Appeals against tribunal orders involving the determination of taxability, excisability, or classification of goods/services under the Central Excise Act are not maintainable before the High Court under Section 35G and must be filed in the Supreme Court pursuant to Section 35L.

JUDGMENT: (per Hon’ble Sri Justice P.Sam Koshy)

Heard Mr. Vijhay K. Punna, learned Senior Standing Counsel for the CBIC for the appellant and Mr.Narendra Dave, learned counsel representing M/s Lakshmi Kumaran & Sridharan for the respondent. Perused the record.

2. The challenge in the present central excise appeal under Section 35G of the Central Excise Act, 1944 is to the order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad dated 11.09.2025.

3. The contention of the learned counsel for the appellant is that the nature of transaction involved is the right to use information technology software for commercial exploitation and such transactions fall within the definition of Information Technology Software Service (ITSS) under Section 65(105) (zzzze) of the Finance Act, 1994.

4. The question of law which the learned counsel for the appellant is trying to raise is whether the nature of transaction carried out by the respondent would amount to a sale of goods or a service rendered under the Finance Act, 1994 under the aforesaid section. It would be relevant, at this juncture, to take note of the relevant section i.e., Section 35G (1) of the Central Excise Act, 1944, which is reproduced hereunder:

Appeal to High Court: (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law.

Along with said section, it also relevant to read Section 35L of the aforesaid Act, more particularly sub-Section (2) to Section 35L . For ready reference, the provision to Section 35L is also being reproduced hereunder:

(2) For the purposes of this Chapter, the determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment.

Sub-Section (2) to Section 35L stood inserted under the Central Excise Act w.e.f., 06.08.2014 by virtue of the Finance Act, 2014. The plain reading of the aforesaid provision i.e., sub-Section (2) to Section 35L read with Section 35G would make it evidently clear that in the event of a dispute in relation to the rate of duty of excise or the value of the goods, the appeal dealing with the said two aspects will not be one which would be maintainable before the High Court under Section 35G . Likewise, if we read Section 35L (2) along with Section 35G , it will further make it clear that the exception carved out under Section 35G so far as the appeals to the High Court are concerned, it would not be in respect of matters pertaining to rate of duty of excise or the value of goods and it includes matters pertaining to determining taxability part and also matters determining the exicisability of the goods for the purpose of assessment. This, in other words, means that wherever the question of law pertains to the rate of duty or the value of the goods or where the question of law raised is either the determination of the taxability part or the exicisability of the goods, an appeal would lie only to the Supreme Court and not to the High Court.

5. The substantial question of law agitated by the learned Senior Standing Counsel for the Department in the p