Custom, Excise & Service Tax Tribunal
M/S. Trl Krosaki Refractories Ltd vs Commissioner Of Central Excise , ... on 5 March, 2012
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
EXCISE APPEAL NO.E/A/493/2006
(ARISING OUT OF ORDER-IN-ORIGINAL NO.CCE/BBSR-II/NO.(DENOVO)08-COMMISSIONER/2006 DATED 09.06.2006 PASSED BY COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, BHUBANESWAR-II)
FOR APPROVAL AND SIGNATURE OF
SHRI S.K.GAULE, HONBLE TECHNICAL MEMBER
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982 ?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/s. TRL KROSAKI REFRACTORIES LTD.
(Formerly:M/s. Tata Refractories Ltd.)
APPELLANT (S)
VERSUS
COMMISSIONER OF CENTRAL EXCISE , CUSTOMS AND SERVICE TAX, BHUBANESWAR-II
RESPONDENT (S)
APPEARANCE:
SHRI S.P.MAJUMDER, ADVOCATE FOR THE APPELLANT(S);
SHRI D.K.NATH, A.R.(DY. COMMR.) FOR THE REVENUE. CORAM:
SHRI S.K.GAULE, HONBLE TECHNICAL MEMBER DR. D.M.MISRA, HONBLE JUDICIAL MEMBER Date of Hearing/Decision:05.03.2012 ORDER NO Per Dr. D.M.Misra This is an Appeal filed by the Appellant against the Order-in-Original No. CCE/BBSR-II/No.(DENOVO)08-COMMISSIONER/2006 dated 09.06.2006 passed By Commissioner Of Central Excise & Customs, Bhubaneswar-II challenging the imposition of penalty of Rs.15,00,000/- on the Appellant.
2. Briefly stated the facts of the case are that the Appellant are engaged in the manufacture of refractory bricks falling under Chapter Sub-Heading 6901.00 of the First Schedule to the Central Excise Tariff Act, 1985. The Appellant had entered into a contract with M/s. Steel Authority of India (SAIL) for supply of Magnesia Carbon Bricks and as per the said contract, M/s. SAIL had agreed to transfer the Advance Import Licence in favour of M/s. TRL Krosaki Refractories Ltd. (TRL), the Appellant herein, on 1:1 basis for the import of raw material namely, Dead Burnt Sea Water Magnesia required for supply of Magnesia Carbon Bricks. Accordingly, it was agreed that an amount of Rs.6500/- had to be adjusted from the ex-works selling price of the finished goods namely, refractory bricks supplied to M/s. SAIL. It is also mentioned in the said contract that if no Advance Import Licence is transferred/endorsed in favour of the Appellant, no deduction of Rs.6500/- would be available from the ex-works selling price of the refractory bricks. The Department had alleged that the amount of Rs.6500/- received, accrued to the Appellant on account of transfer of Advance Import Licence, which was in the nature of additional consideration, ought to be added to value of refractory bricks as per Rule 5 of the Central Excise Valuation Rules, 1975. A Show Cause Notice was issued to the Appellant on 11.03.1998 demanding Central Excise Duty amounting to Rs.47,81,123/- and proposing penalty on the Appellant. The said Notice was adjudicated by the learned Commissioner, Central Excise & Customs, Bhubaneswar-II vide his Order-in-Original No.Commr./BBSR-II/4/CE/2000 dated 17.04.2000 who confirmed the duty and imposed penalty equivalent to the amount of duty, on the Appellant. Aggrieved by the said Order, the Appellant had filed an Appeal before this Tribunal. After hearing both sides, this Tribunal vide Order No.A-102/2002 dated 22.01.2002 remanded the case to the Adjudicating Authority for de novo consideration, while holding that the amount of Rs.6500/- received by the Appellant was an additional consideration and to be added to the value of finished goods. Also, a direction was issued to consider the amount of Rs.25,96,746/- paid by the Appellant vide PLA Entry Nos.451 dated 25.08.95 and 482 dated 30.08.95. Precisely, it was directed to re-determine the quantum of duty liability of the Appellant. In de novo proceedings, the learned Commissioner has re-determined the quantity of duty payable at Rs.44,17,060/- and appropriated an amount of Rs.25,96,746/- already paid and directed the Appellant to make payment of the balance amount of Rs.18,20,314/-. He has imposed a penalty of Rs.15,00,000/- under Rule 173Q read with Rule 9(2) of the erstwhile Central Excise Rules, 1944. Aggrieved by the said Order of Imposition of Penalty of Rs.15,00,000/-, the Appellant filed the present Appeal before this Tribunal.
