(Prayer: Appeal filed under Clause 15 of the Letters Patent against the order dated 16.11.2018 made in W.P.No.16968 of 2018.)
Vineet Kothari, J.
1. The appellant, Dr.Kamakshi Memorial Hospitals Private Limited, has filed the intra-court appeal against the judgment of the learned single Judge dated 16.11.2018 whereby the learned single Judge set aside the order passed by the Appellate Authority under the provisions of the Central Excise Act and remitted the matter back to the Adjudicating Authority for re-considering the whole issue and to pass fresh order of adjudication, after putting the appellant on notice again.
2. The facts in brief are as under:
The appellant Hospital imported a machine called "Cyclotron", which is an equipment primarily intended to develop radio pharmaceuticals. The appellant is providing preventive and curative treatment for cancer. Since the said machine Cyclotron induces radio activity in the course of developing and processing the FDG/F18, its establishment, functioning and processing is regulated by the Atomic Energy Commission of India. The appellant obtained necessary license/ permission from the Atomic Energy Regulation Board for the said purpose.
3. The question involved in the present case is about the classification of the said machine under the Central Excise Tariff Act whether it falls under CETH 28444000 of the said Act attracting Excise Duty at a higher rate, which was quantified by the Adjudicating Authority initially at Rs.78,19,339/-, or whether it will fall under CETH 30063000 as 'diagnostic reagent' attracting a lower rate of duty, which was quantified at Rs.36,64,506/-.
4. The Appellant was issued a Show Cause Notice initially by the Adjucating Authority on 03.5.2016 for applying the higher rate of duty under CETH 28444000 for demanding duty at Rs.78,19,339/-, with applicable interest from April 2011 to March 2013 and the appellant filed its detailed objection and reply on 26.8.2016. The Adjudicating Authority passed an Order-in-Original on 28.4.2017 and accepting the said objection of the Appellant that the goods in question, namely Cyclotron was not classifiable under CETH 28444000 as originally proposed in the Show Cause Notice, the Adjudicating Authority imposed lower duty under CETH 30063000 as "diagnostic reagent" classifiable under CETH 30063000 and amounting to Rs.36,64,506/-.
5. The appellant challenged the said Adjudicator's order before the first Appellate Authority, as the appellant felt that the Adjudicating Authority could not have demanded a different duty than the one proposed in the Show Cause Notice. The first Appellate Authority, namely the Commissioner (Appeals), vide his order dated 27.4.2018, held that the Adjudicating Authority should have levied the higher duty only under CETH 28444000 as "radio active elements" and therefore, he confirmed the said demand in terms of the original Show Cause Notice.
6. Against the said order of Commissioner (Appeals), instead of filing a second appeal before the Customs Excise and Service Tax Appellate Tribunal, the appellant directly approached this Court by way of writ petition, which came to be disposed of by the learned single Judge of this Court, by the order under appeal on 16.11.2018, remitting the matter back to the Adjudicating Authority with the following observations:
"26. In this case, I have already pointed out that the Adjudicating Authority himself had traversed beyond the scope of the show cause notice and had given a finding on the classification of the subject matter product as the one falling under heading 3006 3000 and not under heading 2844 4000 as alleged in the show cause notice. Therefore, it is evident that the Adjudicating Authority, before arriving at such conclusion on the classification of the subject matter product has not put the assessee on notice to call for their explanation/objection on such proposal. A finding given beyond the scope of the show cause notice, more particularly, touching upon the classification issue, without there being any notice of proposal on such issue, cannot be termed as a finding rendered in compliance of the principles of natural justice. Therefore, I am of the firm view that the very order of the Adjudicating Authority classifying the subject matter product as the one falling under 3006 3000 is not in confirmity with the principles of natural justice. It is not that the petitioner had accepted the said classification. On the other hand, the very filing of the appeal against such finding on classification would show that they are disputing even such classification. Under the above circumstances, when the appeal was filed, unfortunately the Appellate Authority, on his turn, travelled beyond the scope of the appeal and found that the subject matter product is not classifiable under 30063000 and on the other hand, it is classifiable under 2844 4000 as alleged in the show cause notice. I have already pointed out that this finding of the Appellate Authority is totally beyond the scope of the appeal as the Revenue has not chosen to file any appeal against the classification finding rendered by the Adjudicating Authority. I have already pointed out that the Appellate Authority has travelled beyond his power and competence conferred under section 35A of the said Act in re-classifying the subject matter product.
