By TIOL News Service

NEW DELHI, DEC 06, 2012: AS per proviso (b) to Section 35B(1) of the Central Excise Act, 1944, the Tribunal shall not have jurisdiction if the disputed order relates to:

(b) rebate of duty of excise on goods exported to any country or territory outside India or on excisable materials used in the manufacture of goods which are exported to any country or territory outside India;

But what will happen if the dispute involves rebate as well as classification? In this interesting case, the assessee claimed classification of the goods exported Bucket and waste bucket under Tariff heading 73269099 attracting duty @ 16%. The department wanted to classify the goods under heading No 7323 in which case the goods are exempted under Notification No 10/03 dated 01.03.2003 and in terms of provisions of Section 5A(1A) of the Central Excise Act, 1944, no duty can be paid and hence no rebate.

The exporter got relief with the Commissioner (Appeals) upholding the classification of the goods and granting consequential relief.

Aggrieved by this order, the department filed Revision Application before the Joint Secretary. The Joint Secretary while rejecting the application held that:

Government further notes that issues of classification of exported goods and sanction of rebate claims is decided together by single order by the lower authorities. In terms of section 35EE of the Central Excise Act the issue relating to rebate claim filed under Rule 18 of the Central Excise Rules, 2002 comes in the jurisdiction of this authority. Whereas appeal against Order-in-Appeal passed by Commissioner(Appeal) on the issue of classification is to be filed before CESTAT. Here, the eligibility of the rebate claim depends on the classification of goods. Since Commissioner (Appeals) has classified the goods under tariff heading 7326.90 where there was no exemption from payment of duty, the rebate claims were rightly held admissible.

The department, now filed an appeal before the CESTAT on classification issue with condonation of delay.

The Member (J) held that:

In an ordinary course, pendency of appeal before wrong forum is required to be considered a mistake and the period of such pendency is required to be excluded for the purpose of limitation. However, in the instant case, we find that the stand taken in revision application does not stand rejected by Govt. of India on the point of jurisdiction but the same stand considered on merits and is accordingly rejected. As such, the reasons adopted by the Joint Secretary for rejecting the application on merits and by observing that the classification issue does not stand set aside by CESTAT cannot be adopted as a reason for filing another appeal before Tribunal in respect of the same order of the Commissioner (Appeals).

However, the Member (T) held:

When the issue is inherently of a nature where the law provides appeals two different authorities in two aspects of the disputed issue, the appeal itself cannot fail for the reason that for the reason that the matter involves two such aspects or for the reason that the statute provides so or. The only question that can arise is what should be the sequence in which the two aspects have to be decided. In this case, first the classification is to be decided and then the eligibility for rebate. Revenue was not conscious of this order and filed application to J.S. apparently because they got focused on the outcome, which is rebate, and not the order in which issues are to be decided. This cannot be a reason to deny the right of the revenue to set right an error in classification (assuming that such error is caused in the impugned order) of the goods. Classification of goods is a matter of recurring consequence and such matters cannot be allowed to rest for such technicalities.

On reference to the Third Member, the Third Member held:

From the perusal of Paras 9,10 & 11 of order of the Jt. Secretary (RA), it is clear that the operative part of the order rejected the department's revision application as being devoid of merits, and thus, the Commissioner (Appeals)'s order allowing the rebate to the respondent stands affirmed. It is clear that order of the Commissioner (Appeals) allowing rebate claim has been affirmed on the ground that the Commissioner (Appeals) had held the goods in question as classifiable under heading 7326 and that order was not challenged by the Department and has not been set aside by the Tribunal. Since operative portion of the Jt. Secretary (RA) order rejects the Department's revision application and confirms the Commissioner Central Excise (Appeals)'s order allowing the rebate by treating the goods as classifiable under heading 73.26, in my view, the order of the Commissioner (Appeals) stands merged in the order of the Jt. Secretary (RA). In view of this, no appeal against order of the Commissioner (Appeals) can be filed as it no longer exists. In my view, para 10 & 11 of the order of the Jt. Secretary cannot be treated as conditional order subject to the question of classification being decided one way or the other by the Tribunal. Therefore, last sentence of Jt. Secretary (R.A.)'s order rules out appeal against the same order of Commissioner Central Excise (Appeals) before the Tribunal. Since what exists is the order of the Jt. Secretary (R.A.), it has to be challenged before the higher forum i.e. High Court.

(See 2012-TIOL-1785-CESTAT-DEL)