M/S. MIL INDIA LTD. versus COMMISSIONER OF CENTRAL EXCISE, NOIDA

Citation: [2007] 3 S.C.R. 476 · Decided: 01-03-2007 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Case Partly allowed

Judgment (excerpt)

A 
MIS. MIL INDIA LTD. 
v. 
f 
COMMISSIONER OF CENTRAL EXCISE, NOIDA 
MARCH I, 2007 
B 
(S.H. KAPADIA AND B. SUDERSHAN REDDY,JJ.] 
Central Excise Tariff Act, 1985; S.H. 8479.90: 
Assessee manufacturing plants and equipments for soaps/detergent-
I 
-~ 
c Entering into an agreement with other companies for supply of equipments 
and also other items directly bought ji·om market-Levy of excise duty on 
bought out items-Challenge to-Held: Excisability is a matter of principle-
Tribunal is the highest authority to decide on facts about excisability of 
goods-Thus, High Court erred in holding that the Tribunal could not have 
D examined the question of dutiability, once on merits, the order of appellate 
authority became final-An order of assessment under the taxing law does 
not become final before the adjudicating authority, it is subject to appeal 
before the appellate authority-When the principle of law is involved, an 
appeal also lies to the appellate Tribunal under the provisions of the Act -
Hence, assessee could agitate the question of dutiability before the Tribunal-
E Though the appellate authorities directed to reduce the demand of duty for 
a period of 6 months while remanding the matter lo adjudicating authority 
for quantification but the adjudicating authority did not reduce the demand 
of duty accordingly-Hence, demand of duty reduced ji·om Rs.94,03,500 lo 
Rs. 23,56,000-Assessee is entitled to benefit of MODVAT credit-Central 
F 
Excise Act, 1944-s.35. 
Appellant-assessee is engaged in the manufacturing of plant and 
equipments for soaps, detergents and allied industries falling under Chapter 
.,. 
Sub-Heading 8479.90 of the Central Excise Tariff Act, 1985. It had entered 
into a composite contract with other companies for supply of various 
G equipments manufactured by it. In addition, various duty paid bought out items 
were also agreed to be supplied by it to the companies. A show cause notice 
was issued by the Revenue authorities to the assessee demanding duty on the 
various bought out items supplied by the assessee directly to the other 
.. 
companies in terms of the agreement. The adjudicating authority confirmed 
• 
the demand of additional excise duty. Aggrieved, the assessee filed an appeal 
H 
476 
MIL INDIA LTD. r. COMMNR. OF CENTRAL EXCISE, NOIDA 
477 
oo 
before the appellate authorities. The authorities held that the value of the A 
" 
bought out items was includible in the assessable value of the equipments 
manufactured by the assessee. However, the matter was remanded to the 
adjudicating authority for quantification of the duty liability. In the quantum 
dispute the adjudicating authority confirmed the same amount of duty, although 
the period for which the assessee was liable to pay the duty was reduced to 6 
B 
months. Aggrieved, the assessees once again moved the adjudicating authority. 
The appellate authorities confirmed the duty demanded on the ground that 
the assessee had failed to produce evidence to disprove the quantification made 
, 
.\ 
by the authorities. Assessees filed an appeal before the Tribunal. The Tribunal 
held that no duty was payable on the bought out items; that the assessees were 
entitled to raise the issue of dutiability of bought out items even though in c 
the earlier round of litigation they did not challenge the order of the appellate 
authorities on merits; that the Revenue was not entitled to add the value of 
the bought out items in the assessable value of the goods manufactured by 
the assessees. Aggrieved, the Revenue preferred an appeal before the High 
Court under Section 35G of the Central Excise Act, 1944, the High Court 
held that the Tribunal was not competent to entertain the appeal preferred by D 
the assessee against the later order of the appellate authorities. Hence the 
present appeal. 
., 
• 
Partly allowing the appeal, the Court 
HELD: 1.1. The High Court had erred in holding that the Tribunal could E 
not have examined the question of dutiability, once on merits, the order of the 
appellate authority became final. One must understand that excisability is a 
matter of principle. The Tribunal is the highest authority in hierarchy to 
decide on facts whether the bought out items were dutiable or not The Tribunal 
was not bound by the decision of the appellate authority on the question of 
dutiability or excisability. By order dated 22.3.2000 appellate authority had F 
remanded the matter to the adjudicating authority on the question of 

Excerpt shown. Read the full judgment & AI analysis in Lexace.