27. Considering the above stated facts and circumstances, this Court is of the view that the classification issue on the subject matter product is to be reconsidered once again from the stage of adjudication, after issuing proper notice of proposal on the petitioner. I have already pointed out that classifying the subject matter product under heading 3006 3000 by the Adjudicating Authority was not preceded by any show cause notice based on such heading. Therefore, any finding rendered by such authority on the classification in the absence of proper show cause notice cannot be sustained. Therefore, this Court is of the view that in order to decide the classification dispute, the matter has to go back to the Adjudicating Authority so as to pass a fresh order of adjudication on the classification issue, after issuing proper notice to the petitioner.
28. Accordingly, the Writ Petition is allowed and the impugned order of the Appellate Authority is set aside and the matter is remitted back to the first respondent, Adjudicating Authority, for re-considering the whole issue and pass a fresh order of adjudication, after putting the petitioner on notice. This Court is also of the view that before issuing such notice on the petitioner, it is better for the Adjudicating Authority to take opinion/view from the experts on the subject matter product and thereafter, to form an opinion and issue show cause notice to the petitioner. Needless to say that the earlier finding rendered by the Adjudicating Authority on the above classification issue, cannot stand in the way of deciding the matter afresh after considering the objections filed by the petitioner. In other words, the Adjudicating Authority has to apply his independent mind on the issue, uninfluenced by any of the observations made in the order of Adjudicating Authority as well as in the order of the first Appellate Authority. The whole exercise shall be done by the first respondent, Adjudicating Authority, within a period of twelve weeks from the date of receipt of a copy of this order. No costs. Consequently, connected miscellaneous petitions are closed."
7. Aggrieved by the aforesaid order of the learned single Judge, the appellant has preferred the above said appeal.
8. The learned counsel for the appellant, Mr.N.Viswanathan, a former Revenue Officer himself submitted that firstly, the Commissioner (Appeals), the first Appellate Authority, had no jurisdiction to restore the demand as per the initial show cause notice of the Adjudicating Authority and raised the demand of excise duty, applying CETH 28444000 and could have either confirmed, modified or annulled the order passed by the Adjudicating Authority which was under appeal before him, as the Adjudicating Authority had only imposed the lower rate of excise duty under CETH 30063000 and therefore, the appellant was justified in assailing the said order directly before the learned Single Judge by way of writ petition. But, the learned Single Judge has set aside both the orders and remitted back the entire matter to the Adjudicating Authority and has directed issuance of a fresh show cause notice, which is now barred by limitation under Section 11A of the Act and therefore, such a direction could not have been made by the learned Single Judge.
9. The learned counsel relied upon certain decisions to support his contention, namely Commissioner of Customs & Central Excise v. Hongo India (P) Ltd. [2009 (236) ELT 417 (SC)], Rajaram Johra v. Commissioner of Customs (Airport & Cargo), Chennai [2019 365 ELT 424 (Mad.)], and Union of India v. Kirloskar Pneumatic Company [1996 (84) ELT 401 (SC)].
10. The above judgments have been relied upon to throw light on the scope of the appellate powers of the authority as well as the parameters within which the High Court should exercise its writ jurisdiction. Here itself, it may be stated that there is no quarrel on the propositions of law discussed in the above judgments and therefore, they are not being discussed in detail about the parameters of jurisdiction and powers of the Appellate Authority under the Act.
11. On the other hand, learned counsel for the Revenue, Mr.Pramod Kumar Chopda, submitted that the learned Single Judge has rightly set aside both the orders and has restored the matter back to the Adjudicating Authority, as there was apparently a confusion about the classification of the machine "Cyclotron" imported in the present case and applicable Entry under the Central Excise Tariff Act and therefore, since the first Appellate Authority had taken a different view than the one taken by the Adjudicating Authority and assessed the demand as per the original show cause notice issued by the Adjudicating Authority himself, whereas the Adjudicating Authority had assessed only a lower rate of duty under a different Chapter, the entire issue deserved to be thrashed out and discussed in detail once again with the help of the relevant evidence and therefore, the learned Single Judge was perfectly justified in remanding the case back to the Assessing Authority.
12. The learned counsel further submitted that the appellant had an alternative remedy to approach the CESTAT by way of second appeal against the order passed by the Commissioner (Appeals), but, the appellant itself cut short the said regular appeal remedy provided under the Act and approached this Court directly against the order of the first Appellate Authority and therefore, in view of the availability of the alternative remedy to the appellant, the writ petition could not even be entertained by the Court. But, since the same was entertained and the matter has been remitted back to the Adjudicating Authority, no valid exception to the same can be taken by the appellant.
13. Mr.Chopda, learned counsel also contended that there is no question of any fresh show cause notice being issued in the present case because the lis or dispute in question has never been decided on merits by the High Court and it is the original show cause notice already issued to the appellant will be decided again in accordance with law only after giving an opportunity to the appellant to show cause against the applicability of CETH 30063000 and therefore, there is no question of any limitation of Section 11A of the Act hitting such a notice now, as contended by the appellant.
