UDAY UMESH LALIT, J. - (1.) This Appeal under Section 35L of the Central Excise Act, 1944 ('the Act', for short) arises out of Order dated 31.05.2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, Kolkata ('the Tribunal', for short) dismissing Appeal No. E/211/07 preferred by the Appellant herein.
(2.) The facts leading to the filing of this Appeal, in brief, are as under:- a)On 23.09.2005 a search was conducted at the registered office as well as the factory premises of the Respondent herein bytheofficers oftheCentralExcise Commissionerate on the basis that the Respondent manufactured Foots Oil, Pressed Wax, Pressed Paraffin Wax without observing the mandatory procedure and clearing Excise Duty. Soon thereafter, Writ Petition No. 2073 of 2005 was filed by the Respondent before the High Court1 submitting inter alia that the Assistant Commissioner of Central Excise had no authority to proceed in the matter as no manufacturing activity was undertaken by the Respondent. The High Court by Order dated 28.11.2005 directed as under:- "Having heard the Learned Advocates appearing for the parties and considering the facts and circumstances of the case, I dispose of this petition by directing the respondent No.1 to decide the preliminary objection raised on behalf of the petitioners regarding the jurisdiction of the respondents to proceed in the matter under Central Excise Act before deciding any other issues in this matter on merit. Since no affidavit in opposition has been used on behalf of the respondents, all allegations levelled against the said respondents in this writ petition should not be deemed to be admitted." b) On 21.03.2006 a Show Cause Notice was issued by the office of the Commissioner of Central Excise, Haldia, which stated inter alia that in terms of the aforesaid directions of the High Court, the Assistant Commissioner of Central Excise had considered the preliminary objection and decided to proceed in the matter. It further recited that from the facts available on record it appeared that manufacturing activity was being undertaken by the Respondent without following due procedure and without paying any Excise Duty. It was observed:- "Whereas M/s. Krishna Wax (Pvt.) Ltd., having their Registered Office at Classic Tower, 10A & 11A Floor, 56 Gariahat Road, Kolkata, had filed a writ petition (No.2073 of 2005) in High Court at Calcutta and obtained an order, whereby the respondent, namely, Assistant Commissioner of Central Excise, was to decide preliminary objection regarding jurisdiction to proceed in the matter under Central Excise Act on merit and it appears to the respondent that the matter can be proceeded with under Central Excise Act and whereas it appears from the facts mentioned below that M/s. Krishna Was Private Ltd. having their manufacturing unit at....." After the aforesaid opening recitals, the facts were considered and finally the Respondent was called upon to show cause :- "i) Why the Central Excise Duty of Rs.1,56,31,712.00 (rupees one crore fifty six lakhs thirty one thousand seven hundred and twelve only) Education Cess of Rs.2,11,007.00 (rupees two lakhs eleven thousand and seven only as detailed in Annexure-A) should not be demanded and recovered under the extended proviso to Section 11A of the said Act? ii) Why interest as applicable at the appropriate rate should not charged under Section 11 AB of the said Act. 3.6. The "said party" is directed to produce all the evidence upon which they intend to rely in support of his defense, when the case will be heard before the Adjudicating Authority. 3.7 The "said party" should also inform whether they wish to be heard in person or through authorized representative when the case will be posted for hearing." c) The Respondent again approached the High Court by filing Writ Petition No. 1719 of 2006, which was disposed of on 27.11.2006 bythe HighCourtwith following observations:- "The show cause notice has mainly been challenged on the ground that notwithstanding an order dated 28.11.2005 of this Court (P.K. Chattopadhyay, J.) directing the respondent, Commissioner of Central Excise, Anti-Evasion Unit to decide the preliminary objection raised by the petitioners regarding jurisdiction of the respondents to proceed against the petitioners under the Central Excise Act, 1944, he said respondent had not done so. It was alleged that the Show Cause Notice had been issued without deciding the preliminary objection of the petitioner. Mr. Tarafdar has produced the records pertaining to the case. It appears that the preliminary objection of the petitioners was decided by an order dated 15th March, 2006. A copy of the said order shall immediately be furnished to the petitioner and in any case within a week from date. The petitioners shall submit their reply to the Show Cause Notice impugned within four weeks from date. It will be open to the petitioners to take objection to the jurisdiction of the concerned Respondents to proceed against the petitioner under the Central Excise Act, 1944. The adjudication proceedings shall be conducted strictly in accordance with law and in compliance with principles of natural justice. The