Custom, Excise & Service Tax Tribunal
M/S. Futura Fibres Ltd vs Commissioner Of Central Excise, ... on 27 June, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/87 & 88/06/MAS
[Arising out of Order-in-Appeal Nos.101 & 102 dated 24.10.2005 passed by the Commissioner of Central Excise (Appeals), Chennai ]
For approval and signature:
Honble Mr. P. KARTHIKEYAN, MEMBER (T)
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 the Member wishes to see the fair copy of the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s. Futura Fibres Ltd.
Appellants
Versus
Commissioner of Central Excise, Chennai.
Respondent
Appearance:
Shri S. Srinivasan, Const.
Shri N.J. Kumaresh, SDR For the Appellants For the Respondent CORAM:
Mr. P. Karthikeyan, Member (Technical) Date of hearing : 27.6.2008 Date of decision : 27.6.2008 Final Order No.____________ These two appeals filed by M/s. Futura Fibres Ltd. (FFL), are against a common Order-in-Appeal (Nos.101 & 102 dated 24.10.2005) passed by the Commissioner (Appeals), Chennai. They challenge the method of determination of the appellants interest liability on a demand of Rs.6,07,719/- made by the Assistant Commissioner in January,1995. The demand relates to disputed eligibility of FFL to an exemption on Polyester stable fibre from payment of duty in terms of Notification No.84/87-CE dated 1.3.87. The order of the original authority had been affirmed by the Commissioner (Appeals) on 17.5.1995 and vacated by the Tribunal on 20.6.1996. The dispute got finally settled in favour of the Revenue by the judgment of the apex Court on 26.2.2004. The department initiated proceedings to recover the interest due on the duty demand in terms of Section 11AA of the Central Excise Act, 1944 (the Act). The Order-in-Original Nos.7/005 and 8/005 were passed by the Assistant Commissioner of Central Excise adjusting respectively the amount of Rs.5 lakhs deposited with the Commissioner (Appeals) under Section 35F of the Act and Rs.2,36,207/- being rebate on export sanctioned to the appellants. The impugned order decided the appeals filed against the above orders and found the computation of interest on Rs.6,07,719/- made by the original authority to be incorrect and remanded the matter for requantification. The appeals are against the decision of adjustment of the amount of interest for delayed payment of duty of Rs.6,07,719/-. The impugned order found the liability to be lower than Rs.104625/- determined by the original authority. In reply to the Show Cause Notices of the original authority, the appellants had agitated for interest for late return of predeposit of Rs.5 lakhs & Rs.2.5 lakhs and delayed refund of Rs.2.36 lakhs. The impugned order does not deal with this aspect of the assessees appeals. Referring to the explanation to Section 11AA of the Act, the ld. Consultant for the appellants reiterates the main ground in the appeals that when a demand determined under sub section (2) of Section 11A was set aside by the appellate forum that decision amounted to another determination of the duty due in terms of the said sub section (2) of Section 11A which reduced the duty due to nil. Also, if appellate forum higher to that authority restored the original demand that was a determination of duty under Section 11A (2) raising the liability from nil to the original amount. Therefore, reading Explanations 1 and 2 in the above perspective, the appellant was liable to pay interest only for the period of delay beyond three months from the judgment of the apex Court in the instant case.
2. Yet another argument raised consistently before the lower authorities by the appellant is that predeposit of Rs.2.5 lakhs paid by it for their appeal in the subject dispute to be heard by the Tribunal had to be refunded to them immediately after the Tribunal set aside the order of the Commissioner (Appeals) in 26.6.1996. As the predeposit was refunded to them only on 26.7.2001, they were entitled for interest for the delay. An amount of Rs.5 lakhs deposited in terms of Section 35 F had become due to them pursuant to Order-in-Appeal No.121/04 (M-I) dt.18.8.2004. This amount was adjusted against the interest of Rs.10,46,525/- vide orders of the original authority affirmed in the impugned order. In terms of another order-in-original also affirmed by the impugned order, an amount of Rs.2.36 lakhs due to the appellants as rebate was appropriated towards interest of Rs.10,46,525/- less the amount of Rs.5 lakhs. The appellants had claimed that interest was due to them owing to delay in return of the above Rs.5 lakhs and Rs.2.36 lakhs (in terms of Section 11B). Ld. Consultant relies on the decision of the Tribunal in Mukund Ltd. Vs.CCE, Mumbai [1996 (88) ELT 725 (Tri)] and Vanaz Engineers Ltd. Vs. CCE, Pune [2007 (219) ELT 581 (Tri)] in support of their claim that interest on the duty demanded was liable to be computed and paid only on the final settlement of the dispute. He has also cited the decision of the apex Court in CCE Vs. ITC Ltd [2005 (179) ELT 15 (SC)] in support of the plea that they are eligible for interest for the delay in return of the amount predeposited after they obtained a favourable order in appeal.
