Custom, Excise & Service Tax Tribunal
M/S. Sharavathy Conductors Pvt. Ltd vs The Commissioner Of Central Excise on 23 June, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Single Member Bench
Court - I
Date of Hearing: 23.06.2011
Date of decision: 23.06.2011
Appeal No. E/446/2010
(Arising out of Order-in-Original No. 3/2010 dated 15.01.2010 passed by the Commissioner of Central Excise, Bangalore I Commissionerate, Bangalore)
For approval and signature:
Honble Mr. B.S.V. Murthy, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes
M/s. Sharavathy Conductors Pvt. Ltd. ..Appellant
Vs.
The Commissioner of Central Excise
Bangalore Respondent(s)
Appearance Mr. K. Parameswaran, Advocate, for the appellant Mr. R.K. Singla, JCDR, for the Revenue Coram:
Honble Mr. B.S.V. Murthy, Member (Technical) FINAL ORDER NO._______________2011 Per: B.S.V. Murthy (Oral) Appellant is engaged in the manufacture of Conductors falling under Chapter Heading 76141000 of the schedule to the Central Excise Tariff Act, 1985. They supplied the said conductors to various electricity boards or electricity supply companies in terms of specific purchase orders issued by the said customers. The price for the conductors is firm at the time of placing of the order subject to price variation clause which is based on the price of EC Grade Aluminium and HTG Steel Core Wire as per the CACMAI Circulars. In terms of this price variation clause in many cases, the appellant raised supplementary invoices in respect of supplies made and received additional payments towards the conductors supplied with excise duty leviable thereon and the same was paid to the department. The question as to whether the appellants are liable to pay interest on such additional excise duty paid by them on the difference amount was considered in the proceedings initiated by the revenue which culminated in Order-in-Appeal dated 31.05.2004 wherein the Commissioner (Appeals) relying upon several decisions of Tribunal etc. came to the conclusion that appellants are not liable to pay interest. It is not in dispute that this order has not been appealed against and no reasons for that decision are available.
2. On 08.12.2008, another show cause notice was issued demanding interest on differential excise duty paid by the appellants during the period from 01.06.2004 to May 2007 which culminated into confirmation of demand amounting to Rs. 6,46,086/- which is impugned now.
3. Learned Advocate for the appellants submitted that in this case the show cause notice issued by the revenue did not make any specific allegation of suppression, mis-declaration, fraud, collusion etc. even though the demand related to period beyond the normal period of limitation of 1 year. The proposition in the show cause notice was that assessee had violated the provisions of Rule 4 since they did not pay appropriate duty leviable and thereby attracting the provisions of 8(3) of the Central Excise Rules, 2002. Therefore he submits that on this ground alone, the impugned order is required to be set aside.
4. The learned JCDR submitted that for demanding interest extended period need not have been invoked at all and interest is an appendage to the principal and once principal is leviable, interest is automatically payable. He drew my attention to the provisions of section 11AB of Central Excise Act, 1944 which provides that the person who liable to pay the duty as determined under sub section (2) or has paid the duty under sub section (2B) of Section 11A shall be liable to pay interest. The word shall would show that the section intended that interest liability is automatic and therefore the question of issue of show cause notice, issue of order etc. are not important since the liability automatically arises once the principal is determined to be payable. The learned counsel on the other hand submitted that provisions of Section 11AB would not be attracted in the facts and circumstances of this case. He drew my attention to the show cause notice wherein proposal is only to demand interest and there is no proposal to determine the duty payable under Section 11A (2) of the Central Excise Act, 1944. Only when the duty liability has been determined under sub section 2 or has been paid under section 2B interest liability arises. In this case there is no evidence to show that payment of differential duty was made by the appellants under Section 11A (2B) which requires said payment to be made and intimated to the department. Even though the learned counsel claimed that intimation was given in the ER -1 returns, no evidence to that effect has been produced. As regards sub section 11A (2) it is quite clear that neither the show cause notice nor the Order-in-Original proposed determination of duty liability. Further, the learned JCDR relied upon the decision of the Tribunal in the case of Abhinav Industries reported in 2011 (264) ELT 538 (Tri.-Del.) to submit that in the absence of any provision laying down any time limit for raising of interest demand and in the light of Bombay High Court judgment wherein a view was taken that interest has to be paid automatically without any notice, question of limitation does not arise. In that case a view was taken by the Tribunal that interest liability would arise automatically. Further the learned counsel submits that Tribunal in the case of UCAL Fuel Systems Ltd. reported in 2010 (261) E.L.T. 375 (Tri.-Chennai) was not brought to the notice of the Tribunal while deciding the Abhinav Industries case. Further the Tribunal had relied upon the decision of the Honble Supreme Court in the case of T.V.S. Whirpool Ltd. -2000 (119) ELT A177 (SC) to come to the conclusion which was also not considered in the case of Abhinav Industries. In the case of T.V.S. Whirpool Ltd., the Honble Supreme Court had observed that it is only reasonable that the period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon. We find no merit in the appeals and they are dismissed with costs. Therefore in the facts and circumstances of this case where the show cause notice did not propose determination of duty liability nor there is evidence to show that duty was paid under section 11A(2B) the claim that interest liability automatically arises and therefore the limitation would not be applicable cannot be sustained.
