Custom, Excise & Service Tax Tribunal
Malu Sleepers (Mah) P. Ltd. vs Cce Pune Iii on 12 July, 2019
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH - COURT NO. 3
EXCISE APPEAL NO: 388 of 2011
[Arising out of Order-in-Appeal No: PIII/VM/299 & 300/2010 dated 08th
November 2010 passed by the Commissioner of Central Excise (Appeals), Pune -
III.]
Malu Sleepers (Maharashtra) Pvt Ltd ...Appellant
Village: Sonawali, Tal. Daund
Pune - 413 801
versus
Commissioner of Central Excise & Customs
Pune - III ...Respondent
ICE House, 41-A, Sasson Road, Opp: Wadia College Pune - 411 001 WITH EXCISE APPEAL NO: 389 of 2011 [Arising out of Order-in-Appeal No: PIII/VM/299 & 300/2010 dated 08th November 2010 passed by the Commissioner of Central Excise (Appeals), Pune - III.] Malu Sleepers (Maharashtra) Pvt Ltd ...Appellant Village: Sonawali, Tal. Daund Pune - 413 801 versus Commissioner of Central Excise & Customs Pune - III ...Respondent ICE House, 41-A, Sasson Road, Opp: Wadia College Pune - 411 001 APPEARANCE:
Shri Suresh Singh, Cost Accountant for the appellant Shri NN Prabhudesai, Superintendent (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE DR SUVENDU KUMAR PATI, MEMBER (JUDICIAL) E/388 & 389/2011 2 FINAL ORDER NO: A/86233-86234/2019 DATE OF HEARING: 07/05/2019 DATE OF DECISION: 12/07/2019 PER: C J MATHEW M/s Malu Sleepers (Maharashtra) Pvt Ltd is in appeal against order-in-appeal no. PIII/VM/299 & 300/2010 dated 8th November 2010 of Commissioner of Central Excise (Appeals), Pune - III Commissionerate which disposed off two orders, both dated 30th April 2010, directing deposit of interest of ₹ 19,12,888/- and ₹ 1,57,195/- respectively on the additional amount of ₹ 37,30,036/- and ₹ 9,62,420/- paid as duty on 11th March2006 and 30th October 2007 on goods cleared between February 2001 to November 2005 and November 2005 to June 2007 to the Indian Railways.
2. Learned Cost Accountant appearing for the appellant submits that the provision for escalation, by invoking of 'book examination clause', is peculiar to contracts with Indian Railways and the discharge of duty liability suo motu by the appellant arising therefrom precludes denomination as short-payment of duty within the meaning of section 11A of Central Excise Act, 1944 and, hence, does not warrant the application of section 11AB of Central Excise Act, 1944 which is, at E/388 & 389/2011 3 best, a consequential occurrence. It is seen that the impugned order has relied upon the decision of the Hon'ble Supreme Court in Commissioner of Central Excise, Pune v. SKF India Ltd [2009 (239) ELT 385 (SC)] as well as the determination that the transaction value, though paid in tranches, could not be delinked from the time of removal from the factory of the appellant. According to the Learned Cost Accountant, the Hon'ble High Court of Karnataka had distinguished the decision relied upon in the impugned order while disposing off appeal of Revenue in Commissioner of Central Excise, Bangalore - III v. Bharat Heavy Electricals Ltd [2010 (257) ELT 369 (Kar)], which, according to him, suffices to allow the escapement from the detriment of section 11AB in their transaction. He also cited the decision of the Tribunal in their own matter, viz. Malu Sleepers (Maharashtra) Pvt Ltd v. Commissioner of Central Excise & Customs, Pune - II, [order no. A/2565-2566/15/SMB dated 26th June 2015 in appeal no. 1328- 1329/2011], to contend that the present dispute is to be disposed off in the same manner. Reliance is also placed on the decision of the Tribunal in Paper Products Ltd v. Commissioner of Central Excise, Mumbai [2015 (327) ELT 326 (Tri.-Mumbai)], which, according Learned Cost Accountant, has examined a number of decisions, including those now being relied upon by Revenue, to conclude that interest provision attaches only with the recovery provisions.
3. Learned Authorised Representative placed reliance on the E/388 & 389/2011 4 decision of the Hon'ble Supreme Court in Steel Authority of India Ltd v. Commissioner of Central Excise [2015 (326) ELT 450 (SC)] and of the Hon'ble High Court of Bombay in Gammon India Ltd v. Commissioner of Customs & Central Excise, Nagpur [2013 (298) ELT 171 (Bom.)]. In addition, as a counter to the contention of the Learned Cost Accountant on the requirement of extending the limitation in section 11A as applicable to section 11AB of Central Excise Act, 1944, that relies on the decision in re Paper Products Ltd, Learned Authorised Representative cites the decision of the Hon'ble High Court of Bombay in Tata Motors Ltd v. Union of India [2009 (244) ELT 337 (Bom.)].
4. On our specific query as to the predicate of judicial discipline, mandating that we follow the decision, in identical matters and, in particular, pertaining to the same appellant, as that of the coordinate benches, it was the contention of the Learned Authorised Representative that the decision cited by the Learned Chattered Accountant should not bind a division bench as a precedent since a single member bench was without jurisdiction to decide. We do not agree with this view as the dispute is restricted to the recovery of interest under section 11AB of Central Excise Act, 1944 that has nothing to do with value. The duty liability arising from the consideration received on invoking of the escalation clause has been duly discharged. The sole point of dispute, from a legal perspective, is the scope for invoking section 11AB in absence of demand under E/388 & 389/2011 5 section 11A of Central Excise Act, 1944. We take note that the show cause notice, pertaining to the orders impugned before us, makes no reference to recovery arising from additional consideration, but is limited to appropriation of duty paid voluntarily, along with interest under section 11AB of Central Excise Act, 1944, on the goods described as 'the principle reflected in voluntary payment of duty' by the adjudicating authority.
