Custom, Excise & Service Tax Tribunal
M/S. Triveni Engg. & Inds. Ltd vs Cce, Allahabad on 23 April, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing:23.04.2012
Date of Decision:08.05.2012
Honble Mr. Justice Ajit Bharihoke, President
Honble Mr. Rakesh Kumar, 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.
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?
Excise Appeal No.1146 of 2005-B
M/s. Triveni Engg. & Inds. Ltd. Appellant
Vs.
CCE, Allahabad Respondent
Coram: Honble Mr. Justice Ajit Bharihoke, President Honble Mr.Rakesh Kumar, Member (Technical) Appearance:
Shri Rajesh Chhibber, Advocate for the appellant. Shri Sanjay Jain, AR for the respondent.
Order No. .
Per Rakesh Kumar:
The appellant are manufacturers of sugar chargeable to central excise duty under heading 1701 of the Central Excise Tariff. The period of dispute is 1996-1997. The appellant as per the statutory provisions were required to sell a certain percentage of their production as levy sugar at the price fixed by the Government which for the purpose of charging duty was classifiable under sub-heading no.170131. The remaining production of sugar was free sale sugar which was classifiable under sub-heading no.170139. the rates of duty for levy sugar and free sale sugar were different. Directorate of Sugar, New Delhi vide order dated 20.09.97 directed some sugar mills including the appellant to sell a specific quantity of sugar as levy sugar out of their free sale quota of 1996-1997 sugar season. The appellant, in pursuance of the Governments order dated 20.09.97 cleared the specified quantity of sugar out of their free sale quota as levy sugar at the price fixed for levy sugar on payment of duty applicable to levy sugar. As per letter dated 13.10.1998 the difference between the duty on levy sugar and free sale sugar was to be reimbursed by the Government to the Sugar Mills. But before this communication, the appellant had cleared 15509 quintals of free sale sugar as levy sugar on payment of duty applicable to levy sugar. The appellant received differential duty of Rs.5,11,797/- in August, 2001. They however had paid the differential duty of Rs.5,11,797/- to the Department on 7.6.2001. The Department subsequently issued a show cause notice dated 21.09.2001 for confirmation of the duty demand along with interest under Section 11 AB and imposition of penalty on the appellant under Section 11 AC. The show cause notice was adjudicated by the Additional Commissioner vide order-in-original dated 26.10.2001 by which the duty demand as made in the show cause notice was confirmed along with interest, penalty of equal amount was imposed on the appellant under Section 11 AC and the amount of Rs.5,11,797/- already paid towards the duty demand was appropriated. On appeal to the Commissioner of Central Excise (Appeals), the Additional Commissioners order was upheld vide order-in-appeal dated 31.12.2004. Against this order of Commissioner of Central Excise (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri Rajesh Chhibber, Advocate the learned Counsel for the appellant, pleaded that during the period of dispute, as per the provisions of Section 11 AB and Section 11 AC, the same attracted only when non-payment or short payment of duty was due to fraud, wilful misstatement, mis-declaration, suppression of facts, etc on the part of the assessee, that in this case, these factors are absent, as the appellant had paid the differential duty on their own and hence the provisions of Section 11 AB and 11 AC would not be attracted, that in this regard, he relies upon the judgement of the Tribunal in cases of U.P. State Sugar & Cane Dev. Corpn. Ltd. Vs. CCE, Allahabad reported in 2009 (242) ELT 260 (Tribunal-Delhi) and CCE, Guntur Vs. Kovvur Co-op Sugar Factory Ltd. reported in 2006 (199) ELT 53 (Tribunal-Bang.) when in identical circumstances the Tribunal held that the provisions of Section 11 AB and 11 AC are not attracted, that at the time of clearance of free sale sugar as levy sugar on the directions of the Government, at the rate of duty applicable to levy sugar, this fact had been intimated to the Department and that in these circumstances, the impugned order upholding the interest under Section 11 AB and penalty under Section 11 AC is not correct.
