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2018 DIGILAW 2276 (ALL)

R. P. Locks Co. v. Commissioner of Central Excise

2018-11-01

DEVENDRA KUMAR ARORA, RAJNISH KUMAR

body2018
ORDER : 1. Heard Mr. Prashant Chandra, Senior Advocate, assisted by Ms. Meha Rashmi, learned Counsel for the review petitioners/respondents and Mr. Dipak Seth, learned Counsel for the respondent/appellant. 2. The instant Review Application has been preferred under Chapter V Rule 12 of the Allahabad High Court Rules, 1952, read with Order XLVII Rule 1 of the Code of Civil Procedure, seeking review of the judgment and order dated 24.3.2017 passed in First Appeal From Order No. 686 of 2004, whereby this Court, while allowing First Appeal From Order No. 686 of 2004, set-aside the judgment of the Customs, Excise Tax Tribunal, New Delhi dated 17.12.2003 and restored the order of Commissioner of Central Excise, Lucknow dated 17.1.2002. 3. M/s. R.P. Locks Company (review petitioner No. 1 herein) is partnership firm having two partners, namely, M/s. Anil Locks Ltd., Sri Anil Monga and Smt. Shakuntala Monga. The partnership firm is engaged in the purchase and selling of various types of locks in the brand name "Harrison". 4. According to the review petitioners, review petitioner No. 1-M/s. R.P. Locks Company, which is engaged in trading in locks under its own brand, namely, 'Harrison', purchases locks from many artisans in Aligarh, who use traditional methods of lock manufacturing without the use of power. Thereafter, M/s. R.P. Locks Company affixes their brand name 'Harison' on these locks. M/s. R.P. Locks Company also purchases duty paid locks from M/s. Key Lock (India). 5. On receipt of the intelligence information with respect to not accounting production of locks by the M/s. R.P. Locks Company in the brand name 'Harrison' which has been supplied to the M/s. R.P. Locks Company by M/s. Key Locks on payment of duty, an inquiry was made and on an inquiry, search operation was conducted in the premises of M/s. Key Lock and M/s. R.P. Locks Company by the officers of Central Excise, Lucknow on 29.9.2000. Subsequently, a show-cause notice dated 23.3.2001 was issued to the review petitioners inter-alia proposing to demand Central Excise duty amounting to Rs. 3,89,05,037/- pertaining to the period April, 1996 to September, 2000 under proviso to Section 11-A (1) of the Central Excise Act along with interest and penalties. 6. After receiving the aforesaid show-cause notice dated 23.3.2001, the review petitioners and other noticee had submitted replies, denying the entire allegation. 3,89,05,037/- pertaining to the period April, 1996 to September, 2000 under proviso to Section 11-A (1) of the Central Excise Act along with interest and penalties. 6. After receiving the aforesaid show-cause notice dated 23.3.2001, the review petitioners and other noticee had submitted replies, denying the entire allegation. Not satisfied with the reply so tendered, cases initiated vide show cause notice dated 23.3.2001 were adjudicated by means of Order-in-Original No. 01/Commr./Lko./2002 dated 17.1.2002 passed by the Commissioner. Feeling aggrieved, the said order dated 17.1.2002 was challenged before the Customs, Excise & Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as the 'Tribunal') by the noticee while filing separate appeals under the provisions of Section 35-C of the Central Excise Act, 1944. The Tribunal, after hearing the parties, disposed of the appeals by the common order No. 967-972/03-B dated 17.12.2003. 7. Not being satisfied with the judgment dated 17.12.2003, the Commissioner of Central Excise, Lucknow (hereinafter referred to as the "Revenue") preferred First Appeal From Order No. 686 of 2004. A Division Bench of this Court, vide order dated 20.3.2017, formulated following substantial questions of law for proper adjudication of the matter: "(i) Whether the Tribunal was justified in holding Assessee not manufacturer of "Harrison" brand locks ignoring the fact that parts/raw material for assembling locks used to be supplied by Assessee to labourers, who are paid wages for such assembling and assembled locks are received and process of polishing, nickeling, branding etc. is under gone at the premises of Assessee. The entire exercise cumulatively results in bringing out a new item namely, lock of a particular brand and, therefore, amounts to manufacture as defined in Section 2 (f) of Act, 1944; (ii) Whether definition of "manufacturer' in Section 2 (f) of Act, 1944 being inclusive would cover various activities referred to in question 1 and in totality will answer the definition of "manufacturer'; (iii) Whether findings recorded by Commissioner of Central Excise regarding functioning of Assessee in making "Harrison" brand locks, having not been reversed, still Tribunal could hold Assessee, not a manufacturer of "Harrison" brand locks, such a judgment of reversal without reversing findings of Commissioner is sustainable in law; (iv) Whether judgment of CCE, Baroda Vs. M.M. Khambhatwala, 1996 (84) ELT 161 S.C. is applicable in the case in hand and has rightly been applied by Tribunal, though facts in the aforesaid judgment were somewhat different." 