Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise And ... vs M/S. Ongc(L) on 5 March, 2012
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
EXCISE APPEAL NO.EDM-329/05
(ARISING OUT OF ORDER-IN-APPEAL NO.109/CE(A)/GHY/04 DATED 28.12.2004 PASSED BY COMMISSIONER CUSTOMS & CENTRAL EXCISE(APPEALS), GUWAHATI)
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 ?
COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, DIBRUGARH
APPELLANT COMMISSIONER
VERSUS
M/S. ONGC(L)
RESPONDENT (S)
APPEARANCE:
SHRI B.B.AGRAWAL, A.R.(COMMISSIONER) FOR THE REVENUE;
SHRI MANOJ ROY, ADVOCATE ASSISTED BY MRs.D.BHATTACHARJEE,ADVOCATE FOR THE RESPONDENT(S).
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 Revenue against the Order-in-Appeal No. 109/CE(A)/GHY/04 Dated 28.12.2004 passed by Commissioner Customs & Central Excise(Appeals), Guwahati.
2. Briefly stated the facts of the case are that the Respondent, a public sector undertaking, are engaged in the manufacture of crude petroleum oil falling under Chapter 27 of the Central Excise Tariff Act, 1985. The Respondent were required to pay cess under Oil Industry (Development) Act, 1974 on the said crude oil. The Respondent were issued two show cause notices both dated 21.05.04 alleging that they had failed to discharge their liability to pay the cess on the due date during the period - April, 2002 to June, 2003 and accordingly, the delay attracted interest @2% per month or Rs.1,000/- per day, whichever is higher till the actual date of payment and the same is recoverable from them. The learned Adjudicating Authority by two Order-in-Originals both dated 16.08.2004 confirmed the demand of interest amounting to Rs.12,80,248/- and Rs.18,84,709/- respectively, and also imposed personal penalty of Rs.5,000/-each in each case under Rule 8(4) read with Rule 27 of the Central Excise Rules, 2002. Aggrieved by the said Order-in-Originals, the Respondent had filed appeals before the Commissioner of Central Excise (Appeals). Learned Commissioner (Appeals) allowed the appeals of the Respondent by setting aside the Orders of the lower Adjudicating Authority. Aggrieved, the Revenue is in appeal.
3. Learned AR appearing for the Revenue has submitted that during the relevant period where facility of fortnightly payment was applicable, for the first fortnight, the Respondent were required to discharge their duty liability on 20th of the month and for the second fortnight, on 5th of the succeeding month as per Rule 8(1) of the Central Excise Rules, 2002; subsequently, where monthly payment facility was made applicable, duty was required to be paid on 5th day of the succeeding month. For the period - April, 2002 to March, 2003, the duty liability was discharged by them availing the fortnightly and monthly facility, as the case may be. It is his submission that irrespective of the difficulty encountered by the Respondent, they were required to discharge their duty liability in accordance with Rule 8(1) of the Central Excise Rules, 2002, as was applicable to them during the relevant time, which they failed to discharge. He has submitted that once there is a delay in payment beyond the due date prescribed under Rule 8(1) of the Central Excise Rules, payment of interest for the delay period is automatic and nobody had any discretion to waive the interest.
3.1. Further, he has submitted that the Respondent had kept on changing their stand before the lower Adjudicating Authority as well as before the learned Commissioner (Appeals). At the first stage, they had submitted that as there were some genuine difficulties and varied constraints relating to the accounting of disposal of crude oil, which is different from other part of the country, as there was no existence of direct contact with purchasers and refineries of the North-Eastern Area, the resultant accounting procedures become cumbersome. The quantum of disposal for the first fortnight and for the second fortnight were used to be received by the end and third week of the month and first week of the succeeding month respectively, resulting in inconvenience in making payment of duty by due date. The said stand was changed before the Appellate Authority.
3.2. Before the Appellate Authority, the Respondent had submitted that they had paid entire dues by due date, i.e.on the date of receipt of the crude oil by the refinery instead of its removal from the producing company. They had challenged the applicability of interest, as the cess was correctly paid on the quantity received multiplied by the rate applicable on the date of removal and claimed that the show causes notices are time-barred. It has been submitted by the Respondent that penalty was not proper, as the provisions of Oil Industry (Development) Act were not invoked in the impugned Notice. Learned AR submitted that the Commissioner (Appeals) travelled beyond the scope of the proceedings in observing that both the Assessee/Respondent and the Department were ignorant of the provisions of the Boards Circular which is required to be followed. On limitation, learned Commissioner (Appeals) held against the Revenue and on the aspect of penalty, learned Commissioner (Appeals) found that the provisions of Rule 8(4) does not have a penalty provision, but recorded no finding on Rule 27 of the Central Excise Rules, 2002.
