Custom, Excise & Service Tax Tribunal
M/S Vimal Moulders (India) Ltd vs Cce, Delhi Iii, Gurgaon on 11 December, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 11/12/2014. DATE OF DECISION : 11/12/2014. Excise Appeal Nos. 2944-2945 of 2005 [Arising out of the Order-in-Appeal No. 254-255/AKG/GGN/2005 dated 27/05/2005 passed by The Commissioner of Central Excise (Appeals), Delhi III, Gurgaon.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, 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 would 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 : Department Authorities? M/s Vimal Moulders (India) Ltd. Appellant Versus CCE, Delhi III, Gurgaon Respondent
Appearance Shri Naveen Mullick, Advocate for the Appellant.
Shri M.S. Negi, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 54924-54925/2014 Dated : 11/12/2014 Per. Rakesh Kumar :-
The facts giving rise to these two appeals are, in brief, as under.
1.1 The appellant are manufacturers of plastic moulded furniture,a dutiable item and plastic dies which are fully exempted goods. Since, the appellant were using common Cenvat credit availed inputs for manufacture of dutiable as well as exempted final products and were not maintaining separate accounts and inventory of inputs meant for dutiable final products and exempted final products, in accordance with provisions of Rule 57CC during the period of dispute i.e. during 1997-1999 period, they were reversing an amount equal to 8% of the sale value of the exempted final products at the time of their clearances. The appellant, however, while paying an amount equal to 8% of the sale value of the exempted final products under the provisions of Rule 57CC of the Central Excise Rules, 1944,were recovering this amount from their customers. The Department was of the view that the amount equal to the 8% of the sale value of the exempted final product being paid by the appellant was in lieu of reversal of the Cenvat credit attributable to the inputs used in the manufacture of exempted final product and, therefore, the same amount being recovered by the appellant from their customers as excise duty would be payable by them to the Central Government in terms of the provision of Section 11D and since they have not paid the same, the same would be recoverable from them. It is on this basis that Jurisdictional Joint Commissioner, Central Excise vide order-in-original dated 31/08/01 confirmed the demand for an amount of Rs. 3,26,237/- against the appellant under Section 11D of Central Excise Act, 1944 and beside this, also demanded interest on this amount invoking the provisions of Section 11AB and imposed equal amount on the appellant under Section 11AC. On appeal being filed to Commissioner (Appeals) against this order of the Joint Commissioner, the Commissioner (Appeals), vide order-in-appeal dated 12/05/03 upheld the Joint Commissioners order. Commissioner (Appeals)s order, however, while specifically confirming the demand under Section 11D and imposition of penalty of equal amount under Section 11AC, was totally silent about levy of interest under Section 11AB.
1.2 The appellant filed appeal before the Tribunal against this order of the Commissioner (Appeals) and the Tribunal vide final order No. A/705/03 dated 27/11/03 confirmed the demand under Section 11D, but set aside the penalty. The Tribunals order was also silent about the interest.
1.3 Subsequent to the Tribunals order, the appellant paid the amount of Rs. 3,26,237/-. The Department, however, wanted interest on this amount under Section 11AB. Since the appellant did not pay this amount, the Assistant Commissioner vide orders dated 18/11/04 and 27/12/04 adjusted the amount of interest from two refund claims payable to the appellant. The appellant filed appeals to Commissioner (Appeals) against the orders-in-original of the Assistant Commissioner adjusting the amount of interest from the refund claims. In course of proceeding of hearing of the appeals before the Commissioner (Appeals), the appellant made a plea that during the period of dispute there was no provision for levy of interest on the amount payable under Section 11D and the provisions in this regard made by introducing Section 11DD w.e.f. 14/5/03 cannot be given retrospective effect and, therefore, in this case there is no justification for charging interest by invoking Section 11AB. The Commissioner (Appeals), however, without giving any finding on this plea of the appellant, upheld the Assistant Commissioners orders adjusting the interest amount against the refund claims. Against this order of the Commissioner (Appeals), these two appeals have been filed.
2. Heard both the sides.
3. Shri Naveen Mullick, Advocate, the learned Counsel for the appellant, pleaded that the amount recoverable in terms of Section 11D is not the same as Central Excise Duty, that for this reason, the interest under Section 11AB would not be chargeable in respect of the amount payable under Section 11D, that specific provision for charging interest on the amount payable under Section 11D was made w.e.f. 14/5/03 by inserting Section 11DD, that there is nothing in this Section from which it can be inferred that this provision can be applied retrospectively, that in any case in view of the order of the Larger Bench of the Tribunal in the case of Unison Metals Ltd. vs. CCE, Ahmedabad I reported in 2006 (4) S.T.R. 491 (Tri. LB) wherein it was held that when a manufacturer has reversed Cenvat credit/paid an amount equal to 8% of the sale value of the exempted final product, the provisions of Section 11D are not attracted even if this amount has been charged from the customers, even the demand under Section 11D would not survive and therefore there is no question of charging interest on the same, and that in view of this, the impugned order upholding the recovery of interest is not sustainable.