8. M.M. Khambhatwala, 1996 (84) ELT 161 S.C. is applicable in the case in hand and has rightly been applied by Tribunal, though facts in the aforesaid judgment were somewhat different." 8. On 24.3.2017, after hearing the parties, a Division Bench of this Court, while allowing the appeal, set-aside the judgment of the Tribunal dated 17.12.2003 and restored the order of the Commissioner dated 17.1.2002. 9. Hence the instant review application. 10. While seeking review of the judgment and order dated 27.4.2017, Mr. Prashant Chandra, Senior Advocate, appearing on behalf of the review petitioners has submitted that in the judgment and order dated 27.4.2017, there are factual and legal errors apparent on the face of records in as much as no finding was returned on the maintainability of the appeal, which was a preliminary objection taken by the review petitioners in their objections. Further an error apparent on the face of the record has crept in rendering the judgment and order dated 24.3.2017 as the appeal has been allowed on the sole finding that the raw material for locks is being supplied by the Assessee ignoring the settled law that the question whether the producer or manufacturer is or is not the owner of the goods is not determinative of liability as held by the Apex Court in the case of Ujagar Prints vs. Union of India, 1998 (38) ELT 535. 11. In totality, the arguments of the learned Counsel for the Review Petitioner are that factual and legal aspects were not considered by the co-ordinate bench while passing the judgment, which is sought to be reviewed and no specific finding has been recorded in respect of each issues separately, which has caused serious prejudice to the Review Petitioners. 12. In contrast, the Counsel for the department while defending the judgment has argued that neither any new and important matter or evidence has been brought which was not in their knowledge or could not be produced by them at the time of hearing nor any error on the face of record has been pointed out as such the Review Application is beyond the scope of provisions of Order 47 Rule 1 CPC. It has also been asserted that the grounds raised in the Review Application are basically on the merits of the matter as if the appeal under Section 35G of the Central Excise Act, 1944 is to be heard and decided afresh after hearing the arguments again. The question relating to maintainability of the appeal raised by the Review Petitioner on the ground that the matter was covered by Section 35L of the Central Excise Act, 1944 is totally misconceived. Neither such an issue was involved in the appeal nor has been decided by the coordinate bench. 13. Before proceeding further, it would be useful to refer Order 47 Rule 1 of the Code of Civil Procedure which deals with the power of review and reads as follows:- "Application for review of judgment.-(1) Any person considering himself aggrieved - (a) by a decree or order from which an appeal is allowed, but from which no appeal has been preferred. (b) by a decree or order from which no appeal is allowed, or (c) by a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the decree or made the order. (2) A party who is not appealing from a decree or order may apply for a review of judgment notwithstanding the pendency of an appeal by some other party except where the ground of such appeal is common to the applicant and the appellant, or when, being respondent, he can present to the Appellate Court the case on which he applies for the review. Explanation.- The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment. The grounds enumerated therein are specific. Explanation.- The fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment. The grounds enumerated therein are specific. The principles for interference in exercise of review jurisdiction are well settled. The Court passing the order is entitled to review the order, if any of the grounds specified in the aforesaid provision are satisfied. 14. In Thungabhadra Industries Ltd. v. Govt. of A.P. AIR 1964 SC 1372 , the Court while dealing with the scope of review had opined:- "What, however, we are now concerned with is whether the statement in the order of September 1959 that the case did not involve any substantial question of law is an 'error apparent on the face of the record'. The fact that on the earlier occasion the Court held on an identical state of facts that a substantial question of law arose would not per se be conclusive, for the earlier order itself might be erroneous. Similarly, even if the statement was wrong, it would not follow that it was an 'error apparent on the face of the record', for there is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by 'error apparent'. A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. 