1. By this reference application filed under Section 35G of the Central Excises and Salt Act, 1944, the appellants require us to refer to the High Court what they consider questions of law (Annexure) arising out of our above order. After considering all the arguments which were pressed for by the appellants at the time of hearing of their appeal before this Bench, the Bench had held in the aforesaid order that- (1) the appellants were not entitled to clear their goods (textile machinery parts etc. falling under Item 68 of the Central Excise Tariff) free of duty under exemption notifications Nos. 176/77-C.E. dated 18-6-77, 89/79-C.E. dated 1-3-79 and 105/80-C.E. dated 18-6-80 and their pleas of certain clearances being out of pre-Budget stocks or out of goods made without the aid of power advanced in support of their claim were found to be untenable; (2) the appellants were guilty of suppression of facts; further, they were also guilty of deliberate concealment inasmuch as the Collector had gone on record to say that though he called upon them to produce their books of account and records on 8 different occasions, they failed to do so; extended time-limit for demand of duty, therefore, applied in this case and they were liable to pay the duty of Rs. 2,69,502.58 and i n the facts and circumstances of this case the penalty of Rs. 6 lakhs and fine of Rs. 20,000/- in lieu of confiscation of the goods valued at Rs. 49,900/- as adjudged by the Collector were not excessive; and (3) the appellants were entitled to clear nickel scrap valued at Rs. 18,875/-free of duty.
2. As the central issue in this case was whether the appellants were entitled to exemption under the aforesaid notifications or not and since Section 35G stated that no reference lay to the High Court in respect of an order relating, among other thing, 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, the appellants were asked by us first to show that their reference application was maintainable. The appellants advanced two arguments in support of their contention that their application was maintainable :- (1) Questions relating to rates of duty are those which concern classifi2cation of goods under one entry of the Tariff or another.
The rates of duty were laid down in the statutory tariff under Section 3 of the Act. An exemption notification did not alter or reduce the rate but only remitted a portion of the duty payable. No question of tariff classification was involved in the appellants' case.
(2) Questions whether certain clearances of theirs were out of pre- Budget stocks or out of goods made without the aid of power were questions of fact and not questions relating to rate of duty.Orient Weaving Mills (P) Ltd. and Ors. v. Union of India and Ors. [1978 E.L.T.(J311)], the Supreme Court had observed that exemption notifications modified the rate of duty. He argued that all the points raised by the appellants were inseparably connected with the question of rate of duty. In support of his argument, he cited various reference orders of this Tribunal passed in similar cases where the issues involved were applicability of exemption notification or of time-bar in relation to demands/refunds of duty.
4. We have carefully considered the matter. There is a basic fallacy in the argument of the appellants that questions relating to rate of duty can arise only in matters of tariff classification. Exemption notifications also affect the rate of duty by giving full or partial concession from the rate as laid down in the Tariff Schedule. To take an example, the tariff entry may lay down the rate of duty in respect of certain goods as 20 per cent ad valorem; the exemption notification may exempt the duty in excess of 10 per cent ad valorem. In that case, the effective rate of duty payable on the goods becomes 10 percent. If in a case the question for determination is whether a person is entitled to pay duty at the exemption rate of 10 per cent or not, it cannot be anything but a question relating to rate of duty for purposes of assessment. The second argument of the appellants is also devoid of substance as it confuses the main issue of rate of duty with pleas in favour of and against that issue. The notifications under which full or partial exemption was claimed by the appellants laid down numerous conditions of eligibility such as value of the plant and machinery installed should not exceed Rs. 7.5/10 lakhs and total clearances in the preceding financial year should not exceed Rs. 30 lakhs, etc. etc.
These conditions had to be gone into to determine whether the appellants were eligible to avail of the exemption under these notifications or not. But the basic question still remained that of the appellants' entitlement to 'nil' rate of duty/concessional rate of duty under these notifications. Since Section 35G specifically bars reference to High Court in respect of any 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" and Section 35L(b) provides for an appeal direct to the Supreme Court against such orders of the Tribunal, we reject the reference application as not maintainable.