The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai bench has directed the Central Board of Indirect Taxes and Customs (CBIC) to take appropriate measures to take care of issues relating to non-following of judicial decisions by the excise department.
The appellant, Asmaco Industries Limited, is in the business of manufacturing of ‘tape’ of several varieties and proceedings were initiated against them for having cleared ‘masking tape’ without payment of duties of central excise on the claim that these had been merely slit from the ‘jumbo rolls’ imported on payment of appropriate duties of customs. The excise department alleged that the ‘masking tape’, liable to duty of 16% corresponding to sub-heading 4823 90 of the Schedule to Central Excise Tariff Act, 1985.
The appellant contended that the issue in dispute, though dating back to a couple of decades and despite judicial decisions setting aright the erroneous construction on the part of central excise authorities, persists as impugned order-in-appeal no. BC/406/MUM-III/2011-12 dated 30th March 2012 of Commissioner of Central Excise (Appeals), Mumbai-III resists settled law on classification of the impugned goods compelling re-statement of their consistent submissions once again in this appeal of M/s Asmaco Industries Ltd for rendering justice to them.
Regarding the rate of duty applicable, the Tribunal bench comprising Justice Dilip Gupta, President and Mr C J Mathew, Member (Technical) observed that “The goods impugned in this dispute are ‘masking tape (crêpe paper)’ which, but for its size, remained in the same form and retained all the characteristics of utility as before. The applicability of these decisions, relying upon the last of the ‘four category test’ to the exclusion of the other three, to the issue before is just the reverse and in favour of the appellant. The earlier decisions of the Tribunal, referred supra, in the very same dispute of the same assessee for different periods are emphatic in holding that the process of slitting jumbo rolls does not amount to manufacture within the meaning of section 2(f) of Central Excise Act, 1944. There are no fresh developments that induce us to consider any proposition to the contrary.”
Noting that this is certainly a matter of concern, the division bench observed that “We do not wish to elaborate on the inadequate understanding of the place assigned to the Harmonized System (HS) Code even in determination of rate of duty, let alone on the evisceration of process for determining ‘manufacture’, the incorrect appreciation of the relevant facts in the decision cited and the illogical proposition of chapter notes deeming manufacture any which way.”
Concluding the order, the Tribunal held that “the impartiality, and credibility, of taxation system rests upon certain pillars among which are determination of the rate and value, provisions for recovery and refund, and circumstances in which goods may be interfered with in the realm of quasi-judicial determination subject only to appellate correction and oversight. Implicit in such design is the inevitability of judicial discipline but for which these pillars would stand askew straining both the aesthetics and the foundation of the tax structure. It would appear that the fundamental lessons tend to be ignored or overlooked and the only remedy lies in frequent, and regular, reiteration. That the administrative authority has failed to instill and inculcate such essence in adjudicating authorities could not be more apparent; if it be an aberration, appellate rectification would pass muster but if it be symptom of a larger malaise, the cost to the system should awaken the Central Board of Indirect Taxes & Customs (CBIC) to the approaching crisis and deal with it appropriately.”
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