15. In Parsion Devi v. Sumitri Devi; (1997) 8 SCC 715 , the Court after referring to Thungabhadra Industries Ltd. (supra), Meera Bhanja v. Nirmala Kumari Choudhury; (1995) 1 SCC 170 and Aribam Tuleshwar Sharma v. Aribam Pishak Sharma; (1979) 4 SCC 389 , held thus:- "Under Order 47 Rule 1 CPC a judgment may be open to review inter alia if there is a mistake or an error apparent on the face of the record. An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of the record justifying the court to exercise its power of review under Order 47 Rule 1 CPC. An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of the record justifying the court to exercise its power of review under Order 47 Rule 1 CPC. In exercise of the jurisdiction under Order 47 Rule 1 CPC it is not permissible for an erroneous decision to be "reheard and corrected". A review petition, it must be remembered has a limited purpose and cannot be allowed to be "an appeal in disguise". The aforesaid authorities clearly spell out the nature, scope and ambit of power to be exercised. The error has to be self-evident and is not to be found out by a process of reasoning. We have adverted to the aforesaid aspects only to highlight the nature of review proceedings. 16. In the case of Kamlesh Verma versus Mayawati and others; (2013) 8 SCC 320 which has been relied upon by the department, has summarized the grounds when the review will be maintainable or not:- "Review proceedings are not by way of an appeal and have to be strictly confined to the scope and ambit of Order XLVII Rule 1 of CPC. In review jurisdiction, mere disagreement with the view of the judgment cannot be the ground for invoking the same. As long as the point is already dealt with and answered, the parties are not entitled to challenge the impugned judgment in the guise that an alternative view is possible under the review jurisdiction. Thus, in view of the above, the following grounds of review are maintainable as stipulated by the statute: (A) When the review will be maintainable:- (i) Discovery of new and important matter or evidence which, after the exercise of due diligence, was not within knowledge of the petitioner or could not be produced by him; (ii) Mistake or error apparent on the face of the record; (iii) Any other sufficient reason. The words "any other sufficient reason" has been interpreted in Chhajju Ram vs. Neki, AIR 1922 PC 112 and approved by this Court in Moran Mar Basselios Catholicos vs. Most Rev. Mar Poulose Athanasius & Ors., (1955) 1 SCR 520 , to mean "a reason sufficient on grounds at least analogous to those specified in the rule". The words "any other sufficient reason" has been interpreted in Chhajju Ram vs. Neki, AIR 1922 PC 112 and approved by this Court in Moran Mar Basselios Catholicos vs. Most Rev. Mar Poulose Athanasius & Ors., (1955) 1 SCR 520 , to mean "a reason sufficient on grounds at least analogous to those specified in the rule". The same principles have been reiterated in Union of India vs. Sandur Manganese & Iron Ores Ltd. & Ors., JT 2013 (8) SC 275. (B) When the review will not be maintainable:- (i) A repetition of old and overruled argument is not enough to reopen concluded adjudications. (ii) Minor mistakes of inconsequential import. (iii) Review proceedings cannot be equated with the original hearing of the case. (iv) Review is not maintainable unless the material error, manifest on the face of the order, undermines its soundness or results in miscarriage of justice. (v) A review is by no means an appeal in disguise whereby an erroneous decision is re-heard and corrected but lies only for patent error. (vi) The mere possibility of two views on the subject cannot be a ground for review. (vii) The error apparent on the face of the record should not be an error which has to be fished out and searched. (viii) The appreciation of evidence on record is fully within the domain of the appellate court, it cannot be permitted to be advanced in the review petition. (ix) Review is not maintainable when the same relief sought at the time of arguing the main matter had been negatived." 17. In the instant case, the appeal was admitted on four questions, as narrated in the judgment, but in nutshell the question to be answered was as to whether the partnership firm was engaged in manufacturing locks and liable to pay Central Excise duty or not. 18. Here it may be clarified that issue nos. 1 to 3 which were formulated for determination are interdependent on each other and not to be read in isolation and the last issue is with regard to application of judgment rendered in Khambhatwala's case. 18. Here it may be clarified that issue nos. 1 to 3 which were formulated for determination are interdependent on each other and not to be read in isolation and the last issue is with regard to application of judgment rendered in Khambhatwala's case. During the course of arguments, it has been admitted by the Review Petitioners that the three questions have rightly been decided but a wrong conclusion has been drawn which has hurt the Review Petitioner and it has also been asserted that the case of the Review Petitioners have not been considered in the light of the Khambatwala's case. 19. In this context, the stand of the firm/assessee was that it make the goods marketable and there is no change in the nature of goods. The stand of the department was that the assessee was not only involved in the activity of branding, polishing, affixation of MRP, packing etcetera but as a matter of fact the parts are made available by the firm to the suppliers. The person associated with M/s. Key Locks had deposed before the authorities that they manufacture "Harrison" brand locks for R.P. Locks Company. The