Ms. Lakshmikumaran, the amendment to Section 35L(2) was enacted in 2014, but the Tribunal order in your case is from 2006. How can a prospective amendment oust the High Court's jurisdiction over an order passed years before the amendment?

My Lord, sub-section (2) of Section 35L is clarificatory, not substantive. The Notes on Clauses to the Finance (No. 2) Bill, 2014 expressly state that the amendment is to clarify that determination of disputes relating to taxability or excisability is covered under the term rate of duty. This Court has consistently held that clarificatory amendments operate retrospectively. In University of Kerala v. Merlin J.N., this Court held that when an amendment intends to clarify something which was implicit in the operation of a provision, such an amendment is meant to operate from an antecedent date. The amendment made explicit what was always implicit in the collective reading of Sections 35G and 35L. Therefore, it applies to orders passed before 2014 as well.

The exclusion under Section 35G uses the words 'rate of duty' and 'value of goods'. Excisability is a threshold issue. Can we say that every question of excisability automatically becomes a question of rate of duty?

My Lord, the answer is yes. A decision on excisability is a logical and legal precursor to the determination of the rate of duty. The levy of excise duty presupposes that the goods are excisable. The two questions are not merely related; they are sequentially and logically interdependent. The legislature, by inserting sub-section (2) in Section 35L, has clarified this position. It states that determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods. The word 'include' denotes an expansive definition that clarifies the scope of an existing expression. This Court in Navin Chemicals held that a dispute as to classification relates directly and proximately to the rate of duty. The same logic applies to excisability.

If we accept your argument, would it mean that the High Court can never decide any question relating to excise liability, even peripheral questions like valuation of goods under dispute?

My Lord, the exclusion under Section 35G is not attracted by every question touching rate of duty or valuation. The question must have a direct and proximate relationship with assessment. The expression 'for purposes of assessment' qualifies both the preceding limbs. The exclusion is triggered only where the question goes to the root of the assessment itself. Peripheral questions that do not directly determine the rate or value may still be within the High Court's jurisdiction. However, the question of whether goods are excisable at all is not peripheral; it is fundamental. If goods are not excisable, there is no rate of duty to apply. That is the most direct and proximate relationship possible with assessment.

The Revenue has argued that the High Court correctly decided the question of manufacture. Even if there was a jurisdictional error, should we not decide the merits finally instead of remanding?

My Lord, the petitioner does not seek a remand. The petitioner submits that the appeal before the High Court was without jurisdiction, and therefore the impugned judgment is a nullity. This Court can, in exercise of its appellate jurisdiction under Section 35L, decide the issue of manufacture on its own merits without remanding the matter. The petitioner has also addressed the merits of whether the process amounts to manufacture. The CESTAT rightly held that no new product emerges and the Revenue failed to prove marketability. This Court can set aside the High Court judgment and restore the CESTAT order without any further remand. The jurisdictional issue is a threshold question, but this Court has full competence to decide the merits as well in this appeal.

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High Court Lacked Jurisdiction Under Section 35G for Excisability Dispute — (2026) INSC 582

The question of excisability of goods falls within the exclusive appellate jurisdiction of the Supreme Court under Section 35L of the Central Excise Act, 1944, not before the High Court under Section…

M/S Alupro Building Systems Pvt. Ltd. v. Commissioner of Central Excise Bangalore-II — (2026) INSC 582

Core Argument

Key Precedents

Navin Chemicals Manufacturing & Trading Co. Ltd. v. Collector of Customs (1993) 4 SCC 320 — Held that classification of goods under the tariff for determining rate of duty is a question having relation to rate of duty.
CCE v. Reliance Media Works Ltd. 2019 SCC OnLine Bom 5162 (FB) — Held that the question of excisability is appealable only to Supreme Court and sub-section (2) of Section 35L is clarificatory and retrospective.

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