Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Concept Pharmaceuticals on 23 December, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/435/07 (Arising out of Order-in-Appeal No. AKD (16)20/2007 dated 24.1.2007 passed by Commissioner of Central Excise& Customs (Appeals), Aurangabad.) For approval and signature: Honble Mr.P.G. Chacko Member (Judicial) ======================================================
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 : Yes 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?
====================================================== Commissioner of Central Excise, Aurangabad Appellant Vs Concept Pharmaceuticals Respondent Appearance:
Shri P.K. Agarwal, S.D.R., for Appellant Shri Bharat Raichandani, Advocate, for Respondent CORAM:
Honble Mr.P.G. Chacko Member (Judicial) Date of Hearing: 23.12.2009 Date of Decision: 23.12.2009 O R D E R NO..
1. In this appeal filed by the department, there are two issues arising for consideration:
(a) Whether interest under Section 11AB is recoverable from the respondent on differential amount of duty paid by them;
(b) Whether penalty under Section 11AC is liable to be imposed on them on the facts of this case.
2. The respondent had removed certain inputs on which CENVAT Credit had been availed, by reversing the credit during the period 6.7.2000 to 15.5.2001. The departmental authorities required them to ensure that appropriate duty be paid on the inputs at normal tariff rate of duty on the assessable value determined under Section 4 (1)(a) of the Central Excise Act, 1944. The party accordingly determined the assessable value and found that the amount of CENVAT Credit reversed by them earlier was not enough. Therefore, they paid the differential amount of duty in June 2001 amounting to Rs 2,19,208/-. A show-cause notice was issued by the department on 15.9.2004 proposing (a) to appropriate the above payment towards demand of duty on the goods under Section 11A of the Central Excise Act, 1944; (b) to levy interest thereon under Section 11AB of the Act; and (c) to impose penalty on the noticee under Section 11AC of the Act. These proposals were contested. The original authority dropped the proposal for interest under Section 11AB and for penalty under Section 11AC, against which the department preferred an appeal to the Commissioner (Appeals). The appellate authority dismissed the departments appeal on merits. It took the view that, where the amount of duty was paid before the issue of show-cause notice, Sections 11AB and 11AC were not invokable. The present appeal of the Revenue is against this decision of the Commissioner (Appeals).
3. The learned D.R. has reiterated the grounds of this appeal and has relied on Bisleri International vs Commissioner 2009 (241) ELT 556 (Tri-Chennai) and Commissioner vs SKF India Ltd 2009 (239) ELT 385 (SC), in support of his plea for levy of interest on duty from the respondent under Section 11AB of the Act. In respect of penalty under Section 11AC of the Act, he has argued that the respondent cannot resist such penalty inasmuch as they conceded their duty liability even after receipt of the show-cause notice, which was issued beyond the normal period of limitation. In this connection, the learned D.R. has also relied on the following decisions: (i) Union of India vs Dharmendra Textile Processors 2008 (231) ELT 3 (SC); (ii) Union of India vs Rajasthan Spinning & Weaving Mills 2009 (238) ELT 3 (SC); and (iii) Commissioner vs Shri Ram Aluminium Pvt Ltd 2009 (242) ELT 202 (Bom).
4. The learned Counsel for the respondent has relied on Kaur & Singh vs Collector of Central Excise 1997 (94) ELT 289 (SC), in support of his submission that, as the show-cause notice did not allege fraud, collusion etc, it was not open to the department to insist on payment of penalty under Section 11AC. The learned Counsel has also sought to defend the Appellate Commissioners decision on the relevant issues.
