Custom, Excise & Service Tax Tribunal
M/S Kailash Auto Builders Pvt. Ltd vs C.C.E. Bhopal on 11 November, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/3276/2009-[SM]
[Arising out of Order-In-Appeal No. 340/BPL/2009 dated 02.09.2009 passed by Commr. (Appeals) Bhopal]
For approval and signature:
Honble Mr. 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 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?
M/s Kailash Auto Builders Pvt. Ltd. Appellant(s)
Vs.
C.C.E. Bhopal Respondent(s)
Appearance:
Mr. Shaswat (Advocate) for the Appellant Mr. R.K. Mishra (DR) for the Respondent CORAM:
Honble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing/ Decision. 11.11.2016 Final Order No. 55917/2016 Per S. K. Mohanty:
This appeal is directed against the impugned order dated 02.09.009 passed by the Commissioner (Appeals), Customs, Central Excise and Service Tax, Bhopal.
2. Brief facts of the case are that the appellant is engaged in manufacture of body building motor vehicles, falling under Chapter 87 of the Central Excise Tariff Act, 1985. The appellant avails cenvat credit on various inputs, input services and capital goods used in the manufacturing process. The appellant receives duty paid chassis from M/s Tata Motors and thereafter upon building the body, removes the same on payment of Central Excise Duty on some occasions, Tata Motors amends the purchase orders in view of revision in the sale prices. Based on the revision of price, the appellant submits supplementary bills after receiving amended purchase orders and raises debit notes, giving reference to the purchase orders. During the disputed period, due to oversight, the appellant did not pay the duty on the revised price. On being pointed out by the department, the appellant paid the duty of Rs. 5,57,885/- on 11.01.2005. Thereafter, the department issued the SCN on 15.04.2008, seeking appropriation of the said amount deposited by the appellant and also for confirmation of interest liability and for imposition of penalty. The said SCN was adjudicated vide order dated 31.03.2009 in confirming the proposals made therein. In appeal, the Ld. Commissioner (Appeals) vide the impugned order has upheld the adjudged demand. Hence, the present appeal is before the Tribunal.
3. Sh. Shaswat, the Ld. Advocate appearing for the appellant submits that the differential duty of Rs. 5,57,885/- was deposited by the appellant on 11.01.2005 and thereafter the SCN was issued after one year, seeking recovery of the interest amount. He submits that since there is no element of fraud, suppression of facts, with intent to evade payment of duty, SCN seeking recovery of interest amount should be confined to a period of one year. To support his stand that the proceedings are barred by limitation of time, the Ld. Advocate has relied on the decisions of Tribunal in the case of Emco Ltd. vs CCE Mum. 2011 (272) ELT 136 (Tri. Mum) and the judgement of Honble Bombay High Court against the said decision, reported in 2015 (325) ELT A-104 Bom.
4. With regard to penalty imposed in the adjudication order, the Ld. Advocate submits that provisions of Rule 25 of the Central Excise Rules, read with Section 11AC ibid has been invoked by the authorities below, which is not proper and justified in the fact of this case inasmuch as non-payment of duty at the material time was due to oversight and not attributable to any malafides on the part of the appellant. Thus, he submits that penalty imposed in the impugned order is not in conformity with the statutory provisions. To support such stand, the Ld. Advocate has relied on the decision of this Tribunal in the case of CCE Aurangabad vs Rohit Industries 2013-TIOL-381-CESTAT-Mum.
5. Sh. R.K. Mishra, the Ld. AR appearing for the Revenue, on the other hand, reiterates the findings recorded in the impugned order. To substantiate his stand that confirmation of interest and penalty in the impugned order is in conformity with the statutory provisions, the Ld. AR has relied on the judgment of Honble Supreme Court, in the case of Commissioner of Central Excise, Kolkata vs Praxair India Pvt. Ltd. 2012 (278) ELT 579 (SC), judgment of Honble Karnataka High Court in the case of CCE and ST LTU Bangalore vs Karnataka Soaps and Detergents Ltd. 2011 (267) ELT 593 (Kar.) and judgment of Honble Bombay High Court in the case of CCE & C. Aurangabad vs Padmashri V.V. Patil S.S.K. Ltd. 2007 (215) ELT 23 (Bom.).
