1. By this application purporting to be under Sub-section (1) of Section 35G of the Central Excises and Salt Act, 1944 (hereinafter Act), the appellants/applicants request that the statement of the case be drawn up and following three questions of law arising out of order No. B-661/1983, dated 22-7-1983, passed by the Tribunal be referred to High Court: (1) Whether Review Proceedings under Section 35A of the Central Excises and Salt Act as it stood at the relevant time could be invoked by the Collector of Central Excise at the instance of an assessee who had not availed of his right of appeal '"! (2) Whether the Collector of Central Excise was entitled to refuse to exercise the powers vested in him without assigning any reason for the same (3) Whether the refusal of the Collector to consider the review application under Section 35A did not amount to an order or decision against which an application could be preferred by the applicants under Section 36 of the Central Excises and Salt Act, as it stood at the relevant time 2. Shri V. Lakshmikumaran, S.D.R. for the Respondent/non-applicants on hearing dated 30-11-1983 raised an objection that the application for reference under Sub-section (1) of Section 35G of the Act was not competent in this appeal. Before the objection and arguments advanced by the parties are discussed, it is necessary to give the facts of the case so that the objection is properly appreciated. The applicants are inter alia engaged in the manufacture of Steel Ingots by electrical arc furnace method in their factory situated at Jhansi. The applicants claimed that steel ingots are manufactured from duty paid unused steel melting scrap, and that they were entitled to avail of credit of duty under Rule 56A read with Notification No. 144/75-C.E., dated 7-6-1975.
The Assistant Collector of Central Excise, Kanpur served Show Cause Notice dated 19-1-1978 on the applicants, which inter alia alleged that the applicants had contravened Rules 56A and 173G(1) of the Central Excise Rules, 1944 (hereinafter Rules) and were liable to pay duty on 1101.055 metric tonne of MS scraps consumed by them. The applicants in their reply to the show cause notice challenged the demand. The Assistant Collector of Central Excise by order dated 19-11-1978, negatived the applicants defence and upheld the demand. The applicants did not file any appeal against this order to the Appellate authorities but instead filed a Review application under Section 35A to the Collector of Central Excise, Kanpur. On the directions of the Collector of Central Excise, Kanpur, the Deputy Collector of Central Excise, Kanpur by communication dated 9-4-1980 informed the applicants that order dated 19-11-1979 passed by the Assistant Collector was an appealable order and an appeal against the order lay to Collector of Central Excise (A), New Delhi; that they should have preferred an appeal to the Appellate Collector. On the basis of the facts and matter Review could not be initiated under Section 35A of the Act.
3. The applicants then filed appeal to the Tribunal. The Tribunal by order dated 22-7-1983 in appeal No. 570/1980-B held that the advice contained in the letter conveyed by the Deputy Collector could not be considered an order or decision which could be appealed against under the provisions of the Act. It was further held that the Collector of Central Excise had full discretion to initiate the review proceedings, if he so desired. It was however not incumbent upon him to do so if the facts and circumstances of the case did not justify such proceedings under Section 35A of the Act. The Tribunal further held that no appeal would lie to the Tribunal in the case and the appeal is not maintainable, With these findings, the Tribunal rejected the appeal.
Aggrieved the applicants filed the present application purporting to be one for reference under Section 35G of the Act.
4. At the hearing of the application Shri M. Chandersekharan, learned Advocate for the appellants submitted that order dated 22-7-1983 passed by the Tribunal does not relate to the determination of any question having a relation to the rate of duty of excise. He submitted that the order only decided that an appeal was not maintainable against advice contained in letter dated 9-4-1980 of the Deputy Collector of Central Excise, Kanpur and that the Tribunal could not give direction to the Collector to initiate Review proceedings under Section 35A of the Act.
He further submitted that the Tribunal was in error in holding that the communication dated 9-4-1980 was not an appealable order, According to him, it was a decision against which an appeal lay to the Tribunal.
Shri Chandersekharan, learned Counsel further contended that the power of Review vested in the Collector under Section 35A of the Act was wide and could be exercised both in favour of the Revenue and the assessee.
