Custom, Excise & Service Tax Tribunal
Gujarat State Fertilizers & Chemicals ... vs Commissioner Of Central Excise, ... on 16 February, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad *****
Appeal No. : E/689/2008 [ Arising out of OIA-COMMR-A/55/VDR-I/2008 dtd 13.5.2008 Passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-VADODARA-I ] Gujarat State Fertilizers & Chemicals Ltd - Appellant(s) Vs Commissioner of Central Excise, CUSTOMS (Adjudication)-VADODARA-I - Respondent (s) Represented by :
Appellant(s) : None Respondent (s) : Shri Alok Srivastava, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) 1 Whether Press Reporter 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 CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Date of Hearing / Decision : 16/2/2015 ORDER No. A/10539 / 2015 dtd 16/2/2015 Per : Mr.P.K. Das, The appellant filed this appeal against the demand of interest and imposition of penalty.
2. The relevant facts of this case, in brief, are that the appellants were engaged in the manufacture of Fertilizer, Caprolactum etc. The appellant had cleared the goods to their other unit at Kosamba during the period from 1.4.2004 to 13.9.2004 on payment of duty under the Central Excise Invoices, without following the CAS4 procedure. Subsequently, the appellant revised the assessable value and paid the differential duty on 21.10.2004. During the Central Excise audit in December 2004, it was pointed out that the revised value for payment of the differential duty was not correct and it was not based on CAS4 procedure On 8.5.2005, the appellant received the CAS4 certificate and paid the differential duty of Rs 47,10,554/- on 24.1.2006. A show cause notice dtd 20th Sept. 2007 was issued proposing demand of duty of Rs 47,10,554/- and to appropriate the said amount, as they have already deposited. There is a demand interest of Rs 7,75,112.00 under Section 11AB of the said Act and to impose penalty of equal amount of duty under Section 11AC of the said Act. It has been alleged that the appellant had suppressed the facts related to the valuation in respect of the goods cleared to their other units with intent to evade payment of differential duty and are liable for penalty under Section 11AC of the said Act. The Adjudicating Authority confirmed the demand of duty and also appropriated the amount as already paid by them, against the said demand. It has also ordered to recover the interest of Rs 7,75,112/- under section 11AB of the said Act and the penalty of equal amount of duty was imposed under Section 11AC of the said Act. By the impugned order, the Commissioner (Appeal) upheld the adjudication order except, penalty under section 11AC of the said Act was set aside and the quantum of penalty under Rule 25 of the Central Excise Rule 2002 was reduced to Rs 50,000/-.
2. None appears on behalf of the appellant. The Learned Advocate on behalf of the appellant by written submission stated that the Commissioner (Appeal) set aside the penalty under Section 11AC holding that there was no suppression of fact with intent to evade payment of duty. The demand of duty for the extended period of limitation would not survive. The appellant already voluntarily paid duty and therefore demand of interest and penalty would be set aside. He relied upon the decision of the Honble Gujarat High Court as under :
a) CCE&C Vadodara II vs Gujarat Narmada Fertilizers Co Ltd 2012(285)ELT.336 (Guj)
b) CCE&C vs Saurashtra Cement Ltd 2010(260)ELT.71 (Guj) Which is Upheld by the Honble Supreme Court as reported in 2013(292) ELT.A98 (SC).
3. On the other hand, the Learned Authorised Representative for the Revenue, reiterates the findings of the Commissioner (Appeals). He submits that in the present case, the appellant had not paid the duty voluntarily. It is submitted that the Department audit party detected the non-payment of Central Excise duty; therefore, the decision of Honble Gujarat High Court would not be applicable. He further submits that the appellant paid the duty therefore they are liable to pay interest which is automatic.
