Custom, Excise & Service Tax Tribunal
Belapur vs Rpg Sciences Limited on 16 September, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: E/41/2006
[Arising out of Order-in-Original No: 44/COMMR/04-05 dated 23rd February 2005 passed by the Commissioner of Central Excise, Belapur II.]
For approval and signature:
Honble Shri C J Mathew, 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 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
Commissioner of Central Excise
Belapur
Appellant
versus
RPG Sciences Limited
Respondent
Appearance:
Shri S V Nair, Assistant Commissioner (AR) for the appellant Shri Vinod Awtani, Chartered Accountant for the respondent CORAM:
Honble Shri C J Mathew, Member (Technical) Date of hearing: 16/09/2016 Date of decision: 16/09/2016 ORDER NO: ____________________________ M/s RPG Life Sciences Ltd was issued with show cause notice dated 11th June 2002 demanding duty of ` 23,35,424/- under section 11A of Central Excise Act, 1944 for the period from 22nd December 1999 to 30th June 2000 on clearance of diphenoxylate hydrochloride from their unit at Belapur to their unit at Ankaleshwar. The original authority vide order no. 44/COMMR/04-05 dated 23rd February 2005, with the finding that the clearances were effected at ` 20,240 per kg instead of the usual price of clearance at ` 25,000, that determination of price under rule 6(b)(ii) of Central Excise Valuation Rules, 1975 was valid only after attempting ascertainment under rule 6(b)(i) and that appellant had paid the duty differential before issue of notice, confirmed demand but did not determine interest liability and did not impose penalty. Revenue is aggrieved by the failure to demand interest and to impose penalty.
2. Heard Learned Authorized Representative and Learned Chartered Accountant for respondent.
3. Learned Authorised Representative placed reliance on the decision of Honble High Court of Bombay in Commissioner of Central Excise & Customs, Aurangabad v. Sterlite Optical Technologies Ltd [2008 (225) ELT 430 (Bom)] requiring imposition of penalty equal to duty in terms of section 11AC of Central Excise Act, 1944 and upon the decision of the Tribunal in Jay Yuhshin Ltd v. Commissioner of Central Excise, New Delhi [2000 (119) ELT 718 (Tribunal-LB)] that 13.?In the light of the above discussion, we answer the reference as under:
(a) xxxxxx
(b) xxxxxx
(c) xxxxxx
(d) We express our opinion in favour of the view taken in the case of M/s. International Auto Products (P) Ltd. (supra) and endorse the proposition that once an assessee has chosen to pay duty, he has to take all the consequences of payment of duty.
4. Reliance was also placed on Commissioner of Central Excise & Customs, Aurangabad v. Padmashri V V Patil SSK Ltd [2007 (215) ELT 23 (Bom)] in which Honble High Court of Bombay held 10.?So far as interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of interest. Language of Section 11AB(1) is clear. The interest has to be at the rate not below 10% and not exceeding 36% p.a. The actual rate of interest applicable from time to time by fluctuations between 10% to 36% is as determined by the Central Government by notification in the Official Gazette from time to time. There would be discretion, if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable u/s. 11AB are declared.
The second aspect would be whether there is any discretion not to charge the interest u/s. 11AB at all and we are afraid, language of Section 11AB is unambiguous. The person, who is liable to pay duty short levied/short paid/non-levied/unpaid etc., is liable to pay interest at the rate as may be determined by the Central Government from time to time. This is evident from the opening part of sub-section (1) of Section 11, which runs thus :
Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under sub-section (2) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........ The terminal part in the quotation above, which is couched with the words shall and be liable clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional.
