Custom, Excise & Service Tax Tribunal
M/S Indian Oil Corporation Ltd vs Cce, Delhi-Iii on 8 March, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi. Court No. 1 Date of hearing/decision: 08.03.2013 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? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Excise Appeal No. 4010 of 2010-SM (Arising out of order-in-appeal No. 382/BK/GGN/2010 dated 29.09.2010 passed by the Commissioner of Central Excise, Delhi-III). M/s Indian Oil Corporation Ltd., Appellants Vs. CCE, Delhi-III Respondent
Present Ms. Tuhina & Ms. Neha Gulati, Advocates for the appellant.
Present Ms. Shweta Bector, DR for the respondent.
Coram: Honble Sh. Rakesh Kumar, Member (Technical) Final Order No. 55765 / 2013 Per: Rakesh Kumar:
The fact leading to this appeal in brief are as under:
1.1 According to the Appellant, registered as a bonded warehouse for storage of non-duty paid petroleum products received from the refineries, during the period of dispute i.e. from April 2001 to September 2001 and December 2003 to February 2004 received duty paid petroleum products from Bijwasan terminal of IOC and the goods had been cleared on payment of duty by Bijwasan terminal. According to the appellant, since by the time the petroleum products were sold from Rewari terminal, the Government had revised the prices upward, as a result of which the amount recovered from the customers by the Rewari Terminal towards excise duty was more than the excise duty originally paid in respect of the same goods by Bijwasan terminal, the appellant (IOC Rewari) paid the extra amount collected from the customers as duty, to the department, as per the provisions of Section 11D of the Central Excise Act, 1944. The extra amount recovered from the customers for the period April 2001 to September 2001 was Rs. 7,82,728/- and the same was paid to the Government on 24.03.2003. Similarly, the extra amount collected as duty for the period from December 2003 to February 2004 was Rs. 15,59,574/- and the same was paid to the Government on 05.03.2004. The Department subsequently issued show cause notice dated 4/8/2006 for recovery of interest under Section 11AB on this amount alleging that the abovementioned differential duty has been paid on account of upward revision of prices and, therefore, the interest on the differential duty would be chargeable under Section 11AB. The Additional Commissioner vide order-in-original dated 22.10.2009 confirmed the interest demand of Rs. 2,32,977/-. On appeal to Commissioner (Appeals), this order of the Additional Commissioner was upheld vide order-in-appeal dated 29.09.2010. Both the Additional Commissioner in the order-in-original and Commissioner (Appeals) in the order-in-appeal have observed that the amount of differential duty mentioned above i.e. Rs. 7,82,728/- for April 2001 to September 2001 period and Rs. 15,59,574/- for December 2003 to February 2004 has been paid by the appellant under supplementary invoices on account of increase of prices with retrospective effect and, therefore, in view of Apex Courts judgment in the case of CCE, Pune vs. SKF India Ltd. reported in 2009 (239) ELT 385 (SC), the interest on the differential duty on account of retrospective upward revision of prices would be payable as per the provision of Section 11AB.
