Custom, Excise & Service Tax Tribunal
M/S. L & T Komatsu Ltd vs Commissioner Of Central Excise, ... on 2 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/296/2010-DB [Arising out of Order-in-Original No. 27/2009 dated 30/12/2009 passed by the Commissioner of Central Excise, Bangalore-II Commissionerate, Bangalore.] For approval and signature: HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL 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? M/s. L & T Komatsu Ltd. Bellary Road, Byatanapura, Bangalore Appellant(s) Versus Commissioner of Central Excise, Service Tax and Customs Bangalore-IV Office of the Commissioner of Central Excise & Service Tax Bangalore-IV Commissionerate, 59, HMT Bhavan, Bellary Road BANGALORE - 560032 KARNATAKA Respondent(s)
Appearance:
Shri S. Muthu Venkataraman, Advocate VMJ ASSOCIATES #79, 17TH CROSS, MALLESWARAM, BANGALORE - 560003 KARNATAKA For the Appellant Shri Pakshi Rajan, Asst. Commissioner (AR) For the Respondent Date of Hearing: 02/02/2016 Date of Decision: 02/02/2016 CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20340 / 2016 Per : ASHOK K. ARYA Both the parties have been heard in detail. The matter was presented on behalf of the appellant by Shri S. Muthu Venkataraman, Advocate and Revenue was represented by learned AR, Shri Pakshirajan.
2. Matter concerns with the admissibility of benefit of Notification No.108/95-CE dated 28.8.1995 amended by Notification No.13/2008 dated 1.3.2008 for the goods supplied to the projects funded/financed by the United Nations or an international organisation and approved by Government of India.
2.1 Original Notification No.108/95-CE dated 28.8.1995 was amended by the Notification No.13/2008 dated 1.3.2008 which inserted an Explanation to the original Notification No.108/95-CE. The Notification No.13/2008-CE dated 1.3.2008 made the following amendment to the Notification No.108/95-CE.
In the said notification, the Explanation shall be numbered as Explanation 1 thereof, and after Explanation 1, as so numbered, the following Explanation shall be inserted, namely:-
Explanation 2 - For the removal of doubts, it is hereby clarified that the benefit under this notification, in the case of goods supplied to the projects financed by the United Nations or an internal organisation, is available when the goods brought into the project are not withdrawn by the supplier or contractor and the expression goods are required for the execution of the project shall be construed accordingly. [Notification No.13/2008-CE; dated 1.3.2008] 2.1.1 Consequently, the effect of this amendment is that the benefit of the original Notification No.108/95-CE dated 28.8.1995 would be available only when the goods supplied and brought into approved projects are not withdrawn by the supplier or the contractor.
3. Revenues main argument is that in the case of 196 Hydraulic Excavators valued at Rs.73,57,50,952/-, which were supplied taking benefit of this Notification No.108/95-CE dated 28.8.1995 for the supplies as per the unamended Notification during the period for 2004-05 to 2008-09 (up to December 2008) new condition that the goods required for the projects are not to be withdrawn after the execution of the project (as made applicable by the amendment Notification No.13/2008-CE dated 1.3.2008 to the original Notification No.108/95-CE has not been fulfilled.
3.1 The Department consequently issued a show-cause notice dated 8.7.2009 for recovery of duty of Rs.11,70,90,398/- along with education cess of Rs.23,41,808/- and higher secondary education cess of Rs.3,29,585/- (totalling to Rs.11,97,61,791/-). Commissioner by its impugned order dated 30.12.2009 issued on 1.1.2010 confirmed the total demand of Rs.11,97,61,791/- along with interest and also imposed equivalent penalty under Section 11AC of Central Excise Act, 1944.
4. The appellants have come to this Tribunal in appeal against the above order dated 30.12.2009 of the Commissioner of Central Excise, Bangalore-II. The appellants viz., L & T Komatsu Ltd. have mainly argued as follows:
(i) Original Notification did not contain Explanation 2. It was introduced only on 1.3.2008 by Notification No.13/2008.
(ii) Explanation 2 applies only prospectively and not retrospectively.
(iii) Only Parliament or Sovereign has the power to bring retrospective amendment. Delegated legislature like Central Government holds no such power.
(iv) Expression used in original Notification required for execution of the project does not extend to retaining the goods post execution. Explanation 2 introduced fresh condition therefore only prospective.
4.1 The appellants have relied upon the case laws in the case of Silara Exports Ltd. vs. CCE: 2010 (255) E.L.T. 117, further stating that demand up to 28.2.2008 has to be set aside and the demand from 1.3.2008 to 31.8.2008 needs to be set aside as they have all along been approaching Deputy Commissioner of Central Excise through their letters dated 15.3.2008, 21.4.2008 and 22.4.2008 on the subject matter and there has not been any evidence that the goods were being diverted.