11.?The question then arises whether payment of duty before issuance of show cause notice exempts the assessee from liability to pay interest u/s. 11AB. Learned Counsel Shri Kolte had placed reliance upon concluding para in the judgment of CESTAT Bangalore in the matter of Rashtriya Ispat Nigam Ltd. v. Commissioner of Central Excise, Visakhapatnam, which reads thus :
In these circumstances, there is no justification on the part of the department to impose penalty u/s. 11AC as well as under Rule 173Q of the Central Excise Rules, 1944. Consequentially, no interest also is payable. In the matter, penalty u/s. 11AC is held non-imposable because the amount of duty was paid before issuance of show cause notice. The observation consequentially no interest is also payable, according to Advocate Shri Kolte, was confirmed by the Honble the Supreme Court while dismissing the appeal of the department. First of all, with due respect, it must be said that on going through the entire judgment of the Tribunal at Bangalore, there does not appear any submissions advanced regarding the issue of interest. The stray reference to interest has come in the judgment of the Tribunal unsupported by any reasons except that it has treated the interest chargeable u/s. 11AB at par with the penalty imposable u/s. 11AC. We have sufficiently distinguished the nature of liability of interest u/s. 11AB and penalty u/s. 11AC in the discussion hereinabove. The first one is civil liability whereas second is penal, if not criminal, liability. This is because u/s. 11AC, existence of mens rea is a must, whereas u/s. 11AB, it may be innocent evasion or omission to pay the duty. The judgment of the Supreme Court is brief and it is not possible to judge whether issue regarding interest was also agitated by the department before the Honble Apex Court. Otherwise also, we have already pointed out that this is a judgment, which can safely be presumed to be regarding the duty payable for a period prior to insertion of amendments by Act No. 14/2001 with effect from 11-5-2001, which have clarified the distinction between Sections 11AB and 11AC by virtue of sub-section (2B) and Explanations below the same. Second explanation below sub-section (2B) reads thus :
Explanation (2) : For the removal of doubts, it is hereby declared that the interest u/s. 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of duty if any as may be determined by the Central Excise Officer, but for this sub-section. It is evident that explanation has taken care to charge the interest on the difference amount if the amount of duty payable as ascertained by the assessee and the amount of duty payable as ascertained by the Central Excise Officer, is different. Thus, even if the assessee pays the short duty by virtue of liberty granted by sub-section (2B) of Section 11A, he is liable to pay interest, on the same even if the amount is paid, and he is liable to further interest also on the amount of short duty as ascertained by the department if that exceeds the self-assessment and to that extent. By this explanation, we are convinced that even if no notice is issued by the department because it agrees with the amount of short duty paid by the assessee as ascertained by the assessee himself under sub-section (2B), still the assessee shall be liable to pay interest over the same even without going through the process of determination as contemplated by Section 11A(1) and (2) commencing with a show cause notice and culminating with an order of the Central Excise Officer. The show cause notice and determination can go on if the short duty is not paid, but even if short duty is paid by taking liberty under sub-section (2B), we are afraid, that does not absolve the assessee from the liability to pay interest thereon. In case by proceeding with the show cause notice, if the Central Excise Officer determines short duty payable higher than as ascertained and paid by the assessee himself, the assessee would be liable to pay interest u/s. 11AB upon the same.
Emphasis by Advocate Shri Kolte was on the tail piece of sub-section (2B). According to him, once the short duty is paid before issuance of show cause notice, the department is prohibited from issuing show cause notice and, therefore, there cannot be any adjudication u/s. 11A(1) and (2) and, therefore, there cannot be any imposition of either interest u/s. 11AB or penalty u/s. 11AC. We quote the tail piece, relied upon by Advocate Shri Kolte :
.......On receipt of such information (regarding payment under sub-section (2B) shall not serve any notice under sub-section (1) in respect of duty so paid. We are afraid, the proceedings starting with the show cause notice u/s. 11A(1) are prohibited so far as duty paid. It does not make any reference, much less prohibits issuance of show cause notice for the purpose of according an opportunity to the assessee to show cause as to why interest may not be charged or penalty may not be imposed. The department would be justified in issuing show cause notice pertaining to duty as well if the duty as ascertained by the assessee himself and paid is less than duty as prima facie ascertained by the officer of Central Excise. In any case, we are unable to agree with the submission by learned Counsel Shri Kolte that on payment of short duty as under sub-section (2B), before issuance of show cause notice, no interest u/s. 11AB can be charged, by virtue of portion of Section 11AB (2B) reproduced hereinabove.
5. Relying on the decision of the Honble Supreme Court in Nirlon Ltd [2015 (320 ELT 22 (SC)], Learned Chartered Accountant claims that, in an entirely revenue neutral situation, there is no justification to allege intent to evade duty. Also relying on decision of the Honble High Court of Madras in Commissioner of Central Excise v. M/s Tenneco RC India Pvt Ltd [2015-TIOL-1579-HC-MAD-CX], it was claimed that this decision was followed.
6. After consideration of the rival contentions, there can be no doubt that the notice had not brought out any evidence of misdeclaration or suppression of facts with intent to evade duty and a notice of 11th June 2002 cannot, in absence of such evidence, invoke the extended period to demand duty. This is admitted to in the impugned order thus Coming to the latter issue, firstly, it is seen that the assessee removed their goods for home clearance other than for their own use in established in the notice, which has not been denied by the assessee. As they claimed that they did file the return for the month of December 1999 during which period such removal was effected which could have been verified to see the fact of any such removal. Moreover, the assessee made goods of the differential duty which has been taken into account in the notice itself. If they had any ill intention they need not make such payment even before any action initiated by the Department. The fact is that the assessee made the payment on 29.8.2000 while the notice was issued on 1.07.2002 after a time lapse of almost two years. The payment itself is an admittance of such omission on their part and the department was in full knowledge of the issue and hence it cannot be said that there was any suppression of facts or any they mis-stated willfully. Hence as claimed by the assessee the notice is beyond the scope of the proviso to Section 11A(1) of the Act.
7. The notice itself is barred by limitation of time. Accordingly, the appeal is devoid of merits and, for that reason, is dismissed.
(Pronounced in Court) (C J Mathew) Member (Technical) */as 1 2