Gujarat High Court
The Commissioner Of Central Excise & ... vs Reliance Industries Ltd on 19 November, 2025
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/TAXAP/18/2008 JUDGMENT DATED: 19/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 18 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI Sd/-
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Approved for Reporting Yes No
✔
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THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS
Versus
RELIANCE INDUSTRIES LTD.
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Appearance:
MS HETAL G PATEL(11032) for the Appellant(s) No. 1
MR MIIR JOSHI, SENIOR ADVOCATE WITH
MR NISARG M. DESAI AND MS NANDITA SUROLIA, ADVOCATES for
GANDHI LAW ASSOCIATES(12275) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 19/11/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. The Coordinate Bench vide order dated 01.10.2025, passed a comprehensive order after considering the submissions advanced by the respective parties and ultimately referred to the provisions of Order 41 Rule 23 of the Code of Civil Procedure, 1908 (in short, "the CPC") as well as the decisions of the Supreme Court in the case of Agricultural Produce Marketing Committee, Bangalore Vs. State of Karnataka and Others, (2022) 7 SCC 796 and in the case of K. M. Krishna Reddy Vs. Vinod Reddy and Another, (2023) 10 SCC 248. Page 1 of 7 Uploaded by MAHESH OMPRAKASH BHATI(HC01086) on Fri Nov 21 2025 Downloaded on : Fri Nov 21 23:49:45 IST 2025 NEUTRAL CITATION C/TAXAP/18/2008 JUDGMENT DATED: 19/11/2025 undefined
2. After the order was recorded, time was sought by learned Senior Standing Counsel Ms.Patel, appearing for the appellants, to take further instructions.
3. Today, when the matter is taken up for hearing, it is not disputed by the learned Senior Standing Counsel Ms.Patel that the Tribunal, while passing the impugned order dated 19.06.2007 in Central Excise Appeal Nos.1084 of 2006 and 199 of 2007 has not adjudicated upon grounds F, G, H, I and J, as specifically noted by the Coordinate Bench in the order dated 01.10.2025.
4. The submissions, as recorded by the Co-ordinate Bench in the order dated 01.10.2025, read as under:
"7. Learned Senior Counsel Mr. Joshi referred to the Appeal Memo filed before the Tribunal to point out that the Tribunal has not decided grounds F, G, H, I and J, which read as under:
(F) Without prejudice to the aforesaid submissions, in any event the Commissioner erred in not upholding the Appellant's alternative submission that Sulphur is not a final product but is a by product which arises during the manufacture of the final products on which duty is paid and that hence the bar contained in Rule 6(1) is clearly inapplicable.
(G) The Commissioner seriously erred in holding that Sulphur is not a by-product. The fact that Sulphur which is exempted from duty is not the final product but is a by-product has already been upheld in the Appellant's own case by the following Orders passed by the Commissioner of Central Excise, Rajkot:
(a) Order No. 03 & 04/COMMR/2002 dated 22-1- 2002,
(b) Order No.09 to 11/ COMMR/2003 dated 24- 3-2003.
In the said Orders it has been clearly held that since Sulphur (which is exempted) is not the final product but is a by-product the bar contained in erstwhile Rule 57CC (corresponding to Rule, 6 of Cenvat Credit Rules 2002) against availing of Modvat where the final product is exempt or chargeable to Nil rate of duty does not Page 2 of 7 Uploaded by MAHESH OMPRAKASH BHATI(HC01086) on Fri Nov 21 2025 Downloaded on : Fri Nov 21 23:49:45 IST 2025 NEUTRAL CITATION C/TAXAP/18/2008 JUDGMENT DATED: 19/11/2025 undefined apply. The said Orders have been accepted by the department and no appeals have been filed against the same. The Commissioner seriously erred in ignoring the said Orders though cited before him. The fact that sulphur arising in the course of manufacture of petroleum products is a by product has also been upheld by the Tribunal in Madras Refineries Ltd v CCE - 2005 (187) ELT 34. The Commissioner's finding that Sulphur is not a by-product is clearly contrary to the said decision of the Tribunal and is hence not sustainable in law (H) The Commissioner seriously erred in holding that even if Sulphur is a by-product, Cenvat Credit of duty paid on the fuel used in relation to Sulphur is not available because in the Cenvat Rules 2002 there is no provision similar to Rule 57D of the Central Excise Rules 1944. His said finding is clearly contrary to the clarification of the Central Board of Excise and Customs contained in Circular bearing F.No. B4/7/2000-TRU dated 3-4-2000 and to the judgment of the Tribunal in the case of Rama Industries Ltd. v CCE reported in 2004 (178) ELT 720 and therefore clearly unsustainable in law.
(I) The Commissioner erred in not appreciating that even that portion of the GT Fuel which is used to generate electricity used in relation to manufacture of Nitrogen can be said to have been used in relation to manufacture of final products on which duty is paid because the Nitrogen though exempt is in turn used for degassing and purging which is an activity in relation to manufacture of final products on which duty is paid. The final products on which duty is paid cannot be marketed under the wagons/tankers in which they are to be loaded are first purged/degassed by the use of Nitrogen. It is thus clear that Nitrogen is used in relation to the manufacture of final products on which duty is paid and hence it follows that GT Fuel used to manufacture such Nitrogen is also used in relation to manufacture of final products on which duty is paid. Thus, in any view of the matter, exemption to GT Fuel used to generate electricity which is used to manufacture Nitrogen cannot be denied.