4.2 The appellants have also pleaded that the demand for extended period is not applicable inter alia on account of following reasons:
* Appellant through letter dated 17.1.2002 indicated the procedure that would be followed for clearance under notification No.108/95. * Met the Asst. Commissioner on 17.1.2002. On 18.2.2002 wrote one more letter indicating that they would comply with the procedure referred in the letter dated 17.1.2002. * All 196 clearances:- duly documented periodical visits by internal audit, CERA and Departmental officials. * All information and particulars were informed to the Department well in advance and there cannot be any allegation of suppression of facts and therefore demand to be set aside.
5. All the facts on record and the submissions of both the sides have been carefully considered.
5.1 From the facts, it is clear that there has been no suppression of facts on the part of the appellants when the new Notification No.13/2008-CE dated 1.3.2008 was issued. After the issue of amended Notification No.13/2008-CE dated 1.3.2008 appellants approached the Department of Central Excise and informed that they have effected clearances only after securing an undertaking that the goods would be retained within the project and not diverted.
5.2 From the facts on record the Revenue has not been able to prove any suppression or intention to evade payment of duty on the part of the appellants. Therefore, extended period of limitation against the appellants is not legally maintainable.
5.3 Though Notification No.13/2008-CE dated 1.3.2008 has added Explanation 2 to the original Notification No.105/95-CE dated 28.8.1995, considering the Honble Supreme Courts decision in the case of UOI vs. Martin Lottery Agencies Ltd: 2009 (14) STR 593 (SC) and CESTAT Ahmedabads decision in the case of Sirala Exports Ltd. vs. CCE (supra), this amendment cannot be made effective retrospectively. In this regard, the decision of the Honble Supreme Court in the case of UOI vs. Martin Lottery Agencies Ltd. (supra) is quoted below:
35.?Reverting to the decision of a Kerala High Court in CIT v. S.R. Patton [(1992) 193 ITR 49 (Ker.)] wherein Gujarat High Courts judgment was followed, this Court noticed that explanation was not held to be a declaratory one but thereby the scope of Section 9(1)(ii) of the Act was widened. The law in the aforementioned premise was laid down as under:
17.?As was affirmed by this Court in Goslino Mario (supra), a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. [See also : Reliance Jute and Industries v. CIT [(1980) 1 SCC 139]. An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section (See: Sonia Bhatia v. State of U.P. [(1981) 2 SCC 585 at 598]. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force (See: Shyam Sunder v. Ram Kumar [(2001) 8 SCC 24 (para 44)]; Brij Mohan Laxman Das v. CIT [(1997) 1 SCC 352 at 354], CIT v. Podar Cement [(1997) 5 SCC 482 at 506]. But if it changes the law it is not presumed to be retrospective irrespective of the fact that the phrase used are it is declared or for the removal of doubts.
18.?There was and is no ambiguity in the main provision of Section 9(1)(ii). It includes salaries in the total income of an assessee if the assessee has earned it in India. The word earned had been judicially defined in S.G. Pgnatale (supra) by the High Court of Gujarat, in our view, correctly, to mean as income arising or accruing in India. The amendment to the section by way of an Explanation in 1983 effected a change in the scope of that judicial definition so as to include with effect from 1979, income payable for service rendered in India.
19.?When the Explanation seeks to give an artificial meaning earned in India and bring about a change effectively in the existing law and in addition is stated to come into force with effect from a future date, there is no principle of interpretation which would justify reading the Explanation as operating retrospectively. (Emphasis supplied)
36.?It is, therefore, evident that by reason of an explanation, a substantive law may also be introduced. If a substantive law is introduced, it will have no retrospective effect. 5.3.1 Further we quote from CESTAT Ahmedabads decision in the case of Silara Exports Ltd. (supra) as below:
3.?.........The notification as it existed prior to introduction of explanation was interpreted while considering and quashing the Circular No. 38/2000 by two High Courts. Therefore obvious conclusion that emerges is that even though the explanation starts with the clause for the removal of doubts it is hereby clarified it cannot have retrospective effect. (Emphasis supplied). In view of the fact that both the decisions of the High Courts cover the issue in this case, appeal is allowed. 5.4 Considering the findings that there has been no suppression on the part of the appellants and in view of the decisions of the judicial fora quoted above, we hold that amendment to the original Notification No.108/95-CE dated 28.8.1995 made by Notification No.13/2008-CE dated 1.3.2008 would have prospective operation and the demand against the appellants can be sustained only for one year period which is within the period of limitation and the penalty imposed by the impugned order deserves to be set aside.
6. The case is remanded to the adjudicating authority i.e., Commissioner of Central Excise, Bangalore, for quantification of demand of duty of Central Excise within the one year limitation period and he/she is directed to determine the quantification within a period of four months from the date of receipt of this order.
(Operative portion of the order was pronounced in open court on 2.2.2016.) ASHOK K. ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv 2