Custom, Excise & Service Tax Tribunal
Godrej & Boyce Mfg. Co. Ltd vs Commissioner Of Central Excise, Mumbai ... on 30 June, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/2468/02 - Mum (Arising out of Order-in-Appeal No. RJB/M-II/400/2001 dated 31.12.2001 passed by Commissioner of Central Excise (Appeals), Mumbai II.) For approval and signature: Mr. P.G. Chacko, Honble Member (Judicial) and Mr. S.K. Gaule, Honble Member (Technical) ======================================================
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?
====================================================== Godrej & Boyce Mfg. Co. Ltd Appellant Vs. Commissioner of Central Excise, Mumbai II Respondent Appearance: Shri A. Hidayatullah, Sr. Advocate for appellant Shri K.A. Photographer, Excise Manager Ms. Shailaja Kher, Advocate Dr. T. Tiju, SDR for respondent CORAM: Mr. P.G. Chacko, Honble Member (Judicial) Mr. S.K. Gaule, Honble Member (Technical) Date of Hearing: 30.6.2010 Date of Decision: 30.6.2010 ORDER NO Per: P.G. Chacko, M(J)
This appeal filed by the assessee is against the demand of interest (not quantified) under Section 11AB of the Central Excise Act on the duty amount of Rs.1,13,94,096.86 covering the period from May 1992 to March 2000. The lower appellate authority ordered for levy of interest on the above amount of duty under Section 11AB ibid. It held so in an appeal of the department filed against order-in-original No.292 to 298/2001 dated 09.03.2001 passed by the Dy. Commissioner who had not ordered for recovery of interest under Section 11AB while confirming demand of duty.
2. After hearing the learned Senior Counsel for the appellant and the learned SDR for the respondent, we note that the short question to be considered is whether Section 11AB of the Act would be invocable for levy of interest from the assessee on the facts of this case. Seven show-cause notices were issued by the department for recovery of duty from the assessee for the total period from May 1992 to March 2000. The essential particulars of these notices are as tabulated below:-
SCN Dated Period Amount 2.11.1992 May 1992 to Sept 1992 56,38,898.26 19.06.1998 Feb 1998 to May 1998 21,32,689.00 17.12.1998 June 1998 to Sept 1998 17,38,760.00 01.02.1999 Oct 1998 to Dec 1998 13,42,869.60 19.04.1999 Jan 1999 to Mar 1999 5,40,880.00 04.01.2000 July 1999 to Dec 1999
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11.04.2000 Jan 2000 to Mar 2000
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3. The learned Counsel submits that the period covered by the first show-cause notice is not covered by Section 11AB of the Act, which provision was enacted with effect from 28.9.1996. It is submitted that this provision has no retrospective effect. With regard to the period covered by the remaining show-cause notices, it is submitted that nothing was alleged in these show-cause notices for invoking Section 11AB. No interest on duty could be levied under Section 11AB unless it could be established that atleast one of the ingredients prescribed under the Section existed in the particular case on hand. It should be shown that the assessee indulged in collusion, fraud, wilful suppression of facts or the like with intention to evade payment of duty so as to attract the penal interest provided under Section 11AB. It is submitted that none of these ingredients was even alleged in any of the show-cause notices and, therefore, the department was not entitled to levy interest on duty under Section 11AB. The learned Counsel has contextually referred to the amendment made to Section 11AB on 11.5.2001. The Finance Act, 2001 substituted a new text for Section 11AB in the place of the erstwhile text. In the new text, requirements like fraud, collusion etc. were done away with and the Revenue was enabled to levy interest on duty (non-paid, short-paid etc.) determined under sub-section 2 of Section 11A of the Act. Sub-section (2) of the amended Section 11AB ruled out the application of sub-section (1) to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill - 2001 received the assent of the President. The Finance Bill received the Presidents assent on 11.5.2001. It would, thus, follow that the amended sub-section (1) of Section 11AB was not applicable to a period for which duty became due from an assessee prior to 11.5.2001. On the one hand the amended provisions of Section 11AB of the Act are not applicable in this case. On the other, the necessary allegations for levy of interest on duty under Section 11AB for any period prior to 11.5.2001 were not raised in the relevant show-cause notices. Therefore, it is argued, the order of the Commissioner (Appeals) for levy of interest from the appellant is not sustainable in law or on facts.