writ application is disposed of accordingly." d) Consequently, a copy of the Internal Order dated 15.03.2006 was furnished to the Respondent. Without filing any reply to the Show Cause Notice and, adopting the course in tune with the observations of the High Court in its Order dated 27.11.2006, the Respondent chose to file Appeal No.01/HAL/07 before the Commissioner of Central Excise (Appeals-I) Kolkata challenging the aforementioned Internal Order dated 15.03.2006. It was submitted that no manufacturing process was being undertaken by the Respondent. An objection was taken on behalf of the Appellant that the Appeal was completely premature as the matter was not yet gone into; no reply to the Show Cause Notice was filed by the Respondent and there was, as a matter of fact, no adjudication by the concerned authority. The objections were rejected by the Appellate Authority observing that an appeal could lie against any order passed under the Act by a Central Excise Officer lower in rank to the Commissioner. It was further concluded that the process undertaken by the Respondent did not amount to manufacture as under:- "I, therefore, find that no new produce has emerged. The names are used interchangeably in literature, character is not changed; only by a mechanical process oil has been separated, but still a high oil content has remained in the wax. Both the raw materials and end products are sold to grease manufacturers and lubricant manufacturers. From tariff also no new entry can be cited for the product. The process involved as such cannot be called incidental to manufacture. Department has failed to discharge the burden to prove manufacture." The appeal was thus allowed by the Appellate Authority vide order dated 10.01.2007. e) The Appellant, being aggrieved, filed Appeal No. E/211/07 before the Tribunal, which came to be dismissed by order dated 31.05.2017. The Tribunal concluded that the decision dated 15.03.2006 was appealable before the Commissioner (Appeals) under Section 35 of the Act as it entailed civil consequences. It observed:- "12. On perusal of the process as stated hereinabove, we find that the Respondent imported the materials under CTH 27129090 and 27129090 amongst others and the Revenue also classified the processed material under the same tariff item. We find that the entire process undertaken by the Respondent-assessee is mainly a manual process and there is a marginal use of hydraulic pressure in the process. 15. In the present case, we find that the imported Slack Wax, Residue Wax is in semi-solid form in drums. Foots Oil is part of Residue Wax or Slack Wax being lighter comes up on surface and siphoned by tilting the drums. The thinner Slack Wax called Foots Oil is thus separated. The pressure created by liquid through orifice for the purpose of exit is known as the hydraulic pressure. Basically, processed materials are emerging from the imported materials and the Revenue classified the processed material under the same Tariff Heading and CTH. The Hon'ble Supreme Court and the Tribunal in various decisions held that such process cannot be treated as manufacture under Section 2(f) of the Central Excise Act, 1944. Thus, we find force in the findings of the ld. Commissioner (Appeals)."
(3.) We heard Ms. Nisha Bagchi, learned Advocate, in support of this Appeal and Ms. Christi Jain, learned Advocate, for the Respondent. Ms. Bagchi, learned Advocate submitted that the process of adjudication had never taken place in the matter; there was no response to the Show Cause Notice; nothing was submitted by the Respondent denying or disputing the assertions made in the Show Cause Notice and the matter was considered by the Appellate Authority and the Tribunal from completely incorrect perspective. According to her, in cases such as the present one, where the manufacturing process was undertaken and the goods were cleared without payment of any Excise Duty, the Show Cause Notice itself would cover not only the basic issue whether the process so undertaken amounted to manufacture or not but also the resultant liability, in case the process in question amounted to manufacture; and it would always be open to the assessee to make such submissions touching upon both the issues; and the proper course was to let the proceedings pursuant to the Show Cause Notice, be taken to a logical conclusion. Ms. Christi Jain, learned Advocate for the Respondent submitted that the Internal Order dated 15.03.2006 had taken a view that the process amounted to manufacture and such assessment was arrived at without affording any hearing to the Respondent. Said order affected the interest of the Respondent adversely and the Respondent was therefore entitled to challenge the Order dated 15.03.2006. According to her, after due service of said Order dated 15.03.2006, the Respondent was well within its rights to challenge said Order. In support of her submission, reliance was placed on the decision of this Court in GKN Driveshafts (India) Ltd. v. Income Tax Officers and others, (2003) 1 SCC 72 and of the decision of the Tribunal in Reliance Industries Ltd. v. Collector of Central Excise, 1987(11) ECR 287.;