4. Learned Advocate appearing for the Respondent has submitted that the issue of charging of interest for delayed fortnightly/monthly payment, as was applicable during relevant period for collection of cess under the Oil Industry (Development) Act, 1974, has been well-settled. He has submitted that during the period from 01.04.2002 to 31.03.2003 and 01.04.03 to 30.06.2003, the Appellant had sold crude oil to refineries and paid cess on the quantities sold during the period. He has submitted that the quantities of crude oil were sold through common pipelines and the same were ascertained, based on the quantities of input of crude oil at both the ends. It requires elaborate mathematical calculation at the relevant point of time, as the quantity of crude oil delivered through the pipelines by the Appellant and the quantities received by the refineries, were not the same, as what was dispatched by the Appellant at the terminal receiving point were much higher (due to pressure of crude oil of OIL India Ltd.). This has resulted in the delay of two to five days in calculating the quantum of the crude oil delivered through the pipelines. Learned Advocate has referred to the judgement of Bangalore Bench of the Tribunal in their own case, vide Order No.883/2009 dated 01.04.2009, wherein the Tribunal observed that the provisions of Section 15(4) of the Oil Industry(Development) Act, 1974 does not contemplate charge of interest. In view of the specific finding of the Tribunal given, interest on payment of cess would not be chargeable from the Respondent.
5. In his rejoinder, learned AR submitted that the Respondent for the first time raised the issue of applicability of interest under Section 15(4) of the Oil Industry (Development) Cess Act, 1974, which was not raised before the lower authorities. Further, on the merit of applicability of Section 15(4) of Oil Industry (Development) Act, he has submitted that the provisions of Central Excise Act and Rules shall apply in relation to levy and collection of duties of excise leviable under this section, and hence, it is clear that interest being merely an accessory to the principal provision once the collection mechanism of Rule 8(1) of the Central Excise Rules, 2002 is applicable, then interest stood automatically applied. He has submitted that it cannot be the interpretation that though the Respondent would avail the facility of payment under Rule 8(1) and Rule 8(2) of fortnightly/monthly intervals instead of payment of duty on consignment basis, but they would not pay interest/penalty even on admitted delay on the hyper technical argument that Section 15(4) of Oil Industry (Development) Act does not contain a specific reference to interest or penalty. He has referred to the judgement of the Honble Bombay High Court in the case of Vidushi Wires Pvt. Ltd. vs. UOI reported in 2003(156) ELT 168(Bom.), wherein it was held that provisions of Rule 8 are mandatory in character and non-compliance therewith would result in penal consequence. Also he has placed reliance on the decision of the Honble Supreme Court in the case of Madhumilan Syntex Ltd. vs. UOI reported in 2007(210) ELT 484(SC), wherein it is laid down that once the statute requires to pay tax and stipulates period within which such payment is to be made, the payment must be made within that period. If the payment is not made within that period, there is default and an appropriate action can be taken under the Act. He has submitted that in all fairness, even though it is a point of law, could be raised at any stage of the proceedings, however, it is necessary that the lower authorities are required to examine such submission in the light of various case laws cited by the Respondent. Hence, the matter may be remanded for re-consideration of the issues by the learned Commissioner (Appeals).
6. Heard both sides and perused the record. The limited issue involved in the present case, is that whether interest could be recovered on the oil cess paid beyond the due date by the Respondent as levied under the Oil Industry Development Act, 1974 and collected under the Central Excise Act, 1944 and the Rules made thereunder, during the period from April, 2002 to June, 2003. It is the contention of the learned AR appearing for the Revenue that in view of the provisions contained in Rule 8(1) of the Central Excise Rules, 2002, the Respondent were required to discharge their duty liability for the first fortnight by 20th of the month and for the second fortnight payment on 5th of the succeeding month and where monthly payment was applicable, it was 5th day of the succeeding month. On default in making payment on the due date, the Respondent were required to discharge interest as per the said Rule. On the other hand, the submission of the Respondent is that in absence of a specific provision in the Oil Industry (Development) Act, 1974 authorizing levy of interest on the cess, the same cannot be collected from the Respondent. In support of their argument, they have relied upon the ratio of the decision delivered by the Bangalore Bench of the Tribunal in their own case. We find from the Order-in-Appeal that the learned Commissioner has not discussed this issue, as the same was not raised before him, which is fairly conceded by the learned Advocate appearing for the Respondent. In these circumstances, we find that it is appropriate to remit the case to the learned Commissioner (Appeals) to examine the issue afresh, in the light of the question of law raised by the Respondent and the case laws relied upon by them in support of their arguments that the levy of interest for delayed payment of cess is not authorized in terms of the Oil Industry (Development), Act, 1974 and accordingly, no interest is payable for the delay in discharging their fortnightly/monthly liability to discharge cess, as required under Rule 8(1) of the Central Excise Rules, 2002. We made it clear that all issues are kept open. Both sides are at liberty to advance evidences in support of their case. Needless to mention that an opportunity of personal hearing may be given to the Respondent. Since the matter pertains to the period, 2002-03, the learned Commissioner (Appeals) should decide the case expeditiously, preferably within a period of 4(four) months from the date of receipt of this Order. Appeal filed by the Revenue is allowed by way of remand.
Operative part of the Order pronounced in the court on 05.03.2012.
Sd/- Sd/-
(S.K.GAULE) (D.M.MISRA)
TECHNICAL MEMBER JUDICIAL MEMBER
DUTTA/
6
EXCISE APPEAL NO.EDM-329/05
6