The Collector could not arbitrarily decline to exercise the power in favour of the appellants, if the conditions for exercise of the same were fulfilled. He could not on the ground that the appellants had not filed an appeal decline to exercise the Review power vested in him. In support of his this argument. Shri Chandersekharan relied on Hirdya Narayan v. Income-tax Officer, Bareilly, (1971) 1 SCR 683 ; Thyl Bombay Ammonia Pvt. Ltd. v. State of Tamil Nadu, AIR 1976 SC 2136. Shri Chandersekharan, further submitted that where a proper application to the Tribunal for stating a case and referring it to High Court was made by the parties, it was the statutory duty of the Tribunal to make the reference, if a question of law arose out of the Tribunal's order. For his this argument, he relied on comments to that effect based on certain decisions at page 1149 of 'Law and Practice of Income-tax' by Konga end Palkiwala, 7th Edition.
5. On behalf of the Respondent, non-applicant, as already observed, Shri V. Lakshmikumaran, learned Senior Departmental Representative submitted that the order of the Tribunal related to the determination of a question having relation to the rate of duty of excise. In such a case Section 35 G(1) of the Act was excluded in its application. He further submitted that no question of law arose out of the order of the Tribunal and therefore, no statement of the case to the High Court was called for.
6. We will first deal with the objection regarding applicability of Section 35 G(1) of the Act to the present applications. On going through paragraphs 2, 3, 4, 5, 6 and 7 of the statement of facts accompanying the applications, it is seen that the applicants claimed proforma credit under Notification No. 144/75-C.E., dated 7-6-1975 and under Rule 56A of the Central Excise Rules, 1944 (hereinafter Rules).
The appeal to the Tribunal was originally a Revision Application to the Government of India, in respect of which, the Tribunal passed order dated 22-7-1983. In para 2 of the Revision application, reference was made to the petition made to the Collector of Central Excise, Kanpur under Section 35A of the Act and it was also stated that the petition to the Collector of Central Excise, Kanpur furnishing in detail the facts of the case as well as the grounds on which the order of the Assistant Collector of Central Excise has been assailed were annexed.
In this application, facts of the case, paras 1 to 4 would show that the applicants claimed benefit of Rule 56A of the Rules in respect of fresh un-used melting scrap. From ground-A, it would appear that the applicants claimed that they could get benefit of Rule 56A of the Rules without formal permission. From para B of the grounds, it would be seen that applicants claimed that they were entitled to benefit of Notification No. 144/75-C.E., dated 7-6-1975 without following the procedure stipulated in Rule 56A of the Rules. From this, there could be no doubt that the applicants had raised question relating to rate of excise duty-whether the concession of duty under Notification was applicable in their case. The order passed by the Tribunal, it is true, did not go into this aspect of the case and decided the case on a preliminary point that no appeal was competent. If the Tribunal had held otherwise, it would have been necessary for the Tribunal to enter into questions relating to rate of excise duty. In Commissioner of Income-tax, Bombay v. India Steam Navigation Co. Ltd., AIR 1961 SC 1633, the Supreme Court held that when a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. Following the ratio of this decision when the applicants had raised a question having a relation to rate of duty of excise, the same must be deemed to have been dealt with by the Tribunal even though the Tribunal failed to deal with it and decided the case on a preliminary point of maintainability or jurisdiction The phrase 'any question having a relation to the rate of duty of excise, is of wide import. According to T.P. Mukherjee's Law Lexion, Vol. II 1982 Edn.
page 503 such words as "relating to" or "in relation to" are words of comprehensiveness which might both have a direct significance as well as indirect significance depending on the context. In the light of this meaning, the true meaning and import of the term 'an order relating to the determination of any question having relation to the rate of duty of excise' can be properly understood only when the order is read not in isolation but alongwith pleadings in the case. Thus read, there can be no doubt that the appeal to the Tribunal involved questions relating to interpretation of Rule 56A of the Rules and Notification No.144/75-C.E., dated 7-6-1975. These would be questions relating to rate of duty of excise. Section 35G of the Act is clear that it is excluded in its application where the order among other things relates to the determination of any question having a relation to the rate of duty of excise.
In view of this, Shri Lakshmikumaran, learned Sr. D.R's objection regarding maintainability of the application is well founded. In view of this finding it is not necessary to consider the other grounds urged by the parties : whether or not any question of law arises out of the order, whether the Tribunal was in error in holding that 'the communication was not a decision and not appealable and whether the Tribunal could itself enrer into this question.