4. Shri Sanjay Jain, the learned Departmental Representative defended the impugned order by reiterating the findings of the CCE (Appeals) and cited the jdugement of Honble Karnataka High Court in case of CCE, Bangalore-I Vs. Geneva Fine Punch Enclosures Ltd. reported in 2011 (267) ELT 481 (KAR.), wherein it was held that even voluntary payment of duty along with interest when pointed out by the authorities after investigation would not save the assesee from the penalty provisions of Section 11 AC.
5. We have carefully considered the submissions from both the sides and perused the records.
6. The undisputed facts are that
(a) The appellant, in pursuance of the orders of Directorate of Sugar, New Delhi in September, 1997 cleared 15509 quintals of free sale sugar as levy sugar during October 1997 to December, 1997 period on payment of duty under heading 170131 i.e. at the rate applicable to levy sugar and these clearances were reflected in the monthly RT-12 returns filed with the Range Office along with which copies of the release orders were also enclosed;
( b ) only in October, 1998, vide letter dated 13.10.98, the Sugar Directorate informed the Sugar Mills that difference, if any, on account of rate of duty for free sale sugar and levy sugar would be borne by the Government;
(d) Subsequently the appellant received the communication in this regard from Indian Sugar Mills Association (ISMA) and on 7.6.2001, worked out the differential duty as Rs.5,11,797 and paid the same; and
(e) The appellant received the differential duty reimbursement from the Government as 3.8.2001.
6.1 Though during the period of dispute, the classification of sugar and hence, the rate of duty applicable depended upon the nature of clearance whether for free sale or as levy sugar at price fixed by the Government, and at the time of clearance of the sugar, in question, the appellant had correctly classified the sugar cleared as levy sugar, as there was nothing in the direction of Sugar Directorate to the Sugar Mills that the sugar cleared as levy sugar was to be treated as free sale sugar and though in November, 1998 the Government clarified that differential duty would be reimbursed to the Sugar Mills which would indicate that the Government intended to treat these sugar sales as free sale sugar, the appellant received the differential duty only in August, 2001 and before that, i.e. in June, 2006, they had paid the differential duty.
6.2 Keeping in view the above facts and the conduct of the appellant, we are of the view that the short-payment of duty in this case, which was made goods by the appellant on their own on 7.6.2001, much before the issue of show cause notice on 21.09.2001, can not be attributed to fraud, willful mis-statement, mis-declaration, suppression of facts or contravention of any provisions of Central Excise Act, 1944 or of the rules made thereunder with intent to evade the payment of duty. For the imposition of penalty under Section 11 AC, the presence of the above element is a must and in absence of such elements, imposition of penalty on the appellant under Section 11 AC is not sustainable.
6.3 As regards the interest on duty under Section 11 AB, during the period of dispute, as per the provisions of Section 11 AB, as the same existed during period prior to 11.5.2001, interest under this Section was chargeable only in those cases where short-payment, non-payment or erroneous refund of duty were due to fraud, wilful mis-statement, mi-declaration, suppression of facts, etc. Though in this case, show cause notice has been issued on 21.09.2001, as per the provisions of Sub-section (2) of Section 11 AB, as it stood w.e.f. 11.5.2001, the provisions of new sub-section (1), coming in force, w.e.f. 11.5.2001 will not apply to cases when the duty had become payable or ought to have been paid prior to 11.5.2001. In view of above, in this case, it is the provisions of Section 11 AB, as the same stood prior to 11.5.2001 which would apply and since in this case, the fraud, wilful mi-statement, mis-declaration, suppression of facts, etc. are absent, interest on differential duty under Section 11 AB would not be chargeable. However, the differential duty which has been paid and also reimbursed by the Government , was correctly paid and its demand has been correctly upheld.
7. In view of the above discussion, while duty demand is upheld, the interest on duty under Section 11 AB and penalty on the appellant under Section 11 AC is set aside. The order passed by the Commissioner of Central Excise (Appeals) stands modified as above.
[order pronounced on 8.5.2012.] ( Justice Ajit Bharihoke ) President ( Rakesh Kumar ) Member (Technical) Ckp.
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