3. Ld. SDR submits that the Explanations 1 and 2 to Section 11AA lay down the period for which interest is payable on a duty demand when the initial determination of duty liability is varied in the orders-in-appeal passed at various higher stages in the judicial hierarchy. In the instant case there has been determination of duty liability only at a single stage i.e by the original authority. Subsequent appeals by either party were disposed of by the appellate fora deciding the issue whether the appellants was eligible for the benefit of the exemption Notification. There was no determination or revision of duty liability at any stage after the decision of the original authority. Therefore, interest liability had to be reckoned from the date of the order of the original authority read with proviso to Section 11AA. As regards interest claimed on predeposit and the late payment of rebate, he submits that the same may be decided in terms of the judgment of the apex Court and the provisions of Section 11AA respectively.
4. I have carefully considered the case records and the rival submissions made by both sides. In the impugned order, the Commissioner (Appeals) decided that the assessee was liable to pay interest in terms of Section 11AA considering the date of the order of the original authority as the date of determination of duty liability envisaged under Section 11A (2) of the Act. He held that the subsequent decisions by higher appellate fora did not determine the duty due by reducing or increasing the liability originally determined. The impugned order did not consider the appellants claim for interest for the delayed return of the predeposit and the delayed payment of the rebate claim.
4.1 The case law cited by the ld. Consultant on the interest liability of the assessee law laid down that the interest liability was to be determined only after the dispute was finally resolved. The decision of the Tribunal in Intech Engg. Services (I) Ltd. Vs. CCE. Chennai [2003 (154) ELT 226 (Tri. Chen)] covers the plea of the department.
5. I find that Explanations 1 and 2 to Section 11AA reads as follows:-
Explanation 1:- Where the duty determined to be payable is reduced by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, the court, the date of such determination shall be the date on which an amount of duty is first determined to be payable. Explanation 2:- Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), Appellate Tribunal or, as the case may be, the court, the date of such determination shall be,-
(a) for the amount of duty first determined to be payable, the date on which the duty is so determined,
(b) for the amount of increased duty, the date of order by which the increased amount of duty is first determined to be payable;
(c) for the amount of further increase of duty, the date of order on which the duty is so further increased As rightly held by the lower appellate authority and reiterated by the ld. SDR, the Explanations deal with determination of duty liability involving variation in the amount of duty by way of increase or decrease. In the instant case the liability has not been revised by any authority. Only the dispute has been decided in favour or against the revenue culminating in a judgment in favour of the revenue by the apex Court. Therefore, the interest applicable has to be computed with reference to the only date of determination of duty liability in these chains of proceedings, namely, the date of order of the original authority read with proviso to the Section 11AA. This proviso laid down that in cases of demands prior to Finance Bill 1995 interest had to be calculated for the period beyond three months of the date when the Finance Bill received the assent of the President. The appeals of the assessee are rejected as regards the relevant date for calculating interest liability of FFL.
6. As regards interest for delay in refund of the predeposit the apex Court in the judgment reported in 2005 (179) ELT 15 (SC) had held that the same was payable by the department in terms of the circular the CBEC had undertaken to issue before the apex Court during hearing of the appeal decided in CCE Vs. ITC (supra). Vide Circular No.802/35/2004-Cx dt.8.12.2004, CBEC had directed the departmental officers that predeposits have to be returned with interest if the same is refunded with delay. As regards the delayed grant of rebate, Section 11B provides that when refund of the duty paid is delayed beyond three months of the claim, interest has to be paid at the prescribed rate. In the ITC case (supra) apex Court directed payment of interest @ of 12% per annum. Following the said judgment, it is ordered that the interest on predeposits shall be allowed to FFL at the rate of 12% per annum for the periods beyond the respective orders of the appellate authority in favour of the appellant. Therefore the appellants succeed as regards the interest on predeposit amounts and the rebate amount. The original authority shall quantify the interest liability of FFL in the above terms. The appeals are thus partly allowed by way of remand.
(Dictated and pronounced in open court) (P. KARTHIKEYAN) MEMBER (T) swamy ??
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