court against every order passed in appeal by the Appellate Tribunal, if the High Court is satisfied that the case involves a substantial question of law. The only exception carved out is that an appeal shall lie before this Court and shall not lie before the High Court against the order relating, amongst other things, to the determination of any question having relation to the rate of duty of customs or to the value of goods for the purposes of assessment.
18. We are of the considered view that the legislature has carved out
only following categories of cases to which it has intended to give a special treatment of providing an appeal directly to this Court.
“(i) determination of a question relating to a rate of duty;
ii. determination of a question relating to the valuation of goods for the purpose of assessment;
iii. determination of a question relating to the classification of goods under the Tariff and whether or not they are covered by an exemption notification;
iv. whether the value of goods for purposes of assessment should be enhanced or reduced having regard to certain matters that the said Act provides for.”
19. In the case of Commissioner of Central Excise, Customs and Service Tax, Siliguri vs. M/s Zydus Healthcare, reported in 2025(5) TMI 62, the Sikkim High Court was seized of a matter in which the learned CESTAT had held that the respondent was entitled to special rate of value addition @73.5%, which was based on the actual value of the cost of raw materials and inventory reflected in the audited financial statement. The Commissioner of Central Excise, Customs and Service Tax, on the other hand was of the view that the decision of the learned CESTAT was incorrect and bad in law. The Sikkim High Court held that it had no jurisdiction to entertain, try and determine the issue relating to an order which related among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment, in view of Section 35G(1) of the CEA, 1944.
20. In the case of Commissioner of Central GST & Central Excise, Jammu vs. Sun Pharma Laboratories Limited, reported in 2019 (12) TMI 229, the Jammu and Kashmir High Court was ceased of an issue involving interpretation of the Exemption Notifications which would have an effect or valuation of goods for the purpose of levy of duty. The Jammu and Kashmir High Court thereafter held that the issue involving interpretation of the Exemption Notifications which would have an effect or valuation of goods for the purpose of levy of duty would not be maintainable in the High Court in view of Section 35G of the CEA, 1944, as the question of exemption was directly or proximately related to the rate of duty for the purpose of assessment of excise duty payable by the assessee. The Jammu and Kashmir High Court, after considering the decision of the Supreme Court in Navin Chemicals MFG and Trading Co. Ltd. Vs. Collector of Customs [1993 (68) ELT 3(SC)] and decision of the Division Bench of Uttarakhand High Court in the case of Commissioner of Central Excise & ST vs. Tirupati LPG Industries Ltd. reported in 2017 (351) ELT 149 (Uttarakhand) had held in paragraph 20 of the said judgment, as follows :
“20. From the above referred judgments, it is evident that the consistent opinion of the Courts is that the dispute, as to whether or not the assessee is covered by the exemption notification, relates directly or proximately to the rate of duty applicable thereto for the purpose of assessment, hence, High Court will not have jurisdiction to entertain appeal pertaining to that, it being in exclusive jurisdiction of Hon’ble the Supreme Court.”
21. On considering the fact that the issue herein pertains to whether the special rate of value addition could be granted to the respondent in terms of the Notifications, we are in respectful agreement with the decision of the other High Courts that the issue raised in these appeals cannot be decided by us. Further, it is seen that the respondent had been given exemptions by way of the Exemption Notifications for the year 2009-2010 by the Commissioner, by using the same methodology for claiming the said exemptions. However, the same was denied for the year 2010-2011.
22. With regard to Substantial Questions of Law formulated by the appellants, we find that the Substantial Question of Law Nos.1 & 3 is directly and proximately related to the determination of a question having a relation to the value of the goods for the purpose of assessment. With regard to the Substantial Question of Law No.2, the learned counsel for the appellant has not produced the said judgment stated therein, i.e. M/s Hindustan Unilever Ltd. vs. Commissioner of Central Excise & Service Tax, Dibrugarh, reported in 2023 (10) TMI-CESTAT, Kolkata, even though these appeals have been listed before this Court on seven earlier occasions. In any event we are of the view that the present appeals are not maintainable, as the issue raised attracts Section 35G and 35L of the CEA, 1944.
23. In view of the reasons stated above, the appeals are not maintainable before this Court. The same are accordingly dismissed.