2. Against the above order of the Commissioner (Appeals), this appeal has been filed.
3. Heard both the sides.
4. Ms. Tuhina, Advocate, the ld. Counsel for the appellant, pleaded that the observations of the Additional Commissioner in the order-in-original and of the Commissioner (Appeals) in order-in-appeal that the differential duty has been paid under supplementary invoices on account of retrospective price revision and that in view of this the interest under Section 11AB on the differential duty would be payable in accordance with the ratio of the Apex Court judgment in the case of SKF India (supra), are factually incorrect; that the appellant (IOC Rewari) received duty paid petroleum products from the IOC (Bijwasan); that the duty on the petroleum products had been paid by the IOC terminal at Bijwasan on the value at the time of clearance; that the duty paid goods had been sold, by the appellant (IOC Rewari) to the customers, that since by the time the goods were sold the prices fixed by the Government for petroleum products had been revised upwards; the IOC (Rewari) terminal recovered higher amount towards duty than the amount of duty which has originally been paid; that it is this extra amount recovered from the customers towards duty Rs. 7,82,728/- for April 2001 to September 2001 and Rs. 15,59,574/- for December 2003 to February 2004, which were paid to the Government on 24.03.2003 and 05.03.2004 respectively under the provision of Section 11D; that the provisions regarding charging of interest for the period of delay in payment to the Government of an amount charged by a manufacturer from his customers towards duty, came into effect w.e.f. 14.05.2003 by introduction of Section 11DD; that during period prior to 14.05.2003, there was no provision for charging interest on the amount payable under Section 11D; that the entire demand of interest, in any case, is time barred, as show cause notice has been issued long after the expiry of normal limitation period of one year and since there was no suppression of fact on the part of the appellant, the longer limitation period was not available; that judgment of Apex Court in the case of SKF India (supra) which has been applied by the Commissioner (Appeals) is not applicable at all, as there were no supplementary invoices issued either by the IOC (Rewari) or IOC (Bijwasan) and observation to this effect is factually incorrect and that in view of the above submissions the, order upholding the demand is not sustainable.
5. Ms. Shweta Bector, ld. DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it. She pleaded that as regards the question of limitation for recovery of interest, a coordinate Bench of the Tribunal in recent judgment in the case of Hindustan Insecticides (Final Order No. A/915-941/2012-EX dated 20.07.2012) has held that the interest on duty being under automatic operation of law, there is no limitation period for its recovery as no show cause notice is required to be issued. She also pleaded that as regards the appellants plea that there were no supplementary invoices issued by IOC (Rewari) and that the amount of differential duty was paid under Section 11D and not on account of upward price revision with retrospective effect, this has to be verified.
6. I have considered the submissions from both the sides and perused the record.
7. The interest demand is from IOC terminal at Rewari which according to the appellant during the period of dispute was selling duty paid petroleum products received from IOC terminal at Bijwasan and it is the IOC terminal at Biswasan which was discharging the duty liability. According to the appellant since by the time the duty paid petroleum products were sold to the customers by the Appellant, the prices for the same had been revised upward, the appellant had recovered higher amount towards duty from the customers than the amount of duty which originally was paid by IOC (Bijwasan) and that it is this differential amount which has been paid under Section 11D and for charging interest on the amount payable under Section 11D, specific provision was introduced w.e.f. 14.05.2003 by inserting Section 11DD. However, on the other hand the facts narrated in the order-in-original give the impression as if the appellant had originally cleared the petroleum products on payment of duty and the differential duty has been paid subsequently when there was revision of upward price revision from retrospective effect and on this basis both the order-in-original and the first appellate authority have confirmed the interest demand under Section 11AB applying the Apex Courts judgment in the case of SKF India (supra). If the appellant i.e. IOC (Rewari) during the period in dispute had received duty paid petroleum products from IOC (Bijwasan), the differential duty paid was certainly the amount realised by the appellant (IOC Rewari) from their customers towards duty which was in excess of the duty originally paid by the IOC (Bijwasan), and the payment of this differential amount have to be treated under Section 11D and the question of charging of interest for the period of delay in paying the same to Government would be governed by Section 11DD only, which came into effect from 14.05.2003. Therefore, if the actual facts are as claimed by the appellant, the interest would be demandable only for the period from 14.05.2003 under Section 11DD and for the period prior to 14.05.2003 the interest would not be chargeable. However, the factual position has to be verified by the original adjudicating authority, for which this matter will have to be remanded.
8. As regards the question of limitation, as held by coordinate Bench of the Tribunal in the case of Hindustan Insecticides (supra) the interest being by automatic operation of law, the limitation period prescribed would not be applicable.
9. In view of the above discussion, the matter is remanded to the original adjudicating authority for denovo adjudication keeping in view the above directions.
(Rakesh Kumar) Member (Technical) Pant 1