Custom, Excise & Service Tax Tribunal
M/S Nagarjuna Agrichem Ltd vs The Commissioner on 29 January, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench Single Member Bench Court I Appeal No.E/28/2012 (Arising out of Order-in-Appeal No.43/2011(V-I)CE, Dated 21-10-2011 Passed by C.C,CE.&ST(Appeals) Visakhapatnam) For approval and signature: Honble Ms.Sulekha Beevi. C.S., Member(Judicial) 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s Nagarjuna Agrichem Ltd. Srikakulam ..Appellant(s) Vs. The Commissioner. C&C.E,Visakhapatnam-I ..Respondent(s)
Appearance Shri V.S.Sudhir, Advocate for the Appellant Shri R.K.Dass, AR for the Respondent Coram:
Honble Ms. Sulekha Beevi, Member(Judicial) Date of Hearing: 22/01/2016 Date of Decision: 29/01/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.]
1. The appellants are aggrieved by the demand of interest on differential duty paid on goods cleared during the period 2008-2009.
1.1 The appellants are engaged in manufacture of pesticides and registered with the Central Excise Department. They were clearing goods to their sister concern on payment of duty by adopting 110% of the cost of production of such goods as per Rule 8 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000. The assessable value was arrived on the basis of previous years cost data of the unit. The appellant paid differential duty by debiting an amount of Rs.27,12, 411/- in their Cenvat account in respect of clearances made to their sister concerns during the period 01-04-2008 to 31-03-2009 by raising supplementary invoice. It was observed by the department that appellants did not pay interest on the differential duty as provided under Section 11(AB) of the Central Excise Act, 1944. A show cause notice was issued proposing the demand of interest of Rs.4,61,711/- on the differential duty and also proposing to impose penalty. After due process of law, the adjudicating authority relying on the decision of the Hon'ble Apex Court in CCE, Pune Vs SKF India Ltd,2009(239)ELT385(SC) confirmed the demand of interest but did not impose any penalty. The appellants carried the issue in appeal and vide the order impugned herein the Commissioner(Appeals) upheld the demand of interest. Being aggrieved, the appellants are before the Tribunal.
2. On behalf of the appellant, the learned counsel, Shri Sudhir.V.S submitted that the appellant had excess Cenvat credit in their account during the relevant time and if the appellants had paid the full duty at the time of clearance itself, they would have utilized the Cenvat credit for payment of duty. Their sister concern would have taken credit of such duty on receiving the goods. Therefore, it would be a revenue neutral situation and therefore, there is no liability to pay interest on the differential duty. To fortify his arguments, he relied upon the judgment laid in CCE, Pune Vs Siddeshwer Textile Mills private limited. In addition, he also submitted that the decision rendered in SKF India Ltd (supra)has been doubted by the Hon'ble Apex Court and therefore is not applicable. He pleaded that the appeal may be allowed.
3. Per contra, the learned AR Shri.R.K.Dass supported the findings in the impugned order and argued that appellants are liable to pay interest on the differential duty under Section 11(AB) of the Central Excise Act. He urged that the judgment in SKF India Ltd was squarely applicable to the case.
4. I have heard the submissions made by either side and perused the records. The main argument advanced by the learned counsel for appellant is that the whole transaction/activity is revenue neutral, as the sister unit would be able to take credit on the duty of goods and that the appellant having excess credit during the relevant time would have paid the duty utilizing Cenvat credit. That, being a book adjustment there is no revenue loss to the government. I am not convinced by these submissions made on behalf of the appellant. In the judgment of Siddheswar Textile Mills (P) Ltd which is relied by the learned counsel for appellant, it was observed that if the components of interest is on the tax or duty demanded on the product, and if that duty or tax is liable to be set off or adjusted against the credit available at the intermediate stage, then the demand itself would be neutralized. It was also stated that such view is taken by the Honble Court as probable in the given facts and circumstances, peculiar to the appellant therein. In the case before me, the contention raised by the appellant is that even if appellant had paid the duty, the sister concern would be eligible to take credit on such duty and therefore would be a revenue neutral situation. The appellant and sister concern being two different units/establishments, such an inference of revenue neutrality, as argued by the learned counsel cannot be deduced. The said judgment is distinguishable on facts as well as issue and therefore not applicable. In the present case, the appellants have not opted for provisional assessment under Rule 7 of the Central Excise Rules, 2002. They have not paid the interest on the differential duty. Section 11 AB states that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person who has paid the duty under Section (2B) of Section11A, shall in addition to the duty, be liable to pay interest. In SKF India Ltd case (supra) the Honble Court held that the payment of differential duty by the assessee at the time of issuance of supplementary invoices to the customers demanding the balance of the revised prices clearly falls under the provision of sub-section (2B) of Section11 A of the Act. The Honble Apex Gourt in the case of M/s Steel Authority of India Ltd. Vs CCE, Raipur 2015-TIOL-292-C-CX, while examining an issue of demand of interest on differential duty paid on account of enhanced price received due to price escalation after taking note of the judgment in SKF and International Auto observed that these judgments need a re-look by a larger bench. However, as the decision still in force, in obedience to judicial discipline I have to follow the ratio laid in SKF India(P)Ltd (Supra). Taking into account the facts and the law laid in the case of SKF India Private Limited (supra), I am of the view that the appellants are liable to pay the interest. The issue is answered in favour of the Revenue.
5. The appeal is dismissed.
(Pronounced on... in open court) ( SULEKHA BEEVI, C.S.) MEMBER(JUDICIAL) DKS 2