5. Both sides have referred to the provisions of Section 11A and Section 11AB of the Act, in the context of discussing the applicability of Section 11AB to this case. In the appeal filed by the department with the lower appellate authority, they inter alia contended that, as the differential amount of duty was paid by the assessee under Section 11 (2B) of the Act, interest thereon was liable to be recovered under Section 11AB of the Act for the period of delay. In the present appeal, interestingly, no reliance is placed on sub section (2B) of Section 11A. However, the learned D.R. has placed reliance on this provision of law. It appears from the records that the assessee also has assumed that the payment of duty in June 2001 was in terms of this provision of law. In this scenario, I have to look at sub-section (2B) of Section 11A of the Act. Explanation 2 to sub-section (2B) reads thus:
For removal of doubts, it is hereby declared that the interest under section 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of duty, if any, as may be determined by the Central Excise Officer but for this sub-section. Now the question arises as to whether this is a fit case to which Section 11AB could be applied. Sub-section (1) of Section 11B made it obligatory for a defaulter of duty of excise to pay interest thereon for the period from thefirst date of the month succeeding the month in which the duty ought to have been paid under the Act till the date of payment of such duty under sub-section (2B) of Section 11A. Sub-section (2) of Section 11AB, which was inserted with effect from 11.5.2001 under the Finance Act, 2001, reads thus:-
The provision of sub-section (1) shall not apply to cases where duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. The Finance Act, 2001 came into force on 11.5.2001 with the assent of the President. Therefore, according to sub-section (2) of Section 11AB, no interest on duty can be levied under sub-section (1) for any period prior to 11.5.2001. The period of dispute in the instant case is 6.7.2000 to 15.5.2001, which, barring a few days, is covered by sub-section (2) of Section 11AB. Consequently, sub-section (1) of Section 11AB was not invocable against the respondents for recovery of interest on differential duty which was paid in June, 2001 for the period from 6.7.2000 to 11.5.2001. Such interest could be levied, at best, only in respect of the duty paid for the period from 11.5.2001 to 15.5.2001, if delay is established. In the case of SKF India Ltd (supra), the Honble Supreme Court has held that interest is leviable under Section 11AB on any amount of duty short-paid by the assessee but it cannot be argued that Section 11AB of the Act would be automatically applicable. The rule-makers decided not to apply the provisions of sub-section (1) of Section 11AB to cases in which duty ought to have been paid prior to 11.5.2001. This injunction laid down by the Parliament has overriding effect. In the present case, even if it be assumed that the differential duty was paid by the respondent in terms of sub-section (2B) of Section 11A of the Act, the penal provisions of Section 11AB (1) would have no application inasmuch as the above payment of differential duty was for a period which, barring a few days, was pre-11.5.2001. Where the Parliament prohibited the application of penal provision for a specific period, that will have overriding effect over considerations like type of the assessee, case law and the like. Therefore, in the present case, no interest is leviable on the differential amount of duty paid by the assessee in June 2001 for the period prior to 11.5.2001. For the brief period of five days (11 to 15.5.2001), it is up to the original authority to quantify the amount of interest and recover the same from the respondent, in accordance with law.
6. As rightly submitted by the learned Counsel, none of the ingredients for a penalty under Section 11AC was alleged in the show-cause notice. It is settled law that, in such a situation, no penalty could be imposed on the party under Section 11AC. This legal position has been reaffirmed by the apex court in the case of Rajasthan Spinning & Weaving Mills (supra), wherein, in the context of clarifying the earlier judgement in Dharmendra Textile Processors (supra), Their Lordships held that a penalty under Section 11AC could be imposed on an assessee, where any of the ingredients (fraud, collusion, suppression of facts etc) laid down thereunder was established. It would mean that atleast one of such ingredients should be alleged in the show-cause notice and an opportunity be given to the noticee to rebut the same. In adjudication of the dispute, the authority should decide whether any of the ingredients mentioned in Section 11AC has been established. It is then, and only then, can that authority impose a penalty on the assessee under the above provisions of law. This is the legal position clearly emerging from the Honble Supreme Courts judgement in Dharmendra Textile Processors (supra) and has been clarified in Rajasthan Spinning & Weaving Mills (supra). In the present case, as already noted, there is no allegation in the show-cause notice for a penalty under Section 11AC and, therefore, the appellant has not made out a case for such a penalty on the respondent.
7. In the result, this appeal is disposed of.
(Dictated in Court.) (P.G. Chacko) Member (Judicial) rk 6