Customs, Excise and Gold Tribunal - Tamil Nadu
Cce vs Spic Pharmaceuticals Division on 7 April, 2006
ORDER P.G. Chacko, Member (J)
1. In this appeal, filed against the order passed by the Commissioner (Appeals), the department is aggrieved by:
(a) Grant of Modvat credit on 'protective coatings' to the respondents,
(b) Non-levy of interest on the amount of Modvat credit denied to them, and
(c) Non-imposition of penalty on the respondents under Rule 173Q of the Central Excise Rules, 1944.
2. After hearing both sides and considering their submissions, I find that, though in the body of the impugned order, it was held that Modvat credit was not admissible to the assessee in respect of protective coatings, learned Commissioner (Appeals), in the operative part of his order, left out the said goods, with the result that the conclusive part of the order allowed Modvat credit on protective coatings. If the words, 'protective coatings' are inserted in the appropriate place in the conclusive sentence of the impugned order, the anomaly will get remedied. Fortunately, there is consensus between the two sides for this remedial measure. Accordingly, the conclusive sentence of the impugned order is ordered to be read as under:
In view of the above discussion the appellant is entitled for Modvat on all the items except on light fittings and protective coatings for reasons discussed supra.
3. The show-cause notice did not expressly invoke Section 11AA of the Central Excise Act for levying interest from the assessee on inadmissible Modvat credit amounts. The original authority held that the assessee was liable to pay interest on such amounts in terms of Section 11AA. However, the Commissioner (Appeals) vacated the demand of interest on the ground that it was beyond the scope of the show-cause notice. According to the appellant, where duty liability was determined by the competent authority under Section 11A of the Act, the liability to pay interest on the duty amount so determined for the period specified under Section 11AA is automatic. The SDR has reiterated this plea and has claimed support from the Supreme Court's judgment in Commissioner of Trade Tax (U.P.) v. Kanhai Ram Thekedar 2005-TIOL-76-SC-CT. Learned Counsel for the respondents has contested this argument, on the strength of the Madhya Pradesh High Court's judgment in Commissioner v. Tirupati Steel Industries . Learned Counsel has raised a more fundamental contention, which is to the effect that Section 11AA is not applicable to the facts of this case. After consulting the provisions of Section 11AA, I accept this contention. Sub-section (2) of Section 11AA reads as under:
The provisions of Sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the assent of the President.
The Order-in-Original was passed on 1.5.2002. In other words, the assessee's liability was determined on that date. The appellant has invoked Sub-section (1) of Section 11AA for demanding interest from the respondent. But the provisions of the sub-section are not applicable to the present case in which duty [by way of denial of Modvat credit] became payable only on 1.5.2002 [i.e. after (sic) the Finance Bill 2001 received the assent of the President]. The demand on interest fails.
4. The grievance that the penalty imposed by the original authority was vacated by the Commissioner (Appeals) is contained in the prayer portion of the appeal memorandum. This prayer is not supported by any ground. Hence the plea for penalty must also fail.
7. The appeal is dismissed except in respect of "protective coatings".
(Dictated and pronounced in open Court)