4. The learned SDR has cited a few decisions including the Honble High Courts Judgement in CCE & C, Aurangabad vs. Padmashri V.V.Patil S.S.K. Ltd. 2007 (215) ELT 23 (Bom.) wherein the Honble High Court considered the amended provisions of Section 11AB (1) of the Act and held that interest on any amount of duty evaded was compulsorily payable even though the evasion of duty was not mala fide or intentional. It is pointed out that a Special Leave Petition filed by the party against the High Courts decision was allowed but, in the Civil Appeal, no interim stay was granted and, therefore, the decision of the Honble High Court has to be followed as a precedent. The learned SDR has also claimed support from Commissioner of Trade Tax, Lucknow vs. Kanhai Ram Thekedar 2005 (185) ELT 3 (S.C.) wherein, in the context of dealing with an assessment order issued under Section 8 of the U.P. Sales Tax Act, it was held that the liability to pay interest accrued automatically. Certain other decisions, wherein different aspects of Section 11AB of the Central Excise Act were considered, also have been cited by the SDR. The learned SDR has also submitted that the duty was paid after 11.5.2001 and therefore, the amended provisions of Section 11AB(1) of the Central Excise Act should be applied. In his rejoinder, the learned Counsel has referred to Circular No. 655/46/2002-CX dated 26.6.2002 wherein the Board accepted the view taken by this Tribunal in Commissioner vs. M.P. Tapes 1998 (103) ELT 128 (T) and clarified that, for the applicability of Section 11AB(1) as amended under the Finance Act, 2001, the duty should have become payable or ought to have been paid after 11.5.2001.
5. We have considered the submissions. At the outset, we have to state that the Tribunals decision in the case of M.P. Tapes (supra) was misunderstood by the Board. What was held by the Tribunal was that interest on delayed payment of duty could not be levied under Section 11AB of the Act in respect of an amount of duty short-paid for a period prior to the enactment of the provision. Coming to the issue arising out of the facts of this case, we have found that the first show-cause notice demanded duty for a period prior to 28.9.1996, the date of enactment of Section 11AB and, therefore, no amount of interest can be levied on the said amount of duty. All the show-causes notices were, admittedly, issued within the normal period of limitation. Though these show-cause notices, barring the first one, invoked Section 11AB for levy of interest on duty, they did not allege any of the requisite ingredients of the Section. Collusion, fraud, wilful misstatement/suppression of facts etc. are expressions conspicuously absent in these show-cause notices. There is no whisper of any intention to evade payment of duty, either. Therefore, it is not open to the Revenue to insist that the assessee should pay interest on duty under Section 11AB in respect of any amount of duty paid by them for any part of the period of dispute. We have also found that the amended provisions of Section 11AB (1) are not applicable to this case.
6. The decisions cited by the learned SDR are not on the point under consideration. He has heavily harped on the High Courts judgement. In that case, their Lordships were considering the provisions of Section 11AB(1) as amended with effect from 11.5.2001. The pre-amendment provisions were not examined in that case. Therefore, neither the High Courts Judgement nor the fact that the party failed to get interim stay from the Honble Supreme Court against the High Courts judgement is of any support to the Revenue. The plea of automatic accrual of interest is not relevant to the context where a statutory provision for levy of interest is under scrutiny. Other decisions cited by the learned SDR are on issues of different shades not akin to the point which we are considering.
7. On the other hand, the learned Counsel has succeed in showing that the provisions of Section 11AB of the Act, whether pre-amendment or post- amendment, are not applicable to this case. In this context, he has usefully referred to Order No. A/81/2010/EB/CII dated 11.03.2010 passed by this Bench in Appeal No. E/991/03-Mum (Godrej & Boyce Mfg. Co. Ltd. vs. CCE, Mumbai II), wherein a demand of interest was upheld only in respect of the amount of duty which pertained to the period after 11.05.2001 and the demand raised for the prior period was set aside as the amended provisions of Section 11AB(1) were found to be inapplicable to any period prior to 11.5.2001.
8. In the result, the impugned order is set aside and the appeal is allowed.
(Pronounced in Court) (S.K. Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) nsk 1 6