4. Shri M.S. Negi, the learned DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it, and pleaded that when the CCE (Appeals) in his order dated 12/05/03 has upheld the Joint Commissioners order dated 31/08/01 in toto and the appeal filed by the appellant before the Tribunal except for setting aside the penalty, was rejected, the levy of interest cannot be agitated once again and that in view of this, there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. The undisputed facts are that the appellant were using common Cenvat credit availed inputs for manufacture of dutiable final product and exempted final products and in respect of clearance of exempted final products, in accordance with the provisions of Rule 57CC of Central Excise Rules, were paying an amount equal to the 8% of the sale value. There is no dispute that this payment of an amount equal to 8% of the sale value of the exempted final product was towards reversal of the Cenvat credit attributable to the inputs used in or in relation to the manufacture of the exempted final products. There is also no dispute that the appellant were mentioning this amount being paid to the Government under Rule 57CC of the Central Excise Rules, 1944 in their invoice as modvat reversal and were recovering this amount from the customers. The Department was of the view that the amount of 8% of the sale value of the exempted final product being paid by them was in lieu of reversal of the Cenvat credit attributable to the inputs used in or in relation to the manufacture of exempted final product and not excise duty and that the amount of 8% being recovered by them from the customers would be required to be paid by them to the Government. It is on this basis that the demand of Rs. 3,26,237/- was confirmed against the appellant by the Joint Commissioner, alongwith interest on it under Section 11AB and penalty under Section 11AC. The Joint Commissioners order was upheld by the Commissioner (Appeals) only to the extent of demand under Section 11D and the penalty under Section 11AC. The CCE (Appeals)s order is silent about interest under Section 11AB and it is this order of CCE (Appeals) which was upheld by the Tribunal except for setting aside of penalty. The point of dispute is as to whether the appellant would required to pay interest on this amount under Section 11AB.
7. Section 11D (1) introduced w.e.f. 20th September 1991 provided that notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court or any provisions of this Act or the rules made thereunder, every person who is liable to pay duty under this Act or the Rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or Rules made thereunder, from the buyers of any such goods in any manner as representing the duty of excise, shall pay forthwith, the amount so collected to the credit to the Central Government. Sub-Section (2) of Section 11D provides that where such an amount required to be paid to the credit of the Central Government has not been paid, the Central Excise officer may serve the person liable to pay such amount, a notice to show cause as to why the amount specified in the notice, should not be paid by him to the Central Government. Sub-Section (3) of Section 11D provides that the Central Excise Officer, after considering the representation, if any, made by the person on whom the notice has been served under Section 11D (2), determined the amount due from such person and thereafter such person shall pay the amount so determined. Initially there was no provision for charging of interest on the amount determined as payable under Section 11D (3). Such a provision was made by inserting Section 11DD w.e.f. 14/5/03. The amount payable under Section 11D is not the same as the duty which has not been levied or paid or has been short paid or which has been erroneously refunded and whose recovery is recovered by Section 11A. The provisions of Section 11AB are applicable only to the duty which has not been levied or has been short levied or short paid or has been erroneously refunded and has been held as recoverable from a person in terms of Sub-Section (2) of Section 11A. We are of the view Section 11AB is not applicable to the amount recoverable under Section 11D (3) readwith Section 11D (1) and 11D (2). The provisions of recovery of interest on the amount determined as payable under Section 11D (3) was made only w.e.f. 14/5/03 by inserting Section 11DD and in absence of any specific provision regarding its retrospective application, the same cannot be applied retrospectively. Therefore, no interest under Section 11AB was chargeable on the demand confirmed under Section 11D (3).
8. As regards the Revenues plea that the Joint Commissioners order confirming interest under Section 11AB on the amount determined as payable under Section 11D (3) was upheld in toto by the CCE (Appeals), this plea is not acceptable as the CCE (Appeals)s order is totally silent about levy of interest under Section 11AB and similarly, the Tribunals order upholding the demand under Section 11D, is totally silent about interest under Section 11AB on this amount. In view of this, it cannot be presumed that the CCE (Appeals) and the Tribunal also upheld the levy of interest under Section 11AB. The principle of interest liability on the duty demand confirmed under Section 11A (2) by automatic application of Section 11AB, will not apply to the demand confirmed under Section 11D (3) during the period of dispute, as, as discussed above, the provisions of Section 11AB are not applicable to demand confirmed under Section 11D (34) and the provisions of Section 11DD which came into force w.e.f. 14/5/03, cannot be applied retrospectively.
9. In view of the above discussion, the impugned order upholding the recovery of interest under Section 11AB on the amount demanded under Section 11D (3) by adjustment against refund claim payable to the appellant is not sustainable. The same is set aside. The appeals are allowed.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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