(J) Without prejudice to the above, the calculation adopted for arriving at the demand of Rs 3,03,35,139/- is incorrect for the reason that instead of considering unit "cost of fuel" as per Balance Sheet he has taken "cost of unit per KWH" for calculating the fuel cost and duty payable thereon. The cost of unit per KWH is not relevant for calculating the cost of fuel. The unit cost of fuel is also disclosed in the Balance Sheet. Extract of Balance Sheet for the year 2004-05 is enclosed marked Exhibit-E. A perusal of annexure will reveal that unit cost of fuel is Rs.1.85 for the year 2004-05 whereas demand is worked out based on the unit cost of generation which is Rs.4.08. The unit cost of generation includes the cost of fuel as well Page 3 of 7 Uploaded by MAHESH OMPRAKASH BHATI(HC01086) on Fri Nov 21 2025 Downloaded on : Fri Nov 21 23:49:45 IST 2025 NEUTRAL CITATION C/TAXAP/18/2008 JUDGMENT DATED: 19/11/2025 undefined as machinery and equipment cost for generation of electricity. When calculated based on unit cost of fuel, the demand amount will stand substantially reduced."
It was, therefore, prayed that the aforesaid grounds ought to have been decided by the Tribunal.
8. xxxx.....
9. Learned advocate Ms. Hetal Patel prays for time to take further instructions."
5. It is established that the Tribunal, by placing exclusively reliance on the judgment of this Court in the case of Commissioner of Central Excise and Customs Vs. Gujarat Narmada Fertilizer Company Limited, 2006 (193) ELT 136 (Guj.), disposed of the appeal without adverting to or deciding the other grounds. Subsequently, during the pendency of the present appeal, the Supreme Court reversed the said decision of this Court in the case of Commissioner of Central Excise Vs. Gujarat Narmada Fertilizer Company Limited, 2009 (240) ELT 661 (SC).
6. It is the case of the respondents that since their appeal before the Tribunal was decided exclusively on the basis of the aforesaid judgment of this Court, which now stands reversed, the remaining grounds, as noted hereinabove, are still required to be examined. Thus, it is urged that the matter may be remanded for fresh consideration before the Tribunal.
7. Learned Senior Standing Counsel Ms. Hetal Patel, appearing for the appellant, has submitted that since only one has been adjudicated, appropriate order may be passed for consideration of the aforesaid grounds, as recorded by the Coordinate Bench of this Court.
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8. It is not in dispute that the Tribunal disposed of the appeal by relying solely on the judgment of this Court in the case of Gujarat Narmada Valley Fertilizers Company (supra), which has subsequently been reversed by the Supreme Court, without examining the remaining grounds referred to hereinabove.
9. At this stage, we may incorporate the provisions of Order 41 Rule 23 of the CPC, which deals with the remand of a case by the Appellate Court. The same reads as under:
"Order 41 Rule 23 - Remand of case by Appellate Court Where the Court from whose decree an appeal is preferred has disposed of the suit upon a preliminary point, and the decree is reversed in appeal, the Appellate Court may, if it thinks fit, by order remand the case, and may further direct what issue or issues shall be tried in the case so remanded, and shall send a copy of its judgment and order to the Court from whose decree the appeal is preferred, with directions to re-admit the suit under its original number in the register of civil suits, and proceed to determine the suit; and the evidence, if any, recorded during the original trial shall, subject to all just exceptions, be evidence during the trial after remand."
10. Since the appeal was disposed of on a preliminary point concerning the applicability of the judgment of this Court, the Tribunal did not examine the other grounds raised. Hence, in our considered view and in terms of the provisions of Order 41 Rule 23 of the CPC, the matter deserves to be remitted to the Tribunal for adjudication of the remaining grounds, which were neither dealt with by the Tribunal nor argued by the respective parties.
11. We may now further incorporate the paragraph Nos.26 and 27 of the decision of the Supreme Court in the case of Page 5 of 7 Uploaded by MAHESH OMPRAKASH BHATI(HC01086) on Fri Nov 21 2025 Downloaded on : Fri Nov 21 23:49:45 IST 2025 NEUTRAL CITATION C/TAXAP/18/2008 JUDGMENT DATED: 19/11/2025 undefined Agricultural Produce Marketing Committee, Bangalore (supra), which read as under:-
"26. Despite the fact that a number of issues/grounds were raised before the High Court on the legality and validity of the acquisition proceedings, the learned Single Judge decided only one issue, namely, whether the acquisition proceedings have lapsed by virtue of the 2013 Act. Whereas a number of issues/grounds were raised and as such the original reliefs sought (acquisition proceedings under the 1894 Act) were the main reliefs which were required to be dealt with and considered, unfortunately, the learned Single Judge did not give findings on the other issues/grounds and on the reliefs sought and as observed hereinabove, disposed of the writ petitions considering only one relief/ground, namely, whether the acquisition proceedings have lapsed by virtue of the 2013 Act.
27. When a number of submissions were made on the other issues/grounds, we are of the opinion that the High Court ought to have considered the other issues and ought to have given the findings on other issues also. Because of not deciding the other issues and deciding the matter only on one issue and thereafter when the decision on such one issue, is held to be bad in law for the reasons stated hereinbelow, this Court has no other alternative but to remand the matters to the learned Single Judge for deciding the writ petitions afresh on all other issues."
12. Thus, in light of the aforesaid decision of the Supreme Court as well as the specific provision of Order 41 Rule 23 of the CPC, we deem it appropriate to set aside the order passed by the Tribunal and remand the matter for fresh consideration. Accordingly, the Central Excise Appeal Nos.1084 of 2006 and 199 of 2007 are ordered to be restored to their original file.
13. Having regard to the fact that the matter is more than 20 years old, we direct the Tribunal to decide the appeals as expeditiously as possible and preferably within a period not later than six months from the date of receipt of copy of this judgment.
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14. The Tax Appeal is allowed to the aforesaid extent. All rights and contentions of the respective parties are kept open.
Sd/-
(A. S. SUPEHIA, J) Sd/-
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