Custom, Excise & Service Tax Tribunal
The Commissioner Of Central Excise vs Indian Sugar Exix Corp. Ltd on 22 October, 2008
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II APPEAL No.E/1120/03 (Arising out of Order-in-Appeal No.SDK(1964)288/M-I/2002 dated 31/12/2002 passed by Commissioner of Central Excise & Customs (Appeals), Mumbai) For approval and signature: Honble Mr. M.V.Ravindran, Member (Judicial) Honble Mr. K.K.Agarwal, Member (Technical) ====================================================
1. Whether Press Reporters may be allowed to see : No 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?
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The Commissioner of Central Excise,
Mumbai Appellants
Vs.
Indian Sugar Exix Corp. Ltd., Respondents
Appearance:
Shri.K.Lal, SDR for Appellants
None - for Respondents
CORAM:
Shri. M.V.Ravindran, Member (Judicial)
Shri. K.K. Agarwal, Member (Technical)
Date of hearing : 22/10/2008
Date of decision : 22/10/2008
O R D E R No:..
Per: Mr. M.V. Ravindran, Member (Judicial)
1. This appeal is directed against the Order-in-Appeal No. SDK(1964)288/MI/2002 dated 31.12.2002.
2. Relevant facts that arise for consideration is that respondent had executed a bond of Rs.20 crores for clearance of sugar without payment of duty for export. Out of quantity of sugar cleared for export under bond, 14,906 quintals of sugar was diverted to home consumption after obtaining necessary permission. Respondent was directed to pay the differential central excise duty, Sugar Cess and interest thereof. Respondent discharges the central excise duty and Sugar Cess, but challenged the imposition of interest on such duty and Cess. Commissioner (Appeals), rejected the claim of assessee as regards the interest liability on central excise duty but allowed the appeal in respect of interest on Cess. Revenue is in appeal against the setting aside of interest on cess.
3. Ld. SDR would submit that duty liability on respondent arose due to diversion of export sugar for home consumption. It is the submission that interest liability also arose as notification no. 42/2001-CE(NT) dated 26.6.2001 clearly stipulates that interest is payable. He would rely upon the larger bench decision of tribunal in the case of TTK-LIG Ltd., - 2006 (193) ELT 169 to submit that Cess is also a duty of excise as per Sugar Cess Act. He submits that impugned order is erroneous to that extent.
4. None appeared for respondent nor there is any request for adjournment. Respondent has also not filed any cross-objections. Since the matter is of 2003, we take up the appeal for disposal in the absence of any representation from respondent.
5. We considered the submissions made by Ld. SDR and perused records. It is seen that learned Commissioner (Appeals) while setting aside the interest liability on the Sugar Cess (paid by respondent on diversion to local consumption) held as under:-
However, the position in law governing interest on cess payments, and interest thereon, would be different. While Sugar Cess Act recognized this cess to be para material with duties of excise, inter alia in application of the procedural provisions of Central Excise law in its collection and for other purposes, the specific law contained in Notification No.41/2001 does not cover the liability for payment of cess, and interest charges, arising from diversion for home consumption. Therefore, while the liability to pay the cess on diversion for home consumption arise from the Sugar Cess Act, read with the Central Excise Act and Rules, the interest charges on cess would be governed only with reference to the provisions of Central Excise Act and Rules. Section 11AA of Central Excise Act provides that interest shall be paid on Central Excise duties after 90 days from the date of determination made by the competent authority. In this case, the initial determination also including the requirement to pay interest on cess, was communicated to the appellant on 7/08/2001. Only the computation was made in application of the provision of Notification No.41/2001 instead of Section 11AA of Central Excise Act. Therefore, the period excluded for charge of interest prior to the date of determination and 90 days thereafter contained in Section 11AA of Central Excise Act, needs to be reconsidered for the collection of interest charges payable on cess.
Except for this change in the quantum of interest on cess liable to be paid by the appellant, the findings on other charges contained in the impugned order are correct in law and maintained. Appellant shall be served with another demand separately for the interest on cess based on the findings contained in this order in appeal, which shall be payable by the appellant immediately, otherwise they shall be additionally liable for additional charge of interest for each month of delay, in excess of the amount determined in the revised demand order of the concerned Maritime Commissioner, till the date of payment.
6. We notice that the Sugar Cess is payable as per the provisions of Sugar Cess Act, 1982. Section 3 (1) of Sugar Cess Act, 1982, mandates that Cess will be levies and collected as a duty of excise on all sugar produced by any sugar factory in India. Further, sub-section (4) provides that provisions of the Central Excise Act, 1944 and rules made thereunder, including relating to refunds and exemptions from shall apply in relation to the levy and collection of the duty of excise under that Act.
7. Notification no.42/2001-CE (NT) dated 26th June 2001 at clause V (b) specifically mandates payment of excise duty and interest thereof on any goods cleared for export is diverted to local use. As Sugar Cess is collected as a duty of excise, interest at applicable rate and from the period as is mentioned in notification no.42/2001 CE (NT) will be payable by the respondent for diversion of the sugar to home consumption.
8. In view of the above reasoning, we are of the considered view that the impugned order to the extent it sets aside the interest payable on the amount of Sugar Cess is unsustainable and is liable to be set aside and we do so. Appeal is allowed as indicated hereinabove.
(Pronounced in Court) (K.K. Agarwal) Member (Technical) (M.V.Ravindran) Member (Judicial) pj 1 4 2