Custom, Excise & Service Tax Tribunal
The Commissioner Of Customs And Central ... vs M/S. Anam Electrical Manufacturing Co on 13 January, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, BANGALORE SOUTH ZONAL BENCH COURT - I Appeal No: E/929 & 931/2009 (Arising out of Order-in-Appeal No:02/2009(V-II)(D)CE & Order-in-Appeal No:04/2009(V-II)(D)CE dated 24.6.2009 passed by the Commissioner of Central Excise, Service Tax and Customs (Appeals), Visakhapatnam.) 1. Whether Press Reporters 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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? Seen 4. Whether Order is to be circulated to the Departmental authorities? Yes The Commissioner of Customs and Central Excise Visakhapatnam-II Commissionerate Visakhapatnam. Appellant Versus M/s. Anam Electrical Manufacturing Co. Respondent
Appearance Ms. Sabrina Cano, Superintendent (AR) for the Revenue.
Ms. Maithili, Advocate for the appellant.
CORAM SHRI P. G. CHACKO, HONBLE MEMBER (JUDICIAL) Date of Hearing: 13.1.2012 Date of decision: 13.1.2012 FINAL ORDER Nos._______________________2012 In these appeals filed by the department, the short question rising for consideration is whether, on the differential amount of duty paid by the respondent (hereinafter referred to as the assessee), interest under Section 11AB of the central Excise Act is recoverable for the period from the date of clearance of the goods to the date of payment of differential duty. It is not in dispute that the assessee originally paid duty on the goods in terms of the price originally agreed with the buyers. Subsequent to the clearance of the goods, apparently, the price escalation clause of the contract was invoked and the seller and the buyer agreed for an increase. The assessee (seller) issued supplementary invoices for the purpose of collecting the differential price and paying differential duty. The differential duty was voluntarily paid and this fact was intimated to the department. The relevant show-cause notices were issued for recovery of interest under Section 11AB of the Act on the differential duty for the period from the date of clearance of the goods to the date of payment of differential duty. The demand was contested. The adjudicating authority dropped the demand of interest. The orders-in-original were reviewed in the department and appeals filed with the Commissioner (Appeals). The appellate authority dismissed the departments appeals. Hence the present appeals before the Tribunal.
2. The learned counsel for the respondent raises a preliminary objection at the outset by submitting that these appeals are not maintainable as they infringe the National Litigation Policy. It is submitted that, as per the said Policy, the department cannot prefer to the Tribunal any appeal involving total revenue exceeding Rs.1 lakh.
3. The learned Superintendent (AR), relying on case law submits that the substantive issue is no longer res integra. The decisions cited by her are (i) Commissioner vs. SKF India Ltd.: 2009 (239) E.L.T. 385 (S.C.), (ii) Commissioner vs. International Auto Ltd.: 2010 (250) E.L.T. l3 (S.C.) and (iii) Commissioner vs. Presscom Products: 2011 (268) E.L.T. 344 (Kar.).Though the learned counsel has not cited any binding decision to the contra on the issue, she has raised the plea of limitation against the demand of interest. In this connection, she has claimed support from the Tribunals decision in Emco Ltd. vs. Commissioner: 2011 (272) E.L.T. 136 (Tri.-Mumbai) wherein, relying on a judgment of the apex court, the Tribunal held that any demand for recovery of interest should be raised within one year. Before parting with the matter, the learned counsel has also referred to para 19 of the High Courts judgment in the Presscom Products case, drawing support to her preliminary plea based on National Litigation Policy. In her rejoinder, the learned Superintendent (AR) opposes the plea of limitation and relies on ASN Steel Tubes Ltd. vs. Commissioner: 2011 (265) ELT 127 (Tri.-Del.).
4. I have given careful consideration to the submissions. As rightly submitted by the Superintendent (AR), it is settled law that an assessee who is placed in a factual situation like the respondent is required to pay interest under Section 11AB on an amount of differential duty paid under sub-section (2B) of Section 11A of the Act by means of supplementary invoice issued to the buyer for recovery of differential price under the escalation clause of the relevant contract. The ruling handed down by the apex court in the case of SKF Ltd. (supra) and subsequently clarified by the court in the case of International Auto Ltd. (supra) has been followed by the Karnataka High Court in the case of Presscom Products (surpa). As per this ruling, the respondent is liable to pay interest under Section 11AB of the Act on the differential amount of duty paid by them, for the period from the date of clearance of the goods to the date of payment of differential duty.
5. The ancillary issue raised before me is whether the demand of interest in this case is liable to be held time-barred in view of the Tribunals decision in the case of Emco Ltd. (supra). In that case, a view was taken to the effect that, in the absence of any period of limitation having been prescribed in the Central Excise Act for recovery of interest on duty under Section 11AB of the Act, a period of one year could be adopted as reasonable period of limitation. Section 11AB provides for recovery of interest on an amount of duty determined under sub-section (2B) of Section 11A. It however does not prescribe any period of limitation for the purpose of recovery of such interest. In my considered view, this is because the liability to pay interest on duty is co-extensive with the liability to pay the duty itself. In other words, it is a continuing liability. Where the liability is a continuing liability, the statute may not prescribe a period of limitation. This apart, there are judgments of the apex court to the effect that interest on tax is automatic. If the tax is not paid on or before the due date, interest thereon will accrue to the revenue. The cumulative effect is that the department is entitled to demand interest on an amount of duty at any time till such interest is paid by the assessee. In my humble opinion, the view taken on this point by this Tribunal in the case of Emco Ltd. is per incuriam and cannot be followed as a precedent.
6. The preliminary objection raised by the learned counsel is also liable to be overruled. This plea has been raised on the strength of para 19 of the High Courts judgment in the Presscom Products case which reads thus:
19. It is true? that the instructions came into effect from 1-11-2010, whereas the present appeal is filed on 7-3-2008. The subject matter of this appeal is Rs. 27,802/- which is less than Rs. 2 Lakhs. Though the said circular is not applicable as the appeal had already been filed before the instructions came into force and the appeal involves a substantial question which we have answered in the above paras, the assessee should not be denied the benefit of the said circular. If only this appeal had been filed after the instructions, the appeal could not have been filed, even if substantial question of law is involved as it is well settled in fiscal legislation, the principles of res judicata is not attracted. But, as the appeal was filed and we have already answered the substantial question, in the facts of this case, we are satisfied that the assessee is entitled to the benefit of the policy underlining the instructions, as the amount involved in this appeal is hardly Rs. 27,802/-. Their lordships clearly held that the Circular was not applicable to the appeal filed by the department before 1.11.2010. They also held that the Circular was not applicable to a case involving substantial question of law. On this basis, the departments appeal was maintained. I am at a loss to understand as to how the above decision of the Honble High Court is of any aid to the present respondent.
6. In the result, the impugned orders are set aside and these appeals are allowed.
(Pronounced and dictated in open Court) (P. G. CHACKO) Member (J) rv.
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