3. Learned Advocate for the Appellant has submitted that they have already paid the balance amount of Rs.18,20,314/-, vide TR-6 Challan No.02 dated 28.07.06 annexed to the present Appeal as Annexure-F. He has submitted that the Appellant accepted the Order of the learned Commissioner confirming the differential duty amount of Rs.44,17,060/-. However, he has submitted that the learned Commissioner erred in imposing the penalty of Rs.15,00,000/- under Rule 173Q of the erstwhile Central Excise Rules, 1944. He has contended that during the relevant period i.e., from 01.03.94 to 07.02.95, the issue of addition of the extra amount to the value accrued to the assessee on account of transfer of Advance Import Licence, was not settled. There were conflicting judgements of the Tribunal. Hence, the Appellant did not discharge the duty on the said additional consideration of Rs.6500/- adjusted in the ex-works price of the finished goods. He has submitted that the Appellant has paid the amount of Rs.25,96,746/- in August, 1995, whereas the Show Cause Notice was issued to them in March, 1998. He has submitted that soon after the de novo adjudication of the case, the balance amount of Rs.18,20,314/- has been paid by them within one month of the receipt of the Adjudication Order dated 17.04.2000. In these circumstances, he has pleaded that no penalty is imposable on them under Rule 173Q of the erstwhile Central Excise Rules, 1944. Besides, he has submitted that even though in the impugned Order, it has been directed to recover interest at the appropriate rate, as applicable, but no provision has been specified as to under which Section, the interest is recoverable. He has submitted that Section 11AB of the Central Excise Act came into force with effect from 28.09.1996. Hence, no interest is payable under the said provisions. Learned Commissioner in his findings has accepted the same and no interest has been directed to be paid under Section 11AB of the Central Excise Act, 1944 and against the said findings, no appeal has been preferred by the Department. Further, he has submitted that interest under Section 11AA is not attracted in this case, as the said provision was inserted on 11.05.2001, in view of the specific provision contained in sub-section (2) of Section 11AA of the Act. Further, he has referred to the judgement of the Honble Bombay High Court in the case of Blue Star Ltd. vs. UOI reported in 2010(250) ELT 179(Bom.), wherein it has been held that the period of three months prescribed under Section 11AA has to be reckoned from the date of de novo adjudication order. In the present case, they have discharged the duty on 28.07.2006 and the impugned Order was passed on 09.06.2006, and hence not interest is chargeable on the said amount of Rs.18,20,314/-.
4. Per contra, the learned AR (Deputy Commissioner) for the Revenue reiterated the findings of the learned Commissioner and submitted that the penalty has been rightly imposed on the Appellant and they are liable to pay interest at the applicable rate, as observed by the learned Commissioner.
5. Heard both sides and perused the record. Learned Advocate has not disputed the confirmation of the demand against them on account of receipt of additional consideration from M/s. SAIL. We find that there was some confusion during the relevant period about the includibility of benefit accrued to an assessee on account of transfer of Advance Import Licence in their favour by the purchaser of the finished goods, which was settled after a period of time. However, we find that the Appellant have deposited an amount of Rs.25,96,746/- in 1995 itself, before issuance of Show Cause Notice, whereas the balance amount of Rs.18,20,314/- was paid by them after adjudication of the Order. In these circumstances, keeping in view that the issue involved in this case is interpretation of law and settled by the Honble Supreme Court in the case of Commissioner of C.Ex. vs. IFGL Refractories Ltd. reported in 2005(186) ELT 529(SC) and major portion of the liability was paid in 1995, much before issuance of Notice, we reduce the penalty imposed on the Appellant to Rs.1,00,000/-(Rupees one lakh) only. Further, we find that the Appellant have paid the balance amount of Rs.18,20,314/- within one month from the Order passed in the de novo proceedings and hence, following the ratio laid down by the Honble Bombay High Court in Blue Stars case(supra), no interest is leviable under Section 11AA of the Central Excise Act, 1944. The Appeal is partly allowed to the extent, as mentioned above.
Operative part of the Order was pronounced in the court on 05.03.2012.
(S.K.GAULE) (D.M.MISRA) TECHNICAL MEMBER JUDICIAL MEMBER DUTTA/ 2 EXCISE APPEAL NO.E/A/493/2006 2