6. I have heard the Ld. Counsel for both the sides and perused the records.
7. The short question involved in this appeal for consideration is, as to whether, extended period of limitation in terms of the Proviso to Section 11A ibid can be invoked for recovery of interest on delayed payment of principle amount; and penalty can be imposed where there is no element of suppression, fraud, misstatement etc, with intent to evade payment of duty.
8. It is an admitted fact on record that the differential duty was paid by the appellant on pointing out the mistake by the department on 11.01.2005 and thereafter the SCN was issued on 15.04.2008, seeking recovery of the interest amount and for imposition of penalty. The said SCN has been issued under the proviso to Section 11A ibid. The facts regarding finalization of the provisional price, issuance of supplementary bills, payment of differential duty etc. were known to the department, and in such eventuality, the department should have issued the SCN within one year from relevant date i.e. 10.01.2006. In this case, since admittedly the SCN was issued on 15.04.2008, the same in my considered view, is barred by limitation of time. In this context, this Tribunal in the case of Emco Ltd. (supra) by placing reliance on the judgment of Honble Supreme Court in the case of CCE vs TVS WhirlPool Ltd. 2000 (119) ELT A-117 SC has held that period of limitation not only applies to the principle amount but also the same applies for recovery of interest. The relevant paragraph in the said decision is extracted herein below.
11.?The Central Excise Act provides a time limit of one year from the relevant date for demand of duty in normal circumstances and a time limit of five years for demand of duty in cases where fraud, suppression of facts, collusion, etc. are involved. In the instant case, there is no allegation that the assessee delayed payment of duty on account of any of these elements. On the other hand, it is very clear that the assessee had discharged the differential duty liability on their own. The differential duty payments were made during the period from May, 2004 to March, 2009 and were also reflected in the corresponding monthly returns filed by the assessee. Thus, the department was fully aware that the assessee was raising supplementary invoices for recovery of differential prices subsequent to the clearance of the goods and they were also discharging differential duty liability on issue of supplementary invoices. Therefore, it was incumbent on the department to recover interest which the assessee had failed to pay within a reasonable period. In a similar case, the Honble Apex Court in the case of Commissioner v. TVS Whirlpool Ltd. [2000 (119) E.L.T. A177 (S.C.)] held as follows -
It is only reasonable that the period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon. Respectfully following the said decision, we hold that when the normal time limit prescribed is one year from the relevant date, (the date of filing of return) for recovery of the principal amount, (excise duty, in this case), it will be reasonable to adopt the same period for recovery of interest as well.
9. The departmental appeals against the decision of Tribunal in Emco Ltd. (supra) was affirmed by the Honble Bombay High Court reported in 2015 (325) ELT A-104 (Bom.). Thus, I am of the view that interest liability confirmed in the impugned order will not stand for judicial scrutiny.
10. In this case, the authorities below have imposed equal amount of penalty of Rs. 5,57,885/- under Rule 25 read with Section 11AC of the Central Excise Act. On perusal of the records, I find that the authorities below have not specifically brought on record any evidence regarding the malafides on the part of the appellant to defraud the Government Revenue. Since Rule 25 ibid is subject to the provisions of Section 11AC ibid, which clearly provides that in case of fraud, collusion, willful misstatement, suppression of facts, equal amount of penalty shall be imposed, and in absence of any specific findings to that effect by the authorities below, I am of the view that penalty imposed in the adjudication order and confirmed in the impugned order is not sustained in the eyes of law.
11. In view of the above, the appeal is allowed to the extent of setting aside the amount of interest and penalty confirmed in the impugned order.
(Dictated and pronounced in open court) (S. K. Mohanty) Member(Judicial) Neha 6 | Page E/3276/2009-SM