4. After hearing the Learned Authorised Representative for the Revenue and on perusal of record, I find that show cause notice dtd 20th Sept. 2007 proposed the demand of duty of Rs 47,10,554/- as differential duty which was paid by the appellant on 24.1.2006 for the period from 1.4.2004 to 12.7.2004. It was also proposed to appropriate the amount of duty as deposited by them. There is no dispute that the appellant transferred the goods to their own unit at Kosamba and the duty paid by them would be eligible to cenvat credit to the other units. Taking into account of overall facts of the case, the Commissioner (Appeals), observed that there is no suppression of fact with the intent to evade payment of duty. The relevant portion of the finding of the Commissioner (Appeals) are as under :
However, I find that the charge that the Appellants had not revised the assessable vale in terms of CAS4 certificate immediately on receipt of CAS4 certificate on 8.5.2005 with the intention to evade duty has not been substantiated with any cogent evidence. The clearance of the subject goods on the estimated value of Rs 57,321/- pr MT and payment of differential duty on tentatively raised value of Rs 66,830/- per MT were made under valid central excise invoice and were shown in the periodical returns and the entire exercise was revenue neutral as the duty payable on the impugned goods was available to their Kosamba Unit as cenvat credit, therefore, there was no justifiable reason for the Appellant to suppress any fact. In this regard, I rely on the decision of the Honble Tribunal in the case of Kores India Ltd vs CCE., Hyderabad 2004(178)ELT.901 (Tri. Bang.) wherein it was held as under:
?4.We have carefully considered the submissions made by both the sides. We find that the appellants were clearing Barium Carbonate to their own Granulation Unit on payment of duty by taking average value of Barium Carbonate of the various grades. The duty paid by them on the Barium Carbonate is being taken as credit in their Granulation Unit. Therefore there is Revenue neutrality in this case despite the fact that the appellants have not determined the correct value of the each grade of the Barium Carbonate. In this circumstance, where there is Revenue neutrality, then in view of the decisions relied upon by the appellants and the decision of Larger Bench in case of Jay Yuhshin Ltd. (supra) and the decision of Supreme Court in case of Amco Batteries Ltd. v. Collector of Central Excise, Bangalore [2003 (153) E.L.T. 7 (S.C.) = 2003 (55) RLT 272 (S.C.)], the intention to evade payment of duty cannot be alleged. Therefore extended period under Section 11A(i) cannot be made applicable in the present case. On this ground alone, the order of the Commissioner (Appeals) is set aside as the show cause notice has been issued after the period of 06 months. Accordingly, the appeal is allowed.
The aforesaid decision is squarely applicable to the present case which is revenue neutral . Moreover, there is also no material on record from which it could be inferred or established that that duty of excise was not levied or paid by reason of any fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or the Rules made there under with intent to evade payment of duty. In the absence of any cogent evidence, the mistake cannot be attributable to intentional mistake to evade payment of duty also keeping in view the fact that the appellant are a Joint Sector Undertaking promoted and controlled by Government of Gujarat. Therefore, I am of the view that for the subsequent payment of differential duty of Rs 47,10,554/- on 24.1.2006 on the basis of CAS4 certificate, the charge of suppression of facts, etc, with intent to evade duty is not established.
5. Revenue had not filed cross appeal against the findings of the Commissioner (Appeals). In fact, the demand of duty for the extended period of limitation under proviso to Section 11A(i) of the Act 1944 would not survive. But, the appellant already paid the duty voluntarily. The demand of interest under Section 11AB of the said Act is payable, if there is any short levied/short payment of duty, who is liable to pay duty as determined by Central Excise Officers under Section 11A(2) or paid under Section 11(2B) of the said Act. So, the payment of interest under Section 11AB (as it stood during the relevant period) linked with Sub Section (2) or (2B) of Section 11A of the Act. In the present case, it is evident that the demand of duty by show cause notice dtd 20th Sept. 2007 for the period 13.7.2004 to 30.9.2004 invoking extended period of limitation would not survive. Hence, the demand of interest and imposition of penalty would also not maintainable.
6. The Honble Gujarat High Court in the case of Gujarat Narmada Fertilizer Co Ltd (supra) held that voluntary payment of time barred duty before issuance of the show cause notice, recovery of interest in such case brings about incongruent situation and the appeal filed by the Revenue was rejected. The relevant portion of the said decision is reproduced below:
In the present case, when the period of limitation had already expired and when the extended period beyond one year was not available to the department as held by the Commissioner himself in his order-in-original, to our mind the respondent was not liable to pay even the basic duty. But for the respondent voluntarily making payment of such duty short-paid, it was not open for the Department to recover the same under sub-section (1) of Section 11A of the Act. In absence of any such voluntary payment, recovery of the unpaid duty would not have been possible. In that view of the matter, we do not find the case would fall under sub-section (2B) of Section 11A of the Act. Sub-section (2B) of Section 11A of the Act applies in a case where there is voluntary payment of unpaid duty before issuance of show cause notice under sub-section (1) of Section 11A. When the provision refers to show cause notice, it means a show cause notice which could have been validly issued and surely not a notice which had become time-barred. If by efflux of time and in absence of availability of extended period of limitation, such show cause notice itself had become time-barred, any payment made voluntarily by the manufacturer cannot be viewed as one made under sub-section (2B) of Section 11A of the Act.
In the present case, we have already held that time for issuing such a notice was one year, which period had already expired.
Accepting the stand of the Department that even in such a case once the payment of duty is made, interest liability would follow would bring about an incongruent situation. The recovery of the unpaid or short paid duty would become time-barred. If the manufacturer does not pay it voluntarily, it would not be possible for the Department to recover the same. But if he does it voluntarily despite completion of period of limitation, he would, further be saddled with the liability to pay statutory interest. Surely, this was not the intention of the Legislature while sub-section (2B) was introduced in Section 11A of the Act.
7. In view of the above discussion, the demand of interest and imposition of penalty are not warranted. Accordingly, the same are set aside. The appeal filed by the appellant is disposed of in the above terms.
(Dictated and pronounced in the Court) (P.K. Das) Member (Judicial) swami ??
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