5. Learned JCDR also submitted that in the case of SKF Ltd. reported in 2009 (239) ELT 385 (S.C), wherein the Honble Supreme Court held that interest is payable even when supplementary invoices are raised, the period involved in that case was from April 2004 to December 2005 and the show cause notice had been issued on 21.04.2006. In that case also extended period had not been invoked and even then the Honble Supreme Court held that interest is payable. Further he also submitted that Supreme Court held in that case that even though in the case of SKF Ltd. payment of duty was totally unintended, the differential duty was still payable. However in that case penalty was waived. He submits that this case is similar to the circumstances of SKF India Ltd. On the other hand the learned counsel submitted that each case has to be decided in the facts and circumstances of that particular case and a decision in another case cannot be blindly applied. He submitted that in this case the issue whether interest was to be paid was finalized by the order of the Commissioner (Appeals) dated 31.05.2004. Therefore for the subsequent periods, the appellant had an order in their favour and no periodical show cause notices were being issued even though the dispute in the case of SKF India Ltd. started from April 2006. The period involved in the case of SKF India Ltd. was from April 2004 and the matter got finally decided in 2009. During the period from June 2004 to May 2007 the disputes were there and for the earlier period also, there were several decisions of the Tribunal which have been cited by the lower authorities also holding that interest is not payable in excess where supplementary invoice is raised and differential duty is collected and paid. In the case of SKF India Ltd. there was no Order-in-Appeal in their favour during the relevant period to which the demand related. Therefore the facts of the case of SKF India cannot be applied to the present one.
6. Further learned counsel for the appellant also submitted that the decisions in the case of Abhinav Industries and ANS Steel Tubes - 2011 (265) ELT 127 (Tri.-Del.) which are the only 2 cases in which a view has been taken in favour of the revenue can be distinguished. In the case of Abhinav Industries as already observed in the discussions above, the decisions of the Tribunal in the case of UCAL Fuel Systems Ltd. and the decision of the Honble Supreme Court in the case of T.V.S Whirpool Ltd. were not considered since the same were not brought to the notice. Therefore this decision cannot be applied. As regards ANS Steel Tubes Ltd., the learned counsel drew my attention to para 13 which reveals that in the show cause notice issued there was a specific allegation that NMPL did not inform the department regarding non-payment of interest with the sole intent to evade payment of interest on differential duty thereby rendering the extended period under Section 11A invokable. In this case as already discussed earlier, there is no allegation of suppression or fraud, mis-declaration etc. In any case in view of the fact that there was a decision of Commissioner (Appeals) in favour of the appellants dated 31.05.2004 and further there was several decisions of the Tribunal taking a view that no interest is payable during the relevant period, in the facts and circumstances of this case it has to be held that the decision in the case of ANS Steel Tubes Ltd. cannot be applied. Thus, the 2 decisions in favour of the revenue are both not applicable taking into account facts and circumstances of this case.
7. Learned counsel for the appellants also drew my attention to the amendments made in the Finance Act, 2011. After the amendment, Sections 11AA and Section 11AB of Central Excise Act have been merged into one section and the present section contains the non obstante clause. Therefore the very fact that a section with non obstante clause has been introduced in the present Finance Act would show that for the earlier period, the time limit under Section 11A would apply. I am not going to discuss this issue in view of the fact that in the facts of this case itself I have taken a view that demand could not have been invoked by applying extended period. Therefore even if a view is taken that Section 11A applies, the appellants would succeed. Further in the case of SKF India Ltd., the Honble Supreme Court did not consider whether the demand for interest has to be issued within a time limit at all. In fact this issue that the demand was time barred does not appear to have been taken up by the respondents in the case of SKF India Ltd. Therefore the decision of the Honble Supreme Court cannot be applied as regards applicability of time limit for demand of interest. On the other hand as submitted by the learned counsel, in the case of T.V.S Whirpool Ltd., there is a clear observation of the Honble Supreme Court that the time limit under Section 11A would apply. Therefore prima facie without going into a detail discussion, I find considerable force in the argument that the time limit under Section 11A would be applicable to the present case.
8. Further I also take note of the fact that in the case of Krishna Engg. Works Ltd. reported in 2010 (261) ELT 801 (Tri.-Del.) and in the case of Annavarma Concrete (P) Ltd. reported in 2011 (263) ELT 469 (Tri.-Del.), Tribunal has taken a view that principle of limitation of time for demanding the principal amount is also applicable for recovery of interest. In both the cases, the Tribunal took a view that extended period of limitation is not available to the Revenue. It is to be noted that in both these decisions, the decision of the Honble Supreme Court in the case of SKF India Ltd. was referred to.
9. In the facts and circumstances of this case, the demand for interest confirmed against the appellants cannot be sustained and accordingly, the impugned order is set aside and appeal allowed.
(Pronounced & dictated in open Court)
(B.S.V. MURTHY) MEMBER (TECHNICAL)
...iss