5. There is no dispute that the Tribunal in Collector of Customs, Madras v. TVS Whirlpool Ltd [1996 (86) ELT 144 (Tri.Chennai)], has held that the time-limit provided for in section 28 of the Customs Act, 1962 would also apply in such provisions of the statute that do not mandate a time-limit. We also find that the Tribunal, in re Paper Products Ltd, on reference to third member, has held '26.1 I have perused carefully the decision of the Hon'ble Apex Court in Citedal Fine Pharmaceuticals case (supra). The only ratio as far as I can see, which has been laid down in the said decision is that merely because the provision of a statute does not lay down any time limit, the exercise of power under the said provision cannot be invalidated so long as the power is exercised within a reasonable period. The question whether a party should be put to notice or not before initiating any action was not a question before the Hon'ble Apex Court in the said case. Nowhere in the said decision, the Apex Court even remotely hinted that principles of natural justice need not be followed while initiating executive action. Such an interpretation would give the executive unbridled powers which is an anathema to the principle of rule of law. In the E/388 & 389/2011 6 Kanhai Ram Thekedar case decided by the Apex Court, the Apex Court had held that since interest liability accrues automatically, separate written notice is not required for its recovery if it is not included in the assessment order. Therefore, it follows that only in a case where there is an assessment order determining the tax liability, interest would be liable to be recovered since it is consequential to the demand of tax. The said decision nowhere states that in a case where only recovery of interest is involved, no notice is required to be issued. In fact in the said order, it has been categorically held that if the assessment order does not include interest, demand for interest thereafter has to be made within a reasonable period. Therefore, I am unable to agree with the interpretation given by the Hon'ble Member (Technical) of the Apex Court's order in the Citedal Fine Pharmaceuticals case. 26.2 It is an implied principle of the rule of law that any order having civil consequences should be passed only after following the principles of natural justice. Otherwise, it will be a violation of Articles 14 and 21 of the Constitution of India. This principle has been lucidly explained by the Hon'ble Apex Court in Raghunath Thakur v. State of Bihar [AIR 1989 SC 620] wherein it was held as under :
"4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principles of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realized that blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order."
E/388 & 389/2011 7 The same position was reiterated by the Hon'ble Apex Court in Charanlal Sahu v. Union of India [AIR 1990 SC 1480] as under : -
"9.1 The fact that the provisions of the principles of natural justice have to be complied with, is undisputed. This is well-settled by the various decisions of the Court. The Indian Constitution mandates that clearly, otherwise the Act and the actions would be violative of Article 14 of the Constitution and would also be destructive of Article 19(1)(g) and negate Article 21 of the Constitution by denying a procedure which is just, fair and reasonable.
9.2 Rules of natural justice are not embodied rules. Hence, it was not possible to make an exhaustive catalogue of such rules. Audi alteram partem is a highly effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power."
Therefore, I am in agreement with the view taken by the Hon'ble Member (Judicial) as far this point is concerned.'
6. In the context of submissions made by Learned Cost Accountant that the show cause notice issued in March 2006 and August 2007 for clearance effected between February 2001 and February 2005 is barred by limitation, we, in the light of these judgments, and absence of any other overruling decisions, must follow and we do so.
7. The decision in re Tata Motors Limited that has been relied upon by the Learned Authorised Representative is on the issue of judicial discipline and that too in the context of the decision of the Hon'ble High Court of Bombay in re Gammon India Ltd. The said decision has referred to the earlier decision of the Hon'ble Supreme Court in Commissioner of Central Excise v. International Auto Limited [2010 E/388 & 389/2011 8 (250) ELT 3 (SC)] which itself relies upon the decision in re SKF India Ltd while distinguishing the circumstance in which the Hon'ble High Court of Karnataka had rendered the decision in re Bharat Heavy Electricals Ltd. The said decision in re Gammon India Ltd was on an appeal by the assessee therein and, in exercise of the jurisdiction conferred statutorily under Central Excise Act, 1944, has determined that there is no substantial question of law involved in view of the established decisions already in existence and before recording the factum of recovery of short-payment only after it was brought to the notice of the respondent. Those facts are not congruent with the facts before us in this dispute and as the Hon'ble High Court of Bombay has stated that the law is well settled and does not require a response in the civil appeal of re M/s Gammon India Ltd, we are not required to examine the applicability of the decisions of the Hon'ble Supreme Court in re International Auto Limited to the present dispute. In re International Auto Ltd, the decision arose from the provision of section 11A(2B) in Central Excise Act, 1944 which has enabled voluntary payment of duty and interest to preclude further action under section 11A(1) of Central Excise Act, 1944 with the implication that such payment of duty and interest does not erase scope of invoking of section 11A(1) except to the extent that penalties should not be imposed. It would appear that the foundation in re Gammon India Ltd, as well as that of International Auto Limited and SKF Limited, was not in E/388 & 389/2011 9 existence when the present proceedings were commenced.
8. Hence following the decision of the Tribunal in their own appeal pertaining to a different period, referred to supra, we set aside the impugned order and allow the appeals.
(Order pronounced in the open court on 12/07/2019) (C J Mathew) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) */as070512051306