14. Having heard the learned counsel for the parties and upon perusal of the material on record and judgments cited at the Bar, we are of the clear and considered opinion that there is no merit in the present writ appeal of the assessee / appellant and the same deserves to be dismissed. The reasons are as under.
15. We do not find any merit in the contention raised by the learned counsel for the appellant that the Commissioner (Appeals), while dealing with the first appeal of the appellant, had no power to assess the duty on the machine "Cyclotron" imported in terms of the Show Cause Notice issued by the Adjudicating Authority himself, but assessed the duty at a lesser rate while passing the original adjudicating order. The powers of the first Appellate Authority are clearly defined in Section 35A(3) of the Act, which clearly stipulates that the Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed against. The words "as he thinks just and proper", in our opinion, are wide enough to give equally co-extensive powers to the Appellate Authority as are available to the Adjudicating Authority, to pass appropriate orders of assessment under the said law.
16. The determination of duty with relation to particular Entry of the Central Excise Act was well within the power of the first Appellate Authority as well and therefore, even if the appellant filed an appeal against the lower rate of duty than the one proposed in the Show Cause Notice, it does not prevent the Commissioner (Appeals) from restoring a higher demand of duty in terms of the Show Cause Notice issued to the Appellant by the Adjudicating Authority. The Commissioner (Appeals) has given his own reasons for assessing the duty under the particular Entry No.28444000. The Appellate Authority was not bound by the demand of lower rate of duty under CETH 30063000 by the Adjudicating Authority.
17. If what the learned counsel for the appellant contended was right, then the powers of the Appellate Authority will be rendered nugatory and unnecessarily narrowed or restricted down, whereas the Legislature never intended to do so. Therefore, wide power has been conferred under Section 35A(3) of the Act upon the Appellate Authority. Therefore, we reject the contention of the learned counsel for the appellant.
18. As far as the option of the appellant to file directly a writ petition against the order of the first Appellate Authority is concerned, we equally deprecate the same. When a regular remedy is provided under the law, by way of second appeal to the Tribunal against the order passed by the first Appellate Authority, there was no reason for the appellant to directly invoke the writ jurisdiction of this Court against the order passed by the first Appellate Authority. Section 35B of the Act provides for an appeal to the Appellate Tribunal against the orders passed by the Commissioner (Appeals) under Section 35A of the Act. It is against the order of the Appellate Tribunal only that Section 35G of the Act provides for an appeal to the High Court. Instead of availing the said remedies in regular seriatum, the appellant itself cut short the said process and invoked the writ jurisdiction of this Court.
19. We are not at all impressed with the contention raised at the Bar by the appellant that even the powers of the writ Court is to be curtailed or restricted in any manner. We do not see any error, much less miscarriage of justice in the directions passed by the learned Single Judge in remanding the entire case back to the Adjudicating Authority for deciding the case afresh in accordance with law. The appellant himself created the confusion by contending that applying the lower rate of duty against the Show Cause Notice issued by the Adjudicating Authority, even though he succeeded before the Adjudicating Authority, who, to his dismay, annulled the favourable part of the order of the Adjudicating Authority and raised the demand of higher duty as originally p
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roposed in the Show Cause Notice. Faced such an adverse situation, instead of availing the regular remedy by way of second appeal before CESTAT, the appellant chose to invoke the writ jurisdiction, where the learned single Judge, in our opinion, had rightly and justifiably restored the matter back to square one and directed the Assessing Authority to decide the issue again afresh in accordance with law. Such a power to remand back to the Adjudicating Authority cannot be objected to by the appellant by way of present intra court appeal. 20. We do not find any such restriction in any law propounded by the Hon'ble Supreme Court in the judgments relied upon by the learned counsel for the appellant. Further, we are of the opinion that directions of the learned Single Judge do not result in giving a fresh Show Cause Notice and fresh initiation of proceedings itself de novo. The lis already started by the issuance of Show Cause Notice to the appellant by the Adjudicating Authority way back on 03.5.2016, in which, what is to be decided again is all in a consequence of the said Show Cause Notice dated 03.5.2016 itself, of course, after giving further opportunity to the appellant about the applicability of CETH 30063000. Therefore, there is no question of any fresh Show Cause Notice to be issued by the Adjudicating Authority which may be hit by the provisions of limitation under Section 11A of the Act, as contended by the appellant. 21. We, therefore, do not find any merit in any of the contentions raised before us by the learned counsel for the appellant / petitioner and the present appeal is found to be devoid of merits and therefore, the same is dismissed. There shall be no order as to costs. Consequently, CMP No.6386 of 2019 is also dismissed.