Custom, Excise & Service Tax Tribunal
M/S. Goyal Tobacco Co. Pvt. Ltd vs C.C.E. & S.T. Jaipur-I on 24 June, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. II Appeal No. E/51575/2014-EX(SM) [Arising out of Order-in-Appeal No. 172-VC/CE-JPR-I-2013 dated 29.11.2013 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Jaipur]. For approval and signature: Honble Shri Ashok Jindal, Member (Judicial) 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. Goyal Tobacco Co. Pvt. Ltd. .Appellants Vs. C.C.E. & S.T. Jaipur-I .Respondent
Appearance:
Shri B.L. Sharma, CA for the Appellant Ms. Ranjana Jha, DR for the Respondent CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial) Date of Hearing: 24.06.2015 FINAL ORDER NO. 52045/2015-EX(SM) Per Ashok Jindal:
The appellant is in appeal against the impugned order denying a refund of the interest recovered by the revenue vide order dated 25/04/2011.
2. The facts of the case are that appellant is manufacturer of tobacco. The appellant is engaged in packing of unmanufactured tobacco in retail pouches and paying duty under Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010. The appellant intimated to the department that the appellant shall start their packing machines from 01/07/2010 to 15/07/2010 and thereafter from 06/08/2010 to 28/08/2010 and thereafter 16/09/2010 to 30/09/2010 in advance. As the machine was functional during the month of July 2010 from 01/07/2010 to 15/07/2010 the appellant paid the duty on pro rata basis for 15 days. For August 2010 he paid the duty for the period 06/08/2010 to 20/08/2010 i.e. for 15 days and in September 2010 from 16/09/2010 to 30/09/2010 i.e. for 15 days. The appellant filed a abatement claim for the period October 2010 to December 2010 Rs.20,99,821/- while sanctioning that abatement claim the Adjudicating Authority recovered the demand of duty on account of short payment of duty for the month of July & September 2010 of Rs. 15,54,032/- and also charged the interest on said amount to the tune of Rs. 1,53,383/-. Thereafter, appellant filed a abatement claim of Rs. 15,54,032/- as the machines remain closed during that period. The abetment claim was sanctioned but interest charged for late payment of Rs. 1,53,383/- was not given to the appellant. The appellant filed a claim of refund of interest which was rejected by both the authorities below. Therefore appellant is in appeal before me.
3. The Ld. Counsel for the appellants submits that the appellant has paid duty for the month of July to September 2010 on the basis of number of working days machines functioned during that period. Same was accepted by the Department and no proceedings were initiated for short payment of duty by the appellant. No show cause notice was issued. No duty demand was confirmed on account of short payment of duty during that period. Therefore question of payment of interest on delayed payment does not arise. Consequently, interest is not payable by the appellant and same is required to be refunded. To support his contentions Ld. Counsel relied on the decision in the case of KEC International Ltd Vs. CCE Bhopal-2014 (310) ELT 615 (Tri-Del) and in the case of CCE Bangalore Vs. Stella Rubber Works-2011 (267) ELT 495 (Kar.)
4. On the other hand Ld. AR oppose the contention of the Ld. Counsel and submits that as per rule 10 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination Collection of Duty) Rules, 2010 the appellant is required to pay duty on the 5th of every month. The appellant has not paid full duty for this period. If machines were not functional for whole of the month in that case applicant is required to file abatement claim for the period of closer. Instead of doing so appellant paid duty for the period when the machines were functional, which is not the mandate of the rule. Therefore, appellant is required to pay interest for the delayed payment. The Ld. AR further submits that provisions of section 11 AC of the Act are applicable to the facts of this case. Moreover, it is a case of Tobacco manufacturing and special rules has been prescribed in statue book for recovery of duty. Therefore, show cause notice was not required to be issued to the appellant. She further submits that the case laws relied upon by the Ld. Counsel for the appellant are not applicable to this case as none of the case laws deals with the issue of manufacturing of Tobacco.
5. Heard the parties.
6. In this case the admitted facts are that during the period July to September 2010 the appellant have duly intimated to the Department of closer of their machines and with regard to payment of duty on pro rata basis. Therefore, if at all, there is any short payment of duty, the mandate of law is that a show cause notice is required to be issued as per section 11 AC of the Act which Department has failed to do so. Therefore, without issuance of the show cause notice, demand of duty cannot be confirmed against the appellant and consequently be recovered from the appellant. In case when demand is not sustainable question of payment of interest does not arise. In this case demand of interest has been confirmed against the appellant for delayed payment without issuance of the show cause notice. Therefore, demand of interest is not sustainable. Consequently, the interest recovered from the appellant is to be refunded. The case law relied upon by the appellant are squarely applicable to the facts of this case wherein it has been held that it is not permissible against unconfirmed demand of interest for adjustment. As per the mandate of law for any demand from the assessee the principle of natural Justice is required to be followed which includes issuance of show cause notice affording reasonable opportunity before adjudication of the matter. Admittedly, this has not been done in this case. The same view was taken by the Honble Karnataka High Court in the case of Stella Rubber Works (Supra) wherein it was held that without issuance of the show cause notice adjustment is not permissible. In this case also no show cause notice has been issued to the appellant. Therefore, adjustment of demand of interest is not permissible. In these terms, the impugned order deserves no merits. Hence same is set aside. The refund claim of interest is allowed. Appeal is allowed accordingly.
(Dictated and pronounced in the open court)
(Ashok Jindal) Member (Judicial)
Bhanu
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E/51575/2014-EX(SM)