authorities have found that unbranded locks were supplied to the firm by the various industries which is established from the statement of various persons which were recorded by the authorities. These persons have stated that they have manufactured locks after receiving raw material or financial assistance from the Assessee as per sample or locks or specifications given by the Firm. A perusal of the judgment would show that the coordinate Bench has recorded detail findings and the crux of the issue, which in actual sense has covered all the three questions, referred to above. The findings so recorded lead to an irresistible conclusion that the case of Review Petitioners is not covered by the decision rendered in the Khambatwala's case and mere not giving the reference in explicit words would not make a case for review of the judgment. 20. The court after considering the law as propounded in Rajasthan State Electricity Board versus Associated Stone Industries and another, JT 2000 (6) SC 522, Aman Marble Industries Pvt. Ltd. versus Collector of Central Excise; 2003 (157) ELT 393 (SC), Union of India vs. Delhi Cloth and General Mills; 1977 (1) ELT 199 SC, Collector of Central Excise, Jaipur Vs. 20. The court after considering the law as propounded in Rajasthan State Electricity Board versus Associated Stone Industries and another, JT 2000 (6) SC 522, Aman Marble Industries Pvt. Ltd. versus Collector of Central Excise; 2003 (157) ELT 393 (SC), Union of India vs. Delhi Cloth and General Mills; 1977 (1) ELT 199 SC, Collector of Central Excise, Jaipur Vs. Rajasthan State Chemical Works, Deedwana, Rajasthan (1991) 4 SCC 473 , Standard Fireworks Industries Sivakashi and another vs. Collector of Central Excise, Madurai (1987) 1 SCC 600 recorded an unambiguous finding that the Assessee is a manufacturer of lock and it is wrong to say that it is engaged only furnishing and branding. The relevant portion of the judgment reads as under:- "Had it been a case of mere assembling, polishing, branding and placing MRP labels, the view taken by Tribunal may not have required any interference, but in the present case, the specific raw material for bringing a lock into existence is being supplied by Assessee. The Artisans or other units assemble all these goods in order to give shape to a lock which throughout remain property of Assessee since raw material belong to him and the ultimate finishing is done at Assessee's premises. Mere fact that labour charges are paid by Assessee does not mean that artisans can not be said to have undergone process of manufacture under the Assessee. In view of facts as have been noticed in the case in hand, we have no manner of doubt that Assessee in the case in hand is a manufacturer of lock and not that it is engaged in only furnishing and branding." 21. In view of the aforesaid clear cut finding that the Assessee is a manufacturer of lock, it is wrong to assert that the Court has not answered all the issues which were formulated. The said finding is in consonance with the Section 2(f) of the Central Excise Act, 1944 which says that the word' manufacturer' is to include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacturer on his own account. The said finding is in consonance with the Section 2(f) of the Central Excise Act, 1944 which says that the word' manufacturer' is to include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacturer on his own account. A perusal of the facts available on record reveals that the R.P. Locks right from raw material stage upto the finished stage have been controlling the entire manufacturing activity and even sample, funds and design including raw material is made available by them. It may be clarified that before recording the said finding, the Court has examined the contentions of both the parties and the settled legal proposition and has reached to a just conclusion that the Tribunal has ignored all the relevant facts available on record and, therefore, disapproved the view taken by the Tribunal. 22. Here, it may be noted that in view of the aforesaid legal position, the case laws relied upon by the Counsel for the applicant are of no avail to him as this court has to confined itself only to review jurisdiction. It is also to be added that in Vijay Arjun Bhagat and others versus Nana Laxman Tapkire and others; 2018 (5) Supreme 261 , which has been relied upon by the Review Petitioner, the Apex Court has upset the order of the High Court as instead of deciding the second appeal on the six substantial questions of law framed at the time of admission allowed the appeal on two additional substantial questions of law, which were not framed by the High Court at the time of admission of the second appeal, which is not the case at hand as while passing the judgment sought to be reviewed, it cannot be said that the court has travelled beyond the questions so formulated. 23. In view of the aforesaid discussion and legal position with regard to exercise of review jurisdiction together with the fact that minor mistakes of inconsequential import are obviously insufficient to exercise the power under Order 47 Rule 1 CPC, the review application has no merit and is hereby rejected. Parties to bear their own costs.