Custom, Excise & Service Tax Tribunal
Caprihans India Ltd vs Cce Thane I on 3 February, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/4020/05 Mum
Arising out of Order-in-Appeal No. BR/178/Th-I/05 dated 29.8.2005 passed by the Commissioner of Central Excise (Appeals) Mumbai IV.
For approval and signature:
Shri. Ashok Jindal, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
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 : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
Caprihans India Ltd.
:
Appellant
Versus
CCE Thane I
Respondent
Appearance Shri Bharat Raichandani, Advocate for appellant Shri V.K. Singh, SDR For Respondent CORAM:
Shri. Ashok Jindal, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 03.02.11 Date of Decision : 03.02.11 ORDER NO.
Per : P.R. Chandrasekharan The appellant M/s. Caprihans (India) Ltd. is the manufacturer of decorative laminates. They claimed exemption under Notification No. 20/94-CE dated 1.3.94 in respect of product manufactured by them during the period 2.2.94 to 31.7.94. A show-cause notice dated 7.9.94 was issued by the Jurisdictional Asst. Collector proposing denial of benefit of exemption claimed by the appellant against which the appellant approached the Honble Bombay High Court. The Honble High Court vide Order dated 23.9.94 allowed the Asst. Collector of Central Excise, Thane Division III to proceed further with the hearing of show-cause notice and to pass order of adjudication on the issue involved after hearing the party.
2. The Asst. Collector vide adjudication order dated 27.6.1995 denied the benefit of concessional duty under Notification No.20/94 and held that they are liable to pay duty @ 30% for the period under dispute and confirmed duty demand of Rs.9,47,490/- for the period from 26.6.94 to 31.7.94. During this period there was a classification dispute pertaining the product manufactured by the appellant i.e. decorative laminates as to whether they are liable for classification under Chapter 48 of Central Excise Tariff Act, 1985 as a paper product or under Chapter 39 as a plastic product and the matter was subjudice before the Honble Supreme Court. The Superintendent of the Central Excise, Thane vide letter dt. 28.6.95 asked the appellant to pay differential duty amounting to Rs.24,95,887/- relating to the period 28.9.94 to 21.12.1994 on the basis of the order passed by the Asst. Collector vide order dt. 27.6.95. The appellant approached the Honble High Court at Bombay for withdrawal of the demand order dated 28.6.95 and the Honble High Court vide order dated 19.9.95 directed the Asst. Collector of Central Excise to accept the revised classification list 2/93-94 dated 26.7.93 filed by the petitioner and provisionally assess the same by allowing the petitioner to clear decorative laminates under Chapter sub-heading 4823.90 of the Central Excise Tariff with the benefit of Notification No. 135/89-CE dt. 1.3.89. The Honble H.C. further modified the order of 19.9.95 by its order dated 17.10.95 wherein they allowed the appellant to execute a bank guarantee for a sum of Rs.9,49,490/- for the period 2.6.94 to 31.7.95 inasmuch as the appellant had already secured by way of bank guarantee, the amount of differential duty of Rs.24,95,887/- covering the period 20.9.94 to 21.12.94. The appellant subsequently withdrew the petition and the Honble High Court vide order dated 15.10.2004 allowed the appellant to withdraw the petition and the appellant also paid differential duty amount to Rs.24.95,887/- on 23.11.04. The Deputy Commissioner of Central Excise vide order dt. 23.3.2005 asked the party to pay interest on the aforesaid amount on the ground that the same is recoverable under Section 11AA of Central Excise Act, 1944. The appellant vide letter dt. 24.12.04 replied that since they have not received any communication regarding finalization of the provisional assessment or final assessment order, the demand made for recovery of interest is premature and without authority of law. The Deputy Commissioner vide letter dated 17.1.2005 informed the appellant that in view of the order-in-original dated 27.6.1995 and the Range Superintendents demand letter dt. 28.6.1995 for differential duty of Rs.24,95,887/- the matter is no more subjudice and as such no provisional assessment in the matter is pending for finalization.
3. The appellant filed an appeal before the Commissioner of Central Excise (Appeals), Mumbai wherein they pleaded that during the relevant period the assessment was provisional and the provisional assessment was not finalized and the appellant had not received any final order. Since there is no demand in show-cause notice issued under Section 11A there was no provision to recover interest during the material period under Section 11AA and, therefore the demand for interest is without any basis of law. The Commissioner (Appeals) rejected the appeal and upheld the demand for interest.
4. The issue in the case is, whether during the material period the assessment was provisional or not. The appellant has submitted that in the affidavit filed before the Honble High Court of Bombay, the department wherein the High Court had clearly stated that the assessments are provisional. In the affidavit filed by the department on 2.12.1998 in Writ Petition No. 3725 of 1995, the Assistant Commissioner of Central Excise, Thane III had stated in the prayer as follows:-
The Honble High Court may dismiss the subject petition so that the provisional assessment may be finalized and the applicant herein may be allowed to recover the amount payable by the respondent herein forthwith. Further in the affidavit dated 30.8.95 filed by the department in petition No. 3725/1995, in para 15 has inter alia stated as follows:-
With reference to paragraph 10, sub-paragraph (d) of the petition I say that by order dated 23.9.94 petitioners were informed that they were allowed to clear the goods on provisional basis viz. that on furnishing B-13 bond and Bank Guarantee which is the procedure followed in the assessment. From the documents adduced, it is clear that the assessments were provisional and they were subsequently finalized. There was no provision to demand interest on the duty finally assessed as has been held in the case of Elgitread (India) Ltd. vs. CCE Cochin 2001 (133) ELT 172 (Tri. Bang.). In that case the Tribunal held that on final assessment of duty assessed, if the duty paid is found to be less than duty payable, the assessee is liable to pay differential duty under Rule 9B(5) of Central Excise Rules, 1944 and such duty cannot be demanded under Section 11A of Central Excise Act, 1944. Section 11AA for demand of interest will apply only when a duty determination made under Section 11A(2) of the Central Excise Act, 1944. In other words, in case duty demand is raised on finalization of provisional assessment, interest cannot be charged under Section 11AA. Similar views has been expressed in the case of Kitply Industries Ltd. vs. CCE 2003 (152) ELT 208 (Tri. Kol.).
5. We have carefully considered the submission. The demand for interest has been raised on the ground that the demand for duty was under Section 11A. However, as per the submissions made to the Honble Bombay High Court in the affidavit filed by the department, the assessment was declared to be provisional and the party had cleared the goods provisionally on execution of B-13 Bonds and Bank Guarantee. Therefore, the provisional assessments have to be finalized and the final duty amount has to be determined under the provisions of Rule 9-B of Central Excise Rules, 1944 and duty cannot be demanded under Section 11A, as has been held in the judgements cited (supra). When duty cannot be demanded under Section 11A, the question of demanding interest under Section 11AA also does not arise. In view of this legal position, we allow the appeal.
(Pronounced in open Court) (Ashok Jindal) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) nsk 6