Customs, Excise and Gold Tribunal - Bangalore
M/S. Elgitread (India) Ltd. Palakkad vs The Commissioner Of Central Excise, ... on 28 May, 2001
Equivalent citations: 2001(76)ECC802, 2001(133)ELT172(TRI-BANG)
ORDER
Shri S.S. Sekhon
1. There was a dispute, regarding classification of products being manufactured by the appellant, and resort to provisional assessment under rule 9B was made for clearances effected. Consequent to Assistant Collector issuing an order of classification no. 65/92 dt 26.12.92, assessments on RT12 were finally completed, by the Range Superintendent and duty was demanded by him on 30.3.93. The appeal against the order no.65/92 dt. 26.12.92 of the Asst. Collector finalizing the Classification Lists. The differential duty of Rs.1,77,03,224/-, was paid by them only on 31.3.97, after receipt of CEGAT decision on classification in the matter. A demand was therefore made for interest, under section 11AA@ 20% for the period 26.8.95 to 30.03.97. The Commissioner (Appeals) after considering the matter, confirmed the order of the original authority of the demand of interest for the period 26.8.95 to 30.3.97 under section 11AA. Present appeal is against the said interest amount demanded.
2. We have heard Ld. Adv. for the appellant and Ld. DR for the Department and after considering the submissions find
(a) that the finding of the Commissioner, that the original demand was raised by Range Superintendent was under section 11A read with rule 1731 or under rule 1731, however in both the cases the finding which would be most advantageous to the appellant would be that the demand was under section 11A and interest would be payable only from 26.8.95 as demanded and confirmed by the Asst. Commissioner in the impugned order in original can not be upheld as on the nature of demand, on RT 12, The Supreme Court in the case of Serai Kella Glass Works Pvt Ltd 1997 (91)ELT 497(SC), has held that where the duty assessed and paid by the assessee on self assessment was less than the duty assessed by the proper office, the assessee was required to pay difference by making a debit in the current account within 10 days of receipt of the copy of the return and held that there was no need for a notice under section 11A. This finding should rest all controversy as regards the nature of demands under rule 173-I. The demands therefore made by the Superintendent on RT 12(SCI) on 30.3.93,can not be held or read to be under rule 173-I read with section 11A. In this view of the matter and the fact that section 11A(3)(b) specifically provide that the relevant date in such cases where assessments were provisional, the date of adjustment of duty after the final assessment thereof would be the 'relevant date' for issue of notice under section 11A), which is thereafter to be determined sub section (2) of section 11A. The assessment were provisional in this case and they were finalized by the Range Superintendent and on such finalisation the appellant was required to pay the deficiency in duty as provided under rule 9B(5). The appellant did not comply with this provision, they proceeded to take up the matter of the finalization of Classification List in appeals, which was determined by the Tribunal against them by order 7.1.97. only then thy they paid the amount of duty, as per the final orders of the Tribunal. Any short payments after this date therefore, could be recovered, in this case by serving a notice under section 11A, after the date of this adjustment, and amounts could then be determined under section 11A(2). On such a determination of an amount under section 11A(2) the interest on that amount under section 11AA could be determined as the provision of section 11AA would start taking. There is therefore, no liability of interest of the entire amount as computed in the impugned orders.
(b) We find that section 11AA which was introduced in the Statue book by Finance Act of 1966. This section provides, "where a person chargeable with duty under section 2 of section 11A fails to pay such duty within 3 months from the date of such determination he shall be liable for interest". Since in the present case, there is no determination of any demand under section 11A(2) the relevant date for the charge of interest under section 11AA(1) does not arise, in the facts of this case. The demand there can not be upheld for any period of time".
(c) We find, that on a similar issue, of the same applicants factory at Pondicherry, the demand for interest have been dropped and the audit in the C&AG report for the year ending 31st June 93 on this issue, has not admitted the draft Audit para on the following comments of the Min. of Finance "The contention of the Audit demanding interest under section 11AA is not correct as the payment of interest arises only when the duty is demanded under section 11A(2). In the present case the provisions of section 11A were not invoked for demanding duty. The SCN dt. 21.6.90 only proposed the finalisation of classification of "procured Tread Rubber" under chapter sub heading 4008.21. Further the duty in question was payable on finalisation of assessment under Rule 9B(5) and not under section 11A(2) and hence question of demanding interest does not arise".
The same has been closed by the C&AG vide their letter dated 16.11.2000 on receipt of the above reply. We are aware of the fact that this is not a circular of the Board, however this is an interpretation on question of interest under section 11AA in case of provisional assessments under section 9B(5) and this interpretation of the Min. of Finance, Dept. of Revenue, would be binding interpretation of law. And any other interpretation wold not be correct for interest under 11AA, in case of provisional assessment being finalized, is therefore not acceptable.
3. In view of our findings, we find no merits in the orders of the lower authorities and we set aside the order and allow the appeal.
